T.C. Memo. 2003-133

UNITED STATES TAX COURT

ALEX B. RHODES, JR., Petitioner v. 

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 11158-01. Filed May 8, 2003.

 

Alex B. Rhodes, Jr., pro se.

Douglas R. Fortney, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

SWIFT, Judge: Respondent determined deficiencies in 

petitioner’s Federal income tax and additions to tax for 1998 and

1999 as follows:
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 Additions to Tax 

 Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654(a)

 1998 $29,644 $6,143 $3,549* $1,227

 1999 29,545 6,191 2,064** 1,311

* As determined by respondent through June 3, 2001.

 ** As determined by respondent through July 29, 2001. 

Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

After concessions, the primary issues for decision are as

follows:

(1) Whether wage and investment income received by

petitioner constitutes taxable income; 

(2) Whether petitioner is entitled to business expense

deductions for which petitioner would have been reimbursed by his

employer had petitioner requested reimbursement; and

(3) Whether petitioner is liable for additions to tax under

sections 6651(a)(1), 6651(a)(2), and 6654(a) for the failure to

file Federal income tax returns, for the failure to pay Federal

income tax, and for the failure to pay estimated Federal income

tax.
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FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

At the time the petition was filed, petitioner resided in

Plano, Texas.

During 1998 and 1999, petitioner resided in Texas and

received wage income for employment with various companies as an

information systems consultant, a technical computer consultant,

and an “internetwork” engineer. Petitioner also earned

investment income.

For 1998 and 1999 respectively, petitioner earned income

from both wages and investments in the total amounts of $110,138

and $110,826. In 1998 and 1999, petitioner submitted to his

employers Forms W-4, Employee’s Withholding Allowance

Certificate, on which petitioner claimed to be “Exempt” from

Federal income tax. As a result, for 1998 no Federal income tax

was withheld from petitioner’s wages, and for 1999 only $354 was

withheld. 

During 1998 and 1999 respectively, petitioner incurred

employee business expenses in the amounts of $4,629 and $4,725. 

Although available to him, petitioner did not request

reimbursement of these expenses from his employers. 

For 1997, 1998, and 1999, petitioner did not file Federal

income tax returns. Other than the above $354 withheld from
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petitioner’s wages for 1999, petitioner paid no Federal income

tax for 1998 and 1999.

OPINION

Petitioner claims that his income from wages and investments

does not constitute taxable income. Petitioner misreads case

law, statutory language, and related Treasury regulations.

Petitioner’s arguments are frivolous. See Takaba v.

Commissioner, 119 T.C. 285 (2002); Williams v. Commissioner,

114 T.C. 136 (2000). 

As stated in Williams v. Commissioner, supra, “we shall not

painstakingly address petitioner’s assertions ‘with somber

reasoning and copious citation of precedent; to do so might

suggest that these arguments have some colorable merit.’” Id.

at 139 (quoting Crain v. Commissioner, 737 F.2d 1417, 1417 (5th

Cir. 1984), affg. per curiam an order of this Court). 

We conclude that the wage and investment income that

petitioner received during 1998 and 1999 is includable in

petitioner’s taxable income. See sec. 61(a).

Section 162(a) generally provides taxpayers with deductions

for ordinary and necessary business expenses. Where taxpayers 

would have been reimbursed by their employers for business

expenses incurred, but where they failed to receive reimbursement

because they failed to request reimbursement, the expenses will

not be considered “necessary” and will not be deductible. Orvis
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v. Commissioner, 788 F.2d 1406, 1408 (9th Cir. 1986), affg.

T.C. Memo. 1984-533; Kennelly v. Commissioner, 56 T.C. 936, 943

(1971), affd. 29 AFTR 2d 72-855, 72-1 USTC par. 9348 (2d Cir.

1972).

Due to petitioner’s failure to request available

reimbursement for his employee business expenses, petitioner is

not entitled to deduct them. See Orvis v. Commissioner, supra at

1408; Kennelly v. Commissioner, supra at 943.

Petitioner is liable for the deficiencies in income tax

determined by respondent for the years in issue.

Petitioner’s argument that he failed to file Federal income

tax returns and to pay tax for the years in issue because of his

purported belief that wage and investment income does not

constitute taxable income is frivolous. Petitioner has offered

no credible evidence showing that his failure to file Federal

income tax returns and to pay estimated tax was due to reasonable

cause. We sustain respondent’s determination of the section

6651(a)(1) addition to tax and the section 6654(a) addition to

tax. 

Under section 6651(a)(2), an addition to tax may be imposed

on a taxpayer for failure to pay any Federal income tax reflected

as due on a tax return. Petitioner failed to file Federal income

tax returns for the years in issue, and respondent has not

asserted that respondent prepared substitute tax returns for
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those years. See sec. 6651(g)(2). Accordingly, petitioner is

not to be treated as having failed to pay a tax reflected on tax

returns for the years in issue. Petitioner is not liable for an

addition to tax under section 6651(a)(2). See Cabirac v.

Commissioner, 120 T.C. ___ (2003), and sec. 7491(c), which places

the burden of production on respondent with regard to additions

to tax. 

Because of petitioner’s frivolous arguments herein, we shall

impose on petitioner under section 6673(a)(1)(B) a penalty equal

to $2,000.

To reflect the foregoing, 

Decision will be entered

under Rule 155.