T.C. Memo. 1999-240

UNITED STATES TAX COURT

MARTY M. MORIN AND MARILEE D. MORIN, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5883-98. Filed July 22, 1999.

Marty M. Morin and Marilee D. Morin, pro sese.

Julie L. Payne, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

VASQUEZ, Judge: Respondent determined the following

deficiencies in and additions to petitioners' Federal income tax:

Marty M. Morin:

 Additions to Tax 

 Year Deficiency Sec. 6651(a) Sec. 6654

 1993 $11,303 $1,934 $299 

 1994 8,205 2,051 423

 1995 5,130 1,283 282

Marilee D. Morin:
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1 Respondent concedes that petitioners did not receive any

gain from the sale of real estate in 1994. 

 Additions to Tax 

 Year Deficiency Sec. 6651(a) Sec. 6654

 1993 $3,545 -- -- 

 1994 11,645 $2,911 $601

 1995 1,624 406 87

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,1 the issues for decision are: (1)

Whether petitioners are liable for the deficiencies determined by

respondent, (2) whether Marty M. Morin (Mr. Morin) is liable for

an addition to tax for failing to file a Federal income tax

return for 1993, (3) whether petitioners are liable for additions

to tax for failing to file Federal income tax returns for 1994

and 1995, (4) whether Mr. Morin is liable for an addition to tax

for failing to make estimated Federal income tax payments for

1993, (5) whether petitioners are liable for additions to tax for

failing to make estimated Federal income tax payments for 1994

and 1995, and (6) whether petitioners engaged in behavior

warranting the imposition of a penalty pursuant to section

6673(a).
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FINDINGS OF FACT

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference. At the time they filed

their petition, Mr. Morin and Marilee D. Morin (Mrs. Morin),

husband and wife, resided in Yakima, Washington. 

In 1993, 1994, and 1995, Mr. Morin earned $50,712, $55,118,

and $32,547, respectively, from Les Morin Subaru as compensation

for his services. In 1993 and 1995, Mr. Morin received prizes

from Subaru of America, Inc., in the amounts of $650 and $625,

respectively. 

In 1994, Mr. Morin received a retirement account

distribution from Common Sense Shareholder Services in the amount

of $1,974. Mr. Morin had not yet attained the age of 591⁄2 at the

time he received this distribution. 

OPINION

Section 61 defines gross income as all income from whatever

source derived. Gross income includes compensation for services. 

See sec. 61(a)(1). Unless certain exceptions apply, prizes,

awards, and any amount received from an annuity (including a

retirement plan) are gross income. See secs. 72, 74. In

general, the Commissioner's determinations in a notice of

deficiency are presumed correct, and taxpayers bear the burden of

proving them erroneous. See Rule 142(a). 
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Petitioners do not challenge the facts on which respondent's

determinations are based or respondent's calculation of tax. 

Petitioners stipulated that during 1993, 1994, and 1995 Mr. Morin

received compensation from Les Morin Subaru, a retirement

distribution, and prizes from Subaru of America, Inc. 

Petitioners have not demonstrated that any exception contained in

the tax laws excludes the prizes or the retirement distribution

from income. Instead, petitioners advanced shopworn arguments

characteristic of tax-protester rhetoric that has been

universally rejected by this and other courts. See Wilcox v.

Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg. T.C. Memo.

1987-225; Carter v. Commissioner, 784 F.2d 1006, 1009 (9th Cir.

1986). Petitioners allege: (1) The wages they received are not

income; (2) the Internal Revenue Service did not send a notice of

deficiency and did not file a return as mandated by section

6020(b); (3) petitioners were not employees; (4) petitioners did

not receive any wages as defined by section 3121; and (5) taxing

their wages violates the Sixteenth Amendment. We shall not

painstakingly address petitioners' assertions "with somber

reasoning and copious citation of precedent; to do so might

suggest that these arguments have some colorable merit." Crain

v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984). 

