TAX COURT OPINION

Case: Joshua R. Deering & Sasha S. Deering
Docket Number: 18833-21S
Judge: Carluzzo
Opinion Type: bench
Filed: 07/08/2022
Pages: 5

United States Tax Court Washington, DC 20217 JOSHUA R. DEERING & SASHA S. DEERING, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 18833-21S. 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 petitioners and to respondent a copy of the pages of the transcript of the trial in the above case before Chief Special Trial Judge Lewis R. Carluzzo at Phoenix, Arizona, on June 8, 2022, containing his oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Lewis R. Carluzzo Chief Special Trial Judge Served 07/08/22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Bench Opinion by Judge Lewis R. Carluzzo 3 June 8, 2022 Joshua R. Deering & Sasha S. Deering v. Commissioner Docket No. 18833-21S THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion (bench opinion). Section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period, and Rule references are to the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. This proceeding for the redetermination of a deficiency is a small tax case subject to the provisions of section 7463 and Rules 170 through 174. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority, and pursuant to section 7463(b) the decision entered in this case shall not be treated as precedent for any other case. Joshua R. Deering and Sasha S. Deering appeared without counsel. Jonathan D. Walker appeared on behalf of 23 respondent. 24 25 In a notice of deficiency dated March 24, 2021 (notice), respondent determined a deficiency in 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 petitioners' 2017 Federal income tax and imposed a section 4 6662(a) accuracy-related penalty. After respondent's concession of the section 6662(a) accuracy-related penalty, the issues for decision are whether: (1) wage income is includable in petitioner's 2017 income, and (2) whether the positions taken and maintained by petitioners in this proceeding subject them to the imposition of a section 6673 penalty. In 2017, Mr. Deering worked for Mechanical Designs Inc. (Mechanical Designs), which paid him $104,161 in wages that year. Mechanical Designs reported that amount on a Form W-2, Wage and Tax Statement, filed with the Internal Revenue Service. Petitioners timely filed their 2017 Federal income tax return. As relevant, petitioners did not report any taxable income on that return. On the line for wages, petitioners reported "0". In the notice, respondent determined that petitioners failed to include in income $104,161 in wages Mr. Deering received from Mechanical Designs and imposed a section 6662(a) accuracy-related penalty. Section 61(a) provides that "gross income means all income from whatever source derived," including compensation for services. Petitioners do not dispute that Mr. Deering received the wage income determined in 1 2 3 4 5 6 7 8 9 10 11 12 13 the notice. Rather, they argue that the wages are not 5 taxable income because of certain provisions of the United States Constitution. Petitioners' position to that end is patently inconsistent with the literal language of section 61(a)(1) and obviously frivolous. In general, we 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). Suffice it to say that petitioners are taxpayers who are subject to Federal income tax and they are required to pay Federal income tax on the wage income Mr. Deering received 14 in 2017. 15 16 17 18 19 20 21 22 23 24 25 Lastly, we note that respondent has requested the imposition of a section 6673 penalty. That section authorizes the Tax 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 such proceeding is frivolous or groundless. Petitioners' position in this case is frivolous, and respondent has pointed that out to them numerous times. Nevertheless, taking into account petitioners' orderly, if ill-advised presentation at trial, we will not impose a penalty at this time. 6 Petitioners are advised, however, that they might not be so lucky if they choose to advance similar positions under similar circumstances in other matters pending before this Court. To reflect the foregoing, an appropriate order and decision will be entered. This concludes the Court's bench opinion in this matter. (Whereupon, at 1:17 p.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