T.C. Memo. 1998-294

UNITED STATES TAX COURT

MAURICE H. SOCHIA AND BEATRICE M. SOCHIA, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 464-97. Filed August 12, 1998.

Maurice H. Sochia and Beatrice M. Sochia, pro sese.

T. Richard Sealy III, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

PARR, Judge: Respondent determined deficiencies in and

additions to petitioners' Federal income taxes for the years and

in the amounts as follows:
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Maurice H. Sochia 

 Additions to Tax 

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

1992 $12,879.15 $3,158.16 $537.83

1993 7,955.00 1,941.63 324.53

1994 8,227.20 1,985.93 410.59

Beatrice M. Sochia

 Additions to Tax 

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

1992 $12,879.15 $3,158.16 $549.77

1993 7,955.00 1,941.63 324.53

1994 8,227.20 1,985.93 410.59

We must decide the following issues: (1) Whether

petitioners had unreported income during the years in issue; (2)

whether petitioners are liable for the addition to tax for

failure to timely file income tax returns under section 6651(a)

for each of the years in issue; (3) whether petitioners are

liable for the addition to tax for failure to pay estimated

Federal income tax under section 6654(a) for each of the years in

issue; and (4) whether petitioners are liable for a penalty under

section 6673.

All section references are to the Internal Revenue Code in

effect for the taxable years in issue, and all Rule references

are to the Tax Court Rules of Practice and Procedure, unless

otherwise indicated.
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FINDINGS OF FACT

Some of the facts have been stipulated. The stipulation and

exhibits submitted therewith are incorporated herein by this

reference. At the time the petition was filed, petitioners

resided in San Antonio, Texas.

On December 21, 1993, respondent received a Form 1040 for

1992 signed by petitioners and purportedly dated April 9, 1993. 

Every line of the form was filled out "Object--5th Amend." or

with zeros. Attached to the form were various appendices

including a "legal brief" and an "administrative claim for refund

and a demand for hearing and abatement, tax year 1992". In

addition, petitioners attached various Forms W-2 and 1099,

statements showing distributions from Dean Witter Trust Co. (Dean

Witter) and Great American Reserve, and a Schedule K-1 showing a

partnership distribution to Beatrice Sochia.

Petitioners filed a Form 1040 for 1993 on or about April 15,

1994. Most of the lines on that form (including line 31,

adjusted gross income) also were completed "Object--5th Amend." 

However, petitioners included numbers for a business loss on line

12. Numbers were also shown on some of the lines for Schedules A

and C, and for the Forms 8283, 2106, and 6251 which were attached

to the Form 1040. Other lines had question marks or, in the case

of Form 4797, which was also attached to the Form 1040, "Object--

5th Amend." As part of the package, petitioners included Forms

1099, a "statement of account" by Dean Witter, annual statements
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from Northbrook Life Insurance Co., a completed Schedule K, and

other documents showing distributions or payments to petitioners.

On April 19, 1995, petitioners sent to respondent a document

entitled "joint income tax return, 1994". This document was not

a Form 1040 but was a document generated by petitioners. This

document did contain specific dollar amounts in various places,

including an attached Schedule A, Form 2106, Forms 1099, Schedule

K, documents from Dean Witter, and Forms W-2. The document

created by petitioners differed in significant respects from the

Commissioner's Form 1040, including the form of the jurat.

Respondent used transcripts of petitioners' information

returns from 1992 through 1994 to compute the deficiencies

determined in the notices of deficiency. After the notices were

issued, petitioners produced their books and records to

respondent and respondent made a number of concessions.

In papers filed with respondent and with the Court,

petitioners argue that Federal income taxes violate various

amendments of the U.S. Constitution and that so-called Fifth

Amendment returns are valid. In oral argument, petitioners also

asserted that section 61(a) is incompatible with the 16th

Amendment of the Constitution. 

OPINION

Petitioners do not contest that they received the wages,

interest, and other amounts determined by respondent in the

notices of deficiency. They argue instead that these amounts are
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not taxable and that the documents petitioners filed were valid

"returns", so as to relieve them from the additions to tax

determined by respondent. 

A Form 1040 which contains only "Object--5th Amend." entries

is not a Federal income tax return. See Parker v. Commissioner,

724 F.2d 469 (5th Cir. 1984), affg. T.C. Memo. 1983-75; Beard v.

Commissioner, 82 T.C. 766 (1984), affd. per curiam 793 F.2d 139

(6th Cir. 1986). This is true even where information forms are

attached to the form. Reiff v. Commissioner, 77 T.C. 1169, 1177-

1179 (1981). Moreover, petitioners have not alleged, let alone

shown, that they had any credible fear of criminal prosecution

that could remotely justify claiming the Fifth Amendment with

respect to the reporting of any given item on their returns.

