T.C. Memo. 1997-264

UNITED STATES TAX COURT

LOLA COWAN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 265-95. Filed June 12, 1997.

Lola Cowan, pro se.

Julie L. Payne, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

JACOBS, Judge: Respondent determined a deficiency in

petitioner's 1990 Federal income tax in the amount of $22,750 and

additions to tax pursuant to sections 6651(a) and 6654(a) in the

respective amounts of $5,553 and $1,491.
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The issues for decision are:

(1) Whether petitioner had unreported income for the year

1990, as determined by respondent. We hold she did.

(2) Whether petitioner is liable for a section 6651(a)

addition to tax for failure to file a 1990 Federal income tax

return. We hold she is.

(3) Whether petitioner is liable for a section 6654(a)

addition to tax for failure to make estimated tax payments for

1990. We hold she is.

(4) Whether petitioner should be required to pay a penalty to

the United States under section 6673(a)(1). We hold she should, in

the amount of $2,500.

All section references are to the Internal Revenue Code in

effect for the year 1990. All Rule references are to the Tax Court

Rules of Practice and Procedure.

FINDINGS OF FACT

Despite the Court's request, no stipulation of facts was

filed. Petitioner called no witnesses. Rather, petitioner relied

on her trial memorandum, which contains nothing more than tax

protester rhetoric and legalistic gibberish. Petitioner did,

however, testify. She did so as respondent's sole witness. For

the most part, petitioner's testimony was in connection with

respondent's request for a penalty pursuant to section 6673(a)(1).
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Notwithstanding the scant record, based primarily on deemed

admissions, we find the following:

Petitioner resided in Issaquah, Washington, at the time she

filed her petition. She did not file a Federal income tax return

for 1990.

During 1990, petitioner received the following amounts of

income:

Wages from Issaquah School District No. 411. $9,189

Savren Service Corp., arising from the sale of 76,750

property located at 27605 SE 196th Pl., Issaquah,

Washington. (We are unable to ascertain from the

record petitioner's basis in the property.)

Dividend income from Nynex American Transtech. 18

Dividend income from American Telephone 25

Telegraph Co.

Dividend income from Southwestern Bell Corp. 16

Dividend income from Pacific Telesis Group. 15

Dividend income from Bell Atlantic American 18

Transtech Co. 

Dividend income from Bellsouth American 23

Transtech Co.

Dividend income from Ameritech American 18

Transtech Co.

Dividend income from Ameritech American 15

Transtech Co. 

Petitioner made no estimated tax payments during 1990, as

required by section 6654.
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Petitioner's failure to timely file a Federal income tax

return was not attributable to reasonable cause within the meaning

of section 6651(a).

OPINION

Issue 1. Unreported Income

Respondent's determinations as to petitioner's tax liability

are presumed correct. Petitioner bears the burden of proving the

contrary. See Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S.

79, 84 (1992); Welch v. Helvering, 290 U.S. 111, 115 (1933).

Petitioner chose not to call any witnesses or present any

meaningful evidence. She admitted, when questioned by the Court,

that during 1990 she worked as a teacher's assistant at Echo Glen,

a prison for youngsters, and received wages from Issaquah School

District. She further admitted not filing a tax return for 1990

and justified her failure to file by stating: "I don't believe that

a person that's working as hard [as I] for as small a wage as I

should have to pay tax."

Section 61 defines gross income as all income from whatever

source derived. Included within the definition of gross income are

"Compensation for services", "Gains derived from dealings in

property", and "Dividends". Sec. 61(a)(1), (3), (7).

The largest amount of unreported income involves petitioner's

sale of property located at 27605 SE 196th Pl., Issaquah,

Washington (196th Pl. property). Section 1001(c) requires
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recognition of gain or loss on the sale or exchange of property.

The amount of gain recognized is the excess of the amount realized

over the property's adjusted basis. Sec. 1001(a). Due to

petitioner's failure to present any evidence, we are unable to

determine her basis in the 196th Pl. property. Petitioner must

bear the consequences flowing from her decision not to properly

prosecute her case. Accordingly, the amount of gain recognized

from the sale of the 196th Pl. property is the entire amount

realized; that is, the $76,750 sale proceeds. (While we recognize

that Washington is a community property State, the record does not

reflect whether the 196th Pl. property is petitioner's separate

property or community property or whether the $76,750 is

petitioner's share of community property or the entire amount of

the sale proceeds.)

We hold that petitioner received taxable wages, dividends, and

gains derived from dealings in property in 1990 as determined by

respondent. Accordingly, we sustain respondent's deficiency

determination.

Issue 2. Section 6651(a) Addition to Tax

Respondent determined an addition to tax pursuant to section

6651(a) for petitioner's 1990 taxable year. Petitioner can avoid

this addition to tax by proving that her failure to file was: (1)

Due to reasonable cause, and (2) not due to willful neglect. Sec.

