TAX COURT OPINION

Case: Edward E. Slingsby
Docket Number: 30935-09
Judge: Vasquez
Opinion Type: memo
Filed: 06/13/2011
Pages: 6

T. C. ,Memo 2011-130 UNITED STATES TAX COURT EDWARD E. SLINGSBY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 30935-09. Filed June 13, 2011. Edward E . Slingsby, pro se Robyn R. Gilliom, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION VASQUEZ Judg : Respondent det erminecl a $2, 793 deficiency in petitioner' s 2007/ Federal income tax based on unreported income. ,The so]e issue ,for decision is whether petit-ioner is liable for the deficiency. Petitioner argues for the first time in,his posttrial (continued. . . ) SERVED JUN 1 3 2011 -2- FINDINGS OF FACT Some of the facts have been stipulated and are so found. The stipulations of facts and the attached exhibits are incorporated herein by this reference. Petitioner resided in Illinois when he filed the petition. In 2007 petitioner worked for Skokie Motor Sales, Inc. (Skokie). Skokie reported on Form ,W-2, Wage and Tax Statement, that it had paid $28,598 in wages to petitioner in 2007 and had withheld Federal income tax. In addition, Interactive Brokers, L.L.C. (Interactive), petitioner's investment broker, reported on Form 1099-DIV, Dividends and Distributions, that it had paid $57 in qualified dividends to petitioner in 2007. Petitioner does not dispute receiving these payments. In 2007 petitioner paid mprtgage interest of $4,658.82 and real estate taxes of $2,190.63 for his primary residence in Illinois. He also paid mortgage interest of $7,694.81 and real estate taxes of $3,707.34 for a second home in Michigan. In (...continued) brief that he is entitled to itemized deductions for real estate taxes and mortgage interest payments. However, as will be discussed in our findings of fact, petitione.r elected the standard deduction on h:Us 2007 Federal did not assert a claim for deductions in his petition. Accordingly, petitioner is deemed to have wdived this argumentand the deductions are not at 34(b) (4). income -tax return and he issue in this case. See Rule Unless otherwise indicated, all section references are to a in effect for the year in issue, the Internal Revenue Code (Code) and all Rule references are to the Tax Court-Rules of'Practice and Procedure. -39 addition, petitioner paid mortgage interest df $6,484^.64 on a home'equity line of credit. Petitioner timely filed Form 1040 U.S. Individual Incomë», Tax Return, fors2007, on which he reported iero income from wages or qualified dividends and -zero taxable incom'e.2 He checked -the box for "single" filing status and claimed the corresponding standard "deduction--he did not claim any deductions for rea-l estate taxes or mortgage' interest payments3 -Petitioner reported $2,187.76 as Fe'deral income -tax withheld from Forms W-2 and 1099 and requested a refund in that amount. OPINiON I. Deficiency Section 61(3) defines gross income as all income from whatever sources derived, including compensation for services and dividends. As a genera] rule, the taxpayer bears, theoburden of proving the Cdmmissioner's deficiency determinati~ons/incorrect. Rule 142(a); Welch- V. Helvering, 290 UdS. 111, 115.(1933). Section 7491(a), however, -provides that i-f ethe taxpayer introduces credibleyevidence and meets certain other prerequisites, the Commissioner shall bear thë.burden of proof with respect.to a factual issues relating to the taipayer'ss liability for a tax . 2 - Petitioner reported $1 306 of gross income from - - a unemployment compensation. -4- imposed under subtitle A or B of the Code . Since petitioner has failed to introduce credible evidence, section 7491(a) does not apply. See Davenport v. Commissioner, T.C. Memo. 2009-248. Petitioner does not dispute receiving the wage and dividend income, determined by respondent and shown in the notice of deficiency. Rather, petitioner argues, inter :alia, that earnings he received from his employer for performing services are not taxable because -Skokie is not a trade or business paying wages as contemplated by Congress and that -the Form W-2 Skokie issued is invalid as a matter of law. In his petition, at trial, and on brief, petitioner advanced shopworn arguments characteristic of tax-protester rhetoric that have been universally rejected by this and other courts. See Wilcox v. Commissioner; 848 F.2d-1007 (9th Cir. 1988),. affg. T.C. Memo. 1987-225; Sawukaytis v. Commissioner, T.C. Memo. 2002-156, affd. 102 Fed. Appx. 29 (6th Cir. 2004) . The U.S. Court of Appeals for the Seventh Circuit, the court to which appeal in this case would lie, has classified one of petitioner's exact arguments, ·that the term "employee" for purposes of section r 3401(c) does not include privately employed wage earners, as. "a preposterous reading of the statute." United States v. Latham 754 F.2d 747, 750 (7th Cir. s1985) . We shall not painstakingly 3 We rejected similar arguments by petitioner with' respect to the collection of his tax liabilities for 1999 through 2004 in Slingsby v. Commissioner; T.C. Memo. 2011-3. address petitioner' s assertions "with somber reasoning and copious citation of precedent; sto do so might suggest that these arguments have some- colorable merit." -Crain v. Commissitoner, 737 F . 2d 1417, 1417 (5th Cir . 1984) . - Accordingly, we conclude 'that petitioner is liable for the deficiency. II. Section 6673 (a) (1) Penalty Section 6Ë73 (a) (1) authorizes the Court to impose a penalty not ta exceed $25 00 if the taxpayer took frivolous or groundless positions in the proceeding or instituted the proceeding primarily for delay. A taxpayer' s position is "frivolous" if it is "contrary to established law and unsupported by a reasoned, colorable argument for chanýe in the law." Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986) . We warned petitioner that his arguments were frivolous and have been universally rejected by this and other courts. We further advised petitioner that the Court may impose a penalty of up to $25,000 if he were to proceed with such arguments. Although res pondent has not moved for a section 6673 (a) (1) penalty and we re rain from imposing the penalty at this time, we take this opportuhity to warn petitioner that we may impose this penalty if he returns to the Court( and proceeds in a similar manner in the future. See Piersori v. Commissioner, 115 T.C. 576 (2000) . -6- In reaching all of our holdings herein, we have considered all arguments made :by the parties, and to the extent not mentionéd above, we conclude they are irrelevant- or without merit. To reflect the foregoing, Decision will be entered -for respondent.