Instead of using a Form 1040 for 1994, petitioners created a

form which they entitled "joint income tax return, 1994". 

Generally, taxpayers are required to file a return that conforms

to the forms and regulations and should use the forms issued by

the Internal Revenue Service. See sec. 1.6011-1(b), Income Tax

Regs. We have held that an altered Treasury Form 1040 does not

constitute a "return" in compliance with section 6011(a). Beard

v. Commissioner, supra; see also Counts v. Commissioner, 774 F.2d

426, 426-427 (11th Cir. 1985), affg. per curiam T.C. Memo. 1984-

561; Rapp v. Commissioner, 774 F.2d 932 (9th Cir. 1985).

The Supreme Court has provided a four-part test to determine

whether a document is sufficient for statute of limitations
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purposes: (1) There must be sufficient data to calculate the tax

liability, (2) the document must purport to be a return, (3)

there must be an honest and reasonable attempt to satisfy the

requirements of the tax law, and (4) the taxpayer must execute

the return under penalty of perjury. Badaracco v. Commissioner,

464 U.S. 386 (1984); Beard v. Commissioner, supra at 777-778; 

see also Zellerbach Paper Co. v. Helvering, 293 U.S. 172 (1934);

Florsheim Bros. Drygoods Co. v. United States, 280 U.S. 453

(1930); National Contracting Co. v. Commissioner, 105 F.2d 488

(8th Cir. 1939), affg. 37 B.T.A. 689 (1938). On their bogus form

petitioners created false "adjustments to income", subtracting

each item of "gross receipts" they had listed, to arrive at a net

income of zero. Moreover, petitioners altered the jurat

significantly. A jurat is required to be made according to the

forms prescribed by the Secretary. Sloan v. Commissioner, 102

T.C. 137, 146-147 (1994), affd. 53 F.3d 799 (7th Cir. 1995).

In light of the above, we conclude that none of the

documents filed by petitioners for the years in issue demonstrate

an honest endeavor to satisfy the law. We hold that petitioners

did not file Federal income tax returns for the years in issue.

Petitioners' arguments concerning the conflict between

section 61(a) and the 16th Amendment are not well taken. The

Supreme Court has defined "income" as "undeniable accessions to

wealth, clearly realized, and over which the taxpayers have
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complete dominion." Commissioner v. Glenshaw Glass Co., 348 U.S.

426, 431 (1955).

We have considered petitioners' other arguments and find

them meritless.

For the above reasons, we hold that petitioners had

unreported income during the years in issue in the amounts

determined by respondent in the notices of deficiency, as

modified by the stipulation of facts. We also hold that

petitioners are liable for the additions to tax for failure to

timely file income tax returns under section 6651(a) for each of

the years in issue. Petitioners are also liable for the

additions to tax under section 6654(a) for failure to pay

estimated Federal income tax. 

We now turn to respondent's request that a penalty against

petitioners under section 6673(a) be awarded. That section

authorizes the Court to require a taxpayer to pay to the United

States a penalty not in excess of $25,000 whenever it appears

that proceedings have been instituted or maintained by the

taxpayer primarily for delay or that the taxpayer's position in

the proceeding is frivolous or groundless. Petitioners have been

to this Court on two previous occasions (involving tax years 1989

and 1990-91), where their arguments were rejected. See Sochia v.

Commissioner, T.C. Memo. 1995-475, affd. without published

opinion 116 F.3d 478 (5th Cir. 1997). On the second occasion we

imposed a $2,000 penalty for each of the 2 years in issue. The
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earlier decision, involving 1989, was consolidated with their

appeal of a dismissal by a District Court of their action seeking

a refund of a $500 penalty imposed for filing a frivolous tax

return. The Court of Appeals not only sustained the courts below

but imposed its own sanction by awarding the United States double

costs plus $1,000 in damages for the frivolous appeals. See

Sochia v. Commissioner, 23 F.3d 941, 944 (5th Cir. 1994).

As petitioners have already been amply notified, their

position is frivolous and groundless. We therefore exercise our

discretion under section 6673(a)(1) and require petitioners to

pay a penalty to the United States in the amount of $5,000 for

each of the years here in issue.

In order to reflect concessions made by respondent,

 An appropriate order

will be issued and decision

will be entered under Rule

155.