6651(a); Rule 142(a); United States v. Boyle, 469 U.S. 241, 245-246
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(1985); United States v. Nordbrock, 38 F.3d 440 (9th Cir. 1994).

"Reasonable cause" requires a taxpayer to demonstrate that she

exercised ordinary business care and prudence and was nevertheless

unable to file a return within the prescribed time. United States

v. Boyle, supra at 246; sec. 301.6651-1(c)(1), Proced. & Admin.

Regs. Willful neglect means a conscious, intentional failure to

file or reckless indifference. United States v. Boyle, supra at

245. 

Petitioner was required to file a Federal income tax return

for 1990. Sec. 6012. She failed to do so. When asked by the

Court whether she had filed tax returns in prior years, petitioner

replied: 

MS. COWAN: Years and years ago I did.

THE COURT: And what made you change your

mind?

MS. COWAN: I believe the things that have

happened in this country and the way the

Government is running things, I just don't

agree with it all.

* * * * * * *

THE COURT: * * * And because you don't

agree with what the Government does, you feel

you don't have to pay taxes on anything you

earn?

MS. COWAN: I don't really want to assist

them in doing the wrong things in the world.
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Petitioner's failure to file was due to willful neglect.

Accordingly, respondent's determination of the section 6651(a)

addition to tax is sustained.

Issue 3. Section 6654(a) Addition to Tax

Respondent also determined an addition to tax pursuant to

section 6654(a) for 1990, asserting that petitioner failed to pay

estimated tax. Where payments of tax, either through withholding

or by making estimated quarterly tax payments during the course of

the year, do not equal the percentage of total liability required

under the statute, imposition of the section 6654 addition to tax

is mandatory, unless the taxpayer shows that one of several

statutory exceptions applies. Sec. 6654; Niedringhaus v.

Commissioner, 99 T.C. 202, 222 (1992); Recklitis v. Commissioner,

91 T.C. 874, 913 (1988); Grosshandler v. Commissioner, 75 T.C. 1,

20-21 (1980). Petitioner bears the burden of proving qualification

for such an exception. See Habersham-Bey v. Commissioner, 78 T.C.

304, 319-320 (1982).

Although certain amounts were withheld from petitioner's

wages, petitioner did not make any estimated tax payments for 1990

and introduced no evidence on this issue. Accordingly, we sustain

respondent's determination pursuant to section 6654(a) for

petitioner's 1990 taxable year.
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Issue 4. Section 6673(a)(1) Penalty

Prior to trial, respondent cautioned petitioner of the

possibility of the Court's imposing a penalty if she pursued her

baseless claims and provided petitioner with an opportunity to

avoid the section 6673(a)(1) penalty. Petitioner failed to heed

respondent's warning. Accordingly, at trial, respondent requested

the Court to impose a penalty against petitioner pursuant to

section 6673(a)(1). 

In relevant part, section 6673(a)(1) provides:

SEC. 6673(a). Tax Court Proceedings.--

(1) Procedures Instituted Primarily For

Delay, etc.--Whenever it appears to the Tax

Court that--

(A) proceedings before it have

been instituted or maintained by the

taxpayer primarily for delay,

(B) the taxpayer's position in

such proceeding is frivolous or

groundless, or

 * * * * * * *

the Tax Court, in its decision, may require the taxpayer

to pay to the United States a penalty not in excess of

$25,000.

Respondent asserts that petitioner's position is frivolous and

groundless, and that petitioner instituted this lawsuit primarily

for delay. We agree with respondent that petitioner is liable for
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a penalty under section 6673(a)(1), and we require her to pay a

penalty to the United States in the amount of $2,500. Petitioner's

conduct throughout this proceeding has convinced us that she

instituted and maintained this proceeding primarily for delay.

Moreover, her position in this proceeding is groundless and

frivolous. See Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir.

1986); see also Neitzke v. Williams, 490 U.S. 319 (1989) (defining

legal frivolousness). Petitioner's insistence on pursuing her

fruitless argument has consumed time and effort of this Court (and

of respondent) that could have otherwise been devoted to resolving

bona fide claims of other taxpayers. See Cook v. Spillman, 806

F.2d 948 (9th Cir. 1986).

We have considered all arguments made by petitioner in this

proceeding. We perceive no need to refute petitioner's protester

arguments with somber reasoning; to do so might suggest they have

colorable merit. Crain v. Commissioner, 737 F.2d 1417 (5th Cir.
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1984). Suffice it to say, all of them are without merit.

To reflect the

foregoing,

An appropriate order will

be issued and a decision will be

entered for respondent.

.