Accordingly, we sustain respondent's determination that these

amounts are income.
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2 Respondent, in the separate notices of deficiency sent to

Mr. Morin and Mrs. Morin, determined: (1) Mr. Morin is taxable

on 100 percent of (a) the compensation he received from Les Morin

Subaru, (b) the retirement distribution he received from Common

Sense Shareholder Services, and (c) the prizes he received from

Subaru of America, Inc.; (2) Mrs. Morin is taxable on 100 percent

of the gain from her sale of real property; (3) Mr. Morin is

taxable on 50 percent of the gain received by Mrs. Morin; and (4)

Mrs. Morin is taxable on 50 percent of the net income earned by

Mr. Morin.

Respondent took these inconsistent positions to protect

respondent's rights under Washington law because petitioners were

uncooperative married nonfilers.

We must next decide whether this income is community

property income.2 Under Washington law, with certain exceptions,

all property (including compensation earned by a spouse) acquired

after marriage is presumed community property and treated as

acquired or earned by each spouse. See Wash. Rev. Code Ann.

secs. 26.16.010 through 26.16.030 (West 1997); Zielasko v.

Commissioner, T.C. Memo. 1993-177. Community property income is

attributable 50 percent to each spouse. See Poe v. Seaborn, 282

U.S. 101 (1930). Petitioners presented no evidence demonstrating

that Mr. Morin's compensation, the prizes, or the retirement

distribution are not community property. Therefore, we conclude

that under Washington law this income is community property and

must be allocated 50 percent to each petitioner. See also Rule

142(a).

Respondent also determined that the retirement distribution

is subject to an additional tax pursuant to section 72(t). 
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Section 72(t) provides for a 10-percent additional tax on the

taxable amount of an early distribution from a qualified

retirement plan. Section 72(t)(2) provides exceptions to the tax

for certain types of distributions. Petitioners did not offer

any evidence at trial related to this issue and failed to address

it on brief. Therefore, we hold that petitioners are liable for

the additional tax pursuant to section 72(t). See Rule 142(a).

Respondent determined that Mr. Morin is liable for an

addition to tax pursuant to section 6651(a)(1) for 1993 and that

petitioners are liable for additions to tax pursuant to section

6651(a)(1) for 1994 and 1995. Section 6651(a)(1) imposes an

addition to tax for failure to file a return on the date

prescribed (determined with regard to any extension of time for

filing), unless the taxpayer can establish that such failure is

due to reasonable cause and not due to willful neglect. The

taxpayer has the burden of proving the addition is improper. See

Rule 142(a); United States v. Boyle, 469 U.S. 241, 245 (1985). 

Petitioners presented no evidence showing that Mr. Morin filed a

return for 1993, that they filed returns for 1994 and 1995, or

that these failures to file were due to reasonable cause and not

due to willful neglect. Accordingly, we hold that Mr. Morin is

liable for an addition to tax pursuant to section 6651(a)(1) for

1993 and that petitioners are liable for the additions to tax

pursuant to section 6651(a)(1) for 1994 and 1995.
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Respondent also determined that Mr. Morin is liable for an

addition to tax pursuant to section 6654 for failing to make

estimated tax payments for 1993 and that petitioners are liable

for additions to tax pursuant to section 6654 for failing to make

estimated tax payments for 1994 and 1995. Petitioners did not

offer any evidence at trial related to this issue, and they

failed to address it on brief. Therefore, we hold that Mr. Morin

is liable for an addition to tax pursuant to section 6654 for

failing to make estimated tax payments for 1993 and that

petitioners are liable for additions to tax pursuant to section

6654 for failing to make estimated tax payments for 1994 and

1995. See Rule 142(a).

By motion made at the conclusion of trial, respondent

requested that the Court impose a penalty pursuant to section

6673. Section 6673(a)(1) authorizes this Court to require a

taxpayer to pay to the United States a penalty not to exceed

$25,000 if the taxpayer took frivolous positions in the

proceedings or instituted the proceedings primarily for delay. A

position maintained by the taxpayer is "frivolous" where it is

"contrary to established law and unsupported by a reasoned,

colorable argument for change in the law." Coleman v.

Commissioner, 791 F.2d 68, 71 (7th Cir. 1986).

Petitioners' position, based on stale and meritless

contentions, is manifestly frivolous and groundless, and they
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have wasted the time and resources of this Court. Accordingly,

we shall grant respondent's motion, and we shall impose a penalty

of $2,500 pursuant to section 6673.

To reflect the foregoing,

An appropriate order will

be issued, and decision will

be entered under Rule 155.