TAX COURT OPINION

Case: Robert E. & Mary K. Adams
Docket Number: 16464-04
Judge: Vasquez
Opinion Type: memo
Filed: 06/01/2006
Pages: 3

SERVICE CA STAT. as T.C. Memo. 2006-114 UNITED STATES TAX COURT ROBERT E. AND MARY K. ADAMS, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 16464-04. Filed June 1, 2006. Robert E. and Mary K. Adams, pro sese. Paul K. Voelker and Wesley J. Wong, for respondent. MEMORANDUM OPINION VASQUEZ, Judge: This case is before the Court on respondent's motion for summary judgment and to impose a penalty under section 6673. ggo JUN 12006 - 3 - Discussion I. Summary Judoment Rule 121(a) provides that either party may move for summary judgment upon all or any part of the legal issues in controversy. Summary judgment may be granted if it is demonstrated that no genuine issue exists as to any material fact and a decision may be rendered as a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). As the party that moved for summary judgment, respondent has the burden of showing there is no genuine issue as to any material fact and that he is entitled to judgment as a matter of law. Nis Family Trust v. Commissioner, 115 T.C. 523, 536, 538 (2000). We conclude that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. II. The Deficiency Section 61 defines gross income as all income from whatever source derived. Gross income includes, among other things, compensation for services, interest, and pensions. Sec. 61(a). Petitioners admit that they received the income listed in the notice of deficiency. However, petitioners contend, inter alia, that the earnings they derived are not income, that therefore they are not liable for taxes, and that income - 5 - understatement" exists if the understatement exceeds the greater of (1) 10 percent of the tax required to be shown on the return for a taxable year, or (2) $5,000. Sec. 6662(d)(1). The understatement is reduced to the extent that the taxpayer (1) has adequately disclosed facts affecting the tax treatment of an item and there is a reasonable basis for such treatment, or (2) has substantial authority for the tax treatment of an item. Sec. 6662 (d) (2) (B) . Respondent determined, and we sustained, a tax deficiency of $10,286. Petitioners conceded that they earned the income advanced in the notice of deficiency, and petitioners did not present any evidence indicating reasonable cause or substantial authority for not reporting the income. See secs. 6662, 6664. We sustain respondent's penalty determination. B. Section 6673 Under section 6673, this Court may require a taxpayer to pay a penalty not to exceed $25,000 if the taxpayer takes a frivolous position in the proceeding or institutes the proceeding 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' protester rhetoric is manifestly frivolous and groundless. They have wasted the time and resources o.f this