T.C. Memo. 1996-330
UNITED STATES TAX COURT
GARY L. CARNAHAN, Petitioner v. COMMISSIONER
OF INTERNAL REVENUE, Respondent
Docket No. 24492-93. Filed July 23, 1996.
Gary L. Carnahan, pro se.
David W. Sorensen, for respondent.
MEMORANDUM OPINION
CHIECHI, Judge: Respondent determined the following defi-
ciency in, and additions to, petitioner's Federal income tax:1
1
Respondent also determined interest on those amounts as
(continued...)
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Additions to Tax
Year Deficiency Section 6651(a)(1)2 Section 6654(a)
1991 $15,389 $3,847 $882
Respondent revised the determinations in the notice of
deficiency (notice), as follows:
Additions to Tax
Year Deficiency Section 6651(a)(1) Section 6654(a)
1991 $12,651 $3,163 $721
The foregoing revisions reflect respondent's concession that a
Form 1099 in the amount of $6,791.10 issued by Codega & Fricke,
Inc. (Codega & Fricke) had been erroneously reported to the
Internal Revenue Service (Service) and erroneously included in
respondent's determinations of unreported income and computations
of the deficiency and additions to tax for petitioner's taxable
year 1991.3
1
(...continued)
provided by law.
2
All section references are to the Internal Revenue Code in
effect for the year at issue. All Rule references are to the Tax
Court Rules of Practice and Procedure.
3
Respondent made the concession in a memorandum brief for
respondent (respondent's memorandum brief) filed at the Court's
request after the Court held a hearing on respondent's motion to
dismiss for failure to state a claim and for damages under sec.
6673 (respondent's motion). The Court requested respondent to
file that memorandum brief in order to respond to the allegation
in petitioner's amended petition that the Form 1099 for 1991 that
was issued to petitioner by Codega & Fricke in the amount of
$6,791.10 was erroneous. In respondent's memorandum brief, re-
spondent (1) represented that, upon investigation by respondent,
(continued...)
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As required by the Court's Standing Pretrial Order, each
party submitted a trial memorandum, both of which the Court had
filed in this case. In petitioner's trial memorandum, petitioner
indicated that he did not intend to call any witnesses at trial.
In respondent's trial memorandum, respondent indicated that she
did not intend to call any witnesses at trial.
When this case was called from the calendar at the Court's
trial session in Carson City, Nevada, the parties informed the
Court that they had not entered into a stipulation of facts and
that neither party intended to call any witnesses. Consequently,
the Court held a pretrial conference in this case, inter alia, to
ascertain from the parties why a trial should be held in this
case when neither party intended to call any witnesses. At that
pretrial conference, petitioner indicated, inter alia, that it
was his position that, because respondent had conceded that a
Form 1099 in the amount of $6,791.10 had been erroneously re-
ported to the Service and erroneously included in respondent's
computation of the deficiency and additions to tax for peti-
tioner's taxable year 1991, the burden of proof in this case
3
(...continued)
Codega & Fricke reported two Form 1099 disbursements to the
Service for petitioner's taxable year 1991, one in the amount of
$6,791.10 and a corrected one in the amount of $3,479 and (2) ad-
mitted the correctness of the allegation in petitioner's amended
petition that the Form 1099 issued by Codega & Fricke in the
amount of $6,791.10 was in error.
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shifted to respondent. The Court cautioned petitioner at the
pretrial conference that if the Court did not sustain his posi-
tion as to the burden of proof and if he presented no evidence at
trial, he would lose this case. Despite the Court's warning,
petitioner chose not to present any evidence at trial or through
a stipulation of facts. Consequently, this case was submitted on
the basis of the record extant at the conclusion of the pretrial
conference.
The issues for decision are:
(1) Did petitioner have income for 1991 in the amount
determined by respondent in the notice, as reduced by the conces-
sion in respondent's memorandum brief? We hold that he did.
(2) Is petitioner liable for 1991 for self-employment tax?
We hold that he is.
(3) Is petitioner liable for 1991 for the addition to tax
under section 6651(a)(1)? We hold that he is.
(4) Is petitioner liable for 1991 for the addition to tax
under section 6654? We hold that he is.
(5) Is petitioner liable for a penalty under section 6673?
We hold that he is liable for a $5,000 penalty.
Petitioner resided in Carson City, Nevada, at the time he
filed the petition.
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At the hearing on respondent's motion, petitioner admitted
that during 1991 he received payments in the following amounts
from the persons indicated in return for labor he performed:
Payor Amount Paid
Milton Sharp $7,795.00
Transwestern 894.73
Codega & Fricke 3,479.00
MHM, Inc. 15,790.29
Redco 15,444.03
43,403.05
Petitioner also admitted at that hearing that he did not file a
Federal income tax return for 1991.
Petitioner bears the burden of proving that respondent's
determinations in the notice are erroneous. Rule 142(a); Welch
v. Helvering, 290 U.S. 111, 115 (1933). Respondent's concession
of an error in the notice relating to the incorrect Form 1099
issued by Codega & Fricke in the amount of $6,791.10 does not
shift that burden to respondent.
Petitioner refused to enter into a stipulation of facts or
to present any evidence at trial. Except for the error alleged
in petitioner's amended petition relating to the incorrect Form
1099 issued to petitioner by Codega & Frick, the arguments he
advanced in his amended petition are tax protester type arguments
that have been repeatedly rejected by this Court and other
courts. We so found in the Order dated January 12, 1995, that we
issued with respect to respondent's motion. Nonetheless, in
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petitioner's trial memorandum, he persists in advancing the same
and/or similar tax protester type arguments. We reaffirm our
earlier finding that the types of arguments that petitioner is
advancing in this case have been consistently rejected by us and
other courts, and we find those arguments to be frivolous and
groundless.
On the record before us, we find that petitioner received
compensation income for services rendered during 1991 in the
total amount of $43,403.05. We further find on that record that
petitioner failed to show error in respondent's determinations in
the notice that for 1991 he (1) had interest income in the amount
of $14 and (2) is liable (a) for self-employment tax, (b) the
addition to tax under section 6651(a)(1), and (c) the addition to
tax under section 6654 in the revised amounts computed by respon-
dent to reflect her concession relating to the incorrect Form
1099 issued to petitioner by Codega & Fricke.
In respondent's trial memorandum, respondent requests the
Court to impose a penalty on petitioner under section 6673.4 We
have consistently applied section 6673 in cases where, as here,
it is clear that the taxpayer's position in the proceeding before
4
Respondent made the same request in respondent's motion.
Since we found that petitioner had alleged in his amended
petition one justiciable error of fact in respondent's
determinations relating to the Form 1099 issued by Codega &
Fricke in the amount of $6,791.10, we did not grant that motion
and therefore did not award a penalty under sec. 6673.
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this Court is frivolous or groundless or that the proceeding was
instituted or maintained by the taxpayer primarily for delay.
E.g., Coulter v. Commissioner, 82 T.C. 580, 584-586 (1984);
Wilkinson v. Commissioner, 71 T.C. 633, 639-643 (1979). Under
the circumstances presented herein, we conclude that petitioner's
position in this case is frivolous and groundless and that this
proceeding was instituted and maintained primarily for delay.
Accordingly, we shall grant respondent's request for a penalty
under section 6673. We hold that petitioner is liable for a
penalty under that section in the amount of $5,000.
To reflect the foregoing and respondent's concession,
Decision will be
entered under Rule 155.