United States Tax Court

Washington, DC 20217

ANDREW ETHAN MACTAGGART,

Petitioner

v.

COMMISSIONER OF INTERNAL 

REVENUE,

Respondent

Docket No. 6465-21.

ORDER

Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is 

ORDERED that the Clerk of the Court shall transmit herewith to petitioner 

and to respondent a copy of the pages of the transcript of the trial in the above case 

before Judge Joseph Robert Goeke containing his oral findings of fact and opinion 

rendered at the Houston, Texas trial session at which this case was heard. 

In accordance with the oral findings of fact and opinion, a decision will be 

entered for respondent as to the deficiency in income tax and for petitioner as to the 

penalty pursuant to I.R.C. section 6662(a).

(Signed) Joseph Robert Goeke

Judge

Served 05/11/22
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Bench Opinion by Judge Joseph Robert Goeke

April 27, 2022

Andrew Ethan MacTaggart v. Commissioner of 

Docket No. 6465-21

THE COURT: The Court has decided to render the 

following as it's oral findings of fact and opinion in 

this case. This bench opinion is made pursuant to the 

authority granted by section 7459(b) of the Internal 

Revenue Code and Tax Court Rule 152. And it shall not be 

relied upon as precedent in any other case. 

Rule references in this opinion are to the Tax 

Court Rules of Practice and Procedure, and section 

references are to the Internal Revenue Code, as amended, 

and in effect at all relevant times. 

The IRS issued a notice of deficiency asserting 

an increase in petitioner's income tax and the section 

6662(d) penalty. Respondent has conceded the penalty, but 

the deficiency of $23,624 for 2017 remains in dispute. 

This Court has jurisdiction under section 6213(a) because 

petitioner timely petitioned this Court after the notice 

of deficiency was issued. On the evidence before us, and 

using the burden of proof principles explained below, the 

Court finds facts as follows: 

Petitioner resided in Texas at the time he filed 

the petition in this case. The record of trial consists 

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(a)

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of three exhibits and petitioner's testimony. Petitioner 

provided services for Valspar Inc. for which he was paid 

$119,838 in 2017. The amended return petitioner filed for 

2017 is in the record and it confirms his testimony that 

he received $119,838 for Valspar. In the amended return 

petitioner asserts the $119,838 was not taxable income. 

The amended return also seeks a refund of all the income 

tax withheld by Valspar from petitioner's wages in 2017. 

Petitioner's amended return notes he changed the 

W-2 he originally received from Valspar to reflect his

position regarding the non-taxability of the amounts he 

was paid by Valspar. Turning to the legal analysis and 

opinion in this case, we first note that petitioner's 

position is a discredited argument which is inconsistent 

with section 61(a)(1). The introduction of section 

61(a)reads as follows. "Except as otherwise provided in 

this subtitle gross income means all income from whatever 

source derived, including (but not limited to) the 

following items:" Subsection (1) of section 61(a) provides 

as follows. "Compensation for services including fees, 

commissions, fringe benefits and similar items." 

Respondent's determination is generally presumed 

correct in deficiency cases and the taxpayer has the 

burden of proof. Tax Court Rule 142(a), and Welch v. 

Helvering, 290 U.S. 111 (1933). The burden of proof may 

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shift to respondent as to certain factual issues which a 

taxpayer presents credible evidence in support of it. 

Section 7491(a). In the present case petitioner has not 

presented any such evidence, and the burden of proof is 

not shifted under section 7491(a). 

In cases asserting the failure to report income 

the Court of Appeals for the Fifth Circuit, where an 

appeal in this case would ordinarily lie, has held that 

the IRS must establish a factual foundation to support 

that the taxpayer engaged in the income producing 

activity. The Court of Appeals has held that such 

evidence is necessary before the burden of proof would 

shift to the taxpayer to establish that the income is not 

taxable. Here petitioner's testimony and the amended 

return, which is an exhibit in the record, meet the 

requirements of the factual foundation. Parker v. 

Commissioner, 117 F.3d 785, 787 (5th Cir. 1997). In 

Bindel v. Commissioner, T.C. Memo. 2022-39, the tax court 

recently dismissed arguments very similar to the arguments 

petitioner is making in the present case regarding the 

non-taxability of income. Bindel contains a quote from 

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

This quote fits the present case very well, "We perceive 

no need to refute these arguments with somber reasoning 

and copious citation of precedent; to do so might suggest 
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that these arguments have some colorable merit." 

Petitioner's arguments clearly merit that analysis and we 

will make no further discussion of those.

We appreciate the fact that ultimately 

petitioner was willing to admit that he actually received 

$119,838 for services in 2017. We advised the petitioner 

that should he continue to pursue frivolous arguments 

about the taxability of such income, he might face 

sanctions. Based upon the record of trial and our 

analysis of the law the clearly applies to petitioner's 

situation, a decision will be entered on the deficiency in 

income tax for respondent. And because of respondent's 

concession, a decision will be entered for the petitioner 

relative to the addition to tax under section 6662(a). 

This concludes the Court's oral findings of fact 

and opinion in this case.

(Whereupon, at 9:55 a.m., the above-entitled 

matter was concluded.)

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