TAX COURT OPINION

Case: Lawrence Horowitz
Docket Number: 3422-05
Judge: Cohen
Opinion Type: memo
Filed: 05/02/2006
Pages: 5

T .C . Memo . 2006-9 1 UNITED STATES TAX COUR T i f LAWRENCE HOROWITZ, Petitioner v . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket Nos . 3422-05, 3854-05 . Filed May 2, 2006 . Lawrence Horowitz, pro se . Donald A . Glasel , for respondent . MEMORANDUM OPINIO N COHEN, Judge : Respondent determined deficiencies of $7,515, and $13,352 in petitioner's Federal income taxes for 2001 and 2002, respectively . Respondent also determined additions to tax of $1,690 .20 and $2,766 .37 under section 6651(a)(1) and $297 .24 and $406 .91 under section 6654 for 2001 and 2002, respectively . SERVED MAY 2 2006 - 2 - Respondent also determined additions to tax under section 6651 ( a)(2) . In each of the answers, respondent conceded the additions to tax under section 6651 ( a)(2) and , accordingly, alleged increases in the additions to tax under section 6651 ( a)(1) . The issue remaining for decision is whether a penalty should be awarded to the United States under section 6673 . Unless otherwise indicated , all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure . Background All of the facts have been stipulated , and the stipulate d facts are incorporated in our findings by this reference . Petitioner resided in Calverton , New York, at the time that he filed his petitions . The petitions alleged no facts showing errors in respondent ' s determinations but set forth frivolous tax protester arguments , including that "petitioner could find no statute or regulation making petitioner liable for an income tax" . In his petitions , petitioner admitted that he failed to file Federal income tax returns for 2001 and 2002 . After these cases were set for trial , respondent sent to petitioner requests for admissions for each year, setting forth the items of income received by petitioner , petitioner ' s failure to file income tax returns for either year, and petitioner's - 3 - failure to pay estimated taxes for either year . The items of income identified included wages, interest, and dividends reported by third-party payors and comprising the unreported income determined in the notices of deficiency for 2001 and 2002 . The requests for admissions, however, mischaracterized certain income from sale of stocks and/or bonds as "ordinary income" . At the time of trial, the parties stipulated to all of the items of income received by petitioner, and respondent conceded that the receipts from sale of stocks and/or bonds were capital gains . However, because petitioner failed to present any information concerning his holding period or basis in the stocks or bonds sold, the gross proceeds are includable in petitioner's income as short-term capital gains . Petitioner's frivolous claims that his income is not subject to tax were repeated in filings in these cases subsequent to the petitions, including motions to continue in order to conduc t frivolous discovery, and in his trial memorandum . Petitioner was warned by respondent and by the Court prior to trial that his arguments were frivolous and that a penalty might be imposed . Petitioner persisted in making his frivolous arguments at the time of trial . Discussion Petitioner's arguments that the items of income that h e received are not taxable have long been recognized as stale, - 4 - groundless , and frivolous . Section 1 imposes an income tax on petitioner ' s taxable income . Section 63 defines taxable income as gross income minus deductions . Section 61 defines gross income as including wages and the other categories of receipts admitted by petitioner . Arguments to the contrary have been consistently rejected and characterized as frivolous in innumerable cases . No further discussion of them is merited . See Connor v . Commissioner , 770 F .2d 17, 20 ( 2d Cir . 1985 ) ; Crain v . Commissioner , 737 F . 2d 1417, 1418 ( 5th Cir . 1984) ; Cabirac v . Commissioner , 120 T . C . 163, 167 ( 2003 ) . Petitioner ' s arguments concerning respondent ' s procedures are similarly frivolous and lacking in merit . Section 6673 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, o r (C) the taxpayer unreasonably failed to pursue available administrative remedies , the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $25,000 . Notwithstanding prior warnings , petitioner has been undeterred . A penalty shall be awarded to the United States in each of these - 5 - consolidated cases in the amount of $5,000, for a total of $10,000 . To reflect any recomputation required as a result of recharacterizing petitioner's gains from sales of stocks and bonds as short-term capital gains, Decisions will be entere d under Rule 155 .