TAX COURT OPINION

Case: Adolfo Sandor Montero
Docket Number: 10587-22
Judge: Weiler
Opinion Type: bench
Filed: 02/02/2024
Pages: 6

United States Tax Court Washington, DC 20217 ADOLFO SANDOR MONTERO, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 10587-22. 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 captioned case before Judge Christian N. Weiler at San Antonio, Texas on December 13, 2023, containing his oral findings of fact and opinion rendered at the conclusion of the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Christian N. Weiler Judge Served 02/02/24 Bench Opinion by Judge Christian N. Weiler, Judge 3 December 13, 2023 Adolfo Sandor Montero v. Commissioner of Internal Revenue Docket No. 10587-22 THE COURT: The Court has decided to render the following as its oral findings of fact and opinion. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. The oral findings of fact and opinion are made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code and Tax Court Rule 152. Section references are to the Internal Revenue Code, in effect at all relevant times. All monetary amounts are rounded to the nearest dollar. This case was called from the calendar on December 13, 2023 and petitioner and respondent's counsel, Aftan Bryant, were present and heard. On the evidence before U.S., and using the burden-of-proof principles explained below, the Court finds the following facts. FINDINGS OF FACT For tax year 2018, Mr. Montero failed to report $307,062.00 in income on his federal income tax return. On February 16, 2022, respondent mailed Mr. Montero a Notice of Deficiency asserting a deficiency of $78,962.00 and a penalty under section 6662(a) of $15,792.00. In the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 petition, Mr. Montero asserts frivolous arguments 4 concerning the classification of his income. Respondent's counsel received and introduced documents from Mr. Montero's employer, Dell Technologies, Inc., supporting the determined income for the tax year at issue. OPINION Gross income generally includes all income from whatever source derived, including wages or other earnings. I.R.C. § 61. Mr. Montero does not dispute his employment and earnings of $307,062.22 reported on his Form W-2, Wage and Tax Statement, for the tax year in question. Rather, he excluded all amounts paid on his 2018 federal income tax return and contends that his earnings do not constitute taxable income. Notwithstanding our prior decision, see Montero v. Commissioner, 354 Fed. Appx. 173, 175 (5th Cir. 2009), aff'g., Transcript of Bench Opinion, No. 23166-07L (Oct. 28, 2008), Mr. Montero's frivolous arguments remain unrestrained. As we have said before, we generally do not address frivolous arguments 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). Mr. Montero's assertion that his earnings are not taxable income has been identified as a "frivolous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 position" in I.R.S. Notice 2010-33, 2010-17 I.R.B. 609, 5 and we have done the same. See, e.g., Walker v. Commissioner, T.C. Memo. 2022-63; Briggs v. Commissioner, T.C. Memo. 2016-86; Lovely v. Commissioner, T.C. Memo. 2015-35, aff'd, 642 F. App'x 268 (4th Cir. 2016). Finding Mr. Montero's arguments to be entirely frivolous, we will sustain the adjustment to his income as determined in the notice of deficiency. Section 6662(a) imposes a penalty equal to 20% of the portion of an underpayment of tax attributable to a taxpayer's negligence or disregard of rules or regulations, or for substantial understatement of income tax. I.R.C. § 6662(a), (b)(1), and (b)(2). An understatement is "substantial" if it exceeds the greater of 10% of the tax required to be shown on the return for the taxable year, or $5,000.00. I.R.C. § 6662(d)(1) and (2). Negligence includes any failure to make a reasonable attempt to comply with the provisions of the Code, including any failure to maintain adequate books and records or to substantiate items properly. See I.R.C. § 6662(c) and Treas. Reg. § 1.6662-3(b)(1). Respondent bears the burden of production to come forward with sufficient evidence indicating that it is appropriate to impose the penalty. I.R.C. § 7491(c). Mr. Montero's understatements for tax year 2018 is a substantial understatement of tax, since it exceeds the greater of 10% 6 of the tax required to be shown on the return, ($7,896.20 for 2018) or $5,000.00. Additionally, Mr. Montero's continued reliance on frivolous arguments to refute or substantiate the changes to the information on petitioner's 2018 tax return rises to the level of negligence. Therefore, respondent met the burden of production as to the penalty by showing that Mr. Montero substantially understated his income tax. Similarly, based on the evidence before U.S., we conclude the 6662(a) substantial understatement penalty was timely approved by the examiner's immediate supervisor. See I.R.C. § 1 2 3 4 5 6 7 8 9 10 11 12 13 6751(b). 14 15 16 17 18 19 20 21 Although not specifically requested by respondent, on the basis of the frivolous arguments repeated by Mr. Montero and ignored warnings from this Court, we will require him to pay a penalty of $5,000 to the United States under section 6673(a). We take this opportunity to warn Mr. Montero again that assertion of such frivolous arguments in any future appearance before this Court my result in an additional penalty of a higher 22 amount. 23 24 25 To reflect the foregoing, an appropriate decision will be entered for respondent. This concludes the Court's oral findings of fact and opinion in this case. 7 (Whereupon, at 10:35 a.m., the above-entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25