TAX COURT OPINION

Case: Andrea Darnell
Docket Number: 2548-20S
Judge: Carluzzo
Opinion Type: bench
Filed: 11/09/2020
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 PA ANDREADARNELL, Petitioner, v. ) ) ) ) Docket No. 2548-20S COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court transmit herewith to each party a copy of the pages of the transcript of the trial in his matter before Chief Special Trial Judge Lewis R. Carluzzo that contain his oral findings of fact and opinion rendered on October 9, 2020, during the trial session at which the case was heard. Decision will be entered in accordance with the oral findings of fact and opinion. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. November 9, 2020 SERVED Nov 13 2020 Bench Opinion by Judge Lewis R. Carluzzo 3 October 9, 2020 Andrea Darnell v. Commissioner Docket No. 2548-20S 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 contained in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period. Rule references are to the Tax Court Rules of Practice and 1 2 3 4 5 6 7 8 9 10 11 12 13 Procedure. 14 This case for the redetermination of a 15 deficiency is subject to the Small Tax Case provisions of 16 section 7463 and Rules 170 through 174. This bench 17 OPinion is made pursuant to the authority granted by 18 section 7459(b) and Rule 152. Except as provided in Rule 19 152(c), this bench opinion shall not be cited as 20 authority, and pursuant to section 7463(b) the decision 21 entered in this shall not be treated as precedent for any 22 23 24 other case. In a notice of deficiency, dated December 18, 2019 (notice), respondent determined a $4,070 deficiency 25 in petitioner's 2016 Federal income tax and imposed a $814 cnners 4 section 6662(a) accuracy-related penalty. Respondent now concedes the penalty. The issues for decision are whether: (1) wage income and a pension distribution are includable in Petitioner's 2016 income, and (2) whether the positions taken and maintained by petitioner in this proceeding subjected her to the imposition of a section 6673 penalty. Some of the facts have been stipulated and are so found. At the time the petition was filed, petitioner lived in Indiana. In 2016 petitioner worked for Midwest 1 2 3 4 5 6 7 8 9 10 11 12 Accounting, LLC (Midwest), which paid her $38,054 in 13 wages. She also received a $2,500 pension distribution 14 from Ameritrade Clearing, Inc. (Ameritrade). Midwest and 15 Ameritrade reported these amounts on information returns 16 filed with the IRS (respectively, a Form W-2, Wage and Tax 17 Statement, and a Form 1099-R, Distributions From Pensions, 18 Annuities, Retirement or Profit-Sharing Plans, IRAs, 19 Insurance Contracts, etc.). 20 21 Petitioner's 2016 Federal income tax return (return) was filed on April 15, 2017. As relevant, the 22 above referenced items of income are not reported on the 23 return, there is no taxable income shown on that return, 24 and there is no Federal income tax liability reported on 25 the return. cnners In the notice, respondent determined that 5 Petitioner failed to include in income: (1) $38,054 in wages she received from Midwest, as well as (2) a $2,500 pension distribution from Ameritrade. section 61(a) provides that "gross income means all income from whatever source derived," including compensation for services. Gross income also includes distributions from a pension plan. Secs. 61(a)(10), 408(d). Petitioner does not dispute that she received the 1 2 3 4 5 6 7 8 9 10 wage and pension income determined in the notice. Rather, 11 she argues that the payments are not income. According to 12 petitioner, gross income does not include compensation for 13 14 15 services, wages, or salaries, and in any event, she is not the type of taxpayer that is subject to tax. Petitioner's position to that end is patently 16 inconsistent with the literal language of section 61(a)(1) 17 and (a)(10) and obviously frivolous. There is no need for 18 19 the Court to address frivolous arguments "with somber reasoning and copious citation of precedent; to do so 20 might suggest that these arguments have some colorable 21 merit." Crain v. Commissioner, 737 F.2d 1417, 1417 (5th 22 Cir. 1984). It suffices to note that petitioner's 23 arguments have no colorable merit and nothing more be said 24 other than to state that she is a taxpayer who is subject 25 to Federal income taxation and obligated to pay Federal . c noen income tax on the wage and pension income she received in 6 2016. At the conclusion of the trial respondent made an oral motion for 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. separate and apart from any potential implications under section 6751(b) that we need not consider under the circumstances, respondent's oral motion is well-made. The position advanced by petitioner, that 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 wages do not constitute income, has been repeatedly and 16 consistently rejected by this Court and other Federal 17 courts as well. The position is frivolous and the nature 18 of the argument certainly supports the imposition of the 19 Penalty. Nevertheless, in addressing respondent's oral 20 motion in this case, we consider not only petitioner's 21 arguments, but her behavior in advancing those arguments 22 as well. In that regard we note that she stipulated to 23 the receipt of the contested items of income thereby 24 reducing what might have otherwise been a more lengthy 25 trial and eliminating the need for the Court to consider c t nefs additional evidence regarding the disputed items of income. Potential implications of section 6751(b) and Petitioner's behavior tips the scales ever so slightly in 7 her favor. That being so, respondent's oral motion to impose a section 6673 penalty upon petitioner will be denied. To reflect the foregoing, decision will be entered for respondent with respect to the deficiency, and for petitioner with respect to the section 6662(a) and 6673 penalties. This concludes the Court's bench opinion in this 1 2 3 4 5 6 7 8 9 10 11 12 matter. (Whereupon, at 10:11 a.m., the above-entitled matter was concluded.) 13 14 15 16 17 18 19 20 21 22 23 24 25