T.C. Memo. 1998-376
UNITED STATES TAX COURT
ALAN MICHAEL NEWMAN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 358-97. Filed October 16, 1998.
Alan Michael Newman, pro se.
Michael F. Steiner, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
PARR, Judge: Respondent determined deficiencies in, and
additions to, petitioner's Federal income taxes as follows:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654(a)
1990 $7,204 $1,651 $428
1991 8,339 2,049 468
1993 9,013 2,253 378
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All section references are to the Internal Revenue Code in
effect for the taxable years in issue, and all Rule references
are to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated.
The issues for decision are: (1) Whether for 1990, 1991,
and 1993 petitioner received and failed to report wages and
nonemployee compensation of $9,130, $12,158, and $22,927,
respectively. We hold he did. (2) Whether for 1990, 1991, and
1993 petitioner received and failed to report additional income
of $21,178, $19,771, and $10,913, respectively. We hold he did
not. (3) Whether for 1990, 1991, and 1993 petitioner is liable
for an addition to tax pursuant to section 6651(a)(1). We hold
he is. (4) Whether for 1990, 1991, and 1993 petitioner is liable
for an addition to tax pursuant to section 6654(a). We hold he
is.
Some of the facts have been stipulated and are so found.
The stipulated facts and the accompanying exhibits are
incorporated herein by this reference. At the time the petition
in this case was filed, petitioner resided in Santa Clara County,
California.
FINDINGS OF FACT
During 1990, petitioner was employed by C.K. Trucking and
received wages and nonemployee compensation of $7,855 and $1,275,
respectively.
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During 1991, petitioner was employed by Appraisal Tech and
the San Jose Mercury News. Petitioner received $2,296 and $7,875
of wages and nonemployee compensation, respectively, from
Appraisal Tech. Petitioner received nonemployee compensation of
$1,987 from the San Jose Mercury News.
During 1993, petitioner was employed by Kushner & Robertson
and received wages of $22,927.
In addition, respondent increased petitioner's income using
amounts determined from statistical data compiled by the Bureau
of Labor Statistics. In calculating petitioner's income based on
Bureau of Labor Statistics' data, respondent selected 10 tables
which he believed were representative of petitioner's age, race,
family/earning composition, and geographics. These 10 tables
totaled income of $278,512, which respondent divided by 10 to get
a base income of $27,851 for taxable year 1988. Respondent
increased the 1988 base year amount for inflation to determine
the 1990, 1991, and 1993 Bureau of Labor Statistics income
amounts for petitioner of $30,969, $31,929, and $33,840,
respectively.1
1
Respondent introduced at trial the revenue agent's
workpapers showing how the Bureau of Labor Statistics tables were
used. Petitioner objected because he was not shown the
workpapers prior to their introduction at trial. Because
respondent did not show the workpapers to petitioner 15 days
before trial, as required by the standing pretrial order, the
workpapers were received only to show how the amount in the
statutory notice of deficiency was calculated, not for the truth
(continued...)
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Respondent had little information regarding petitioner when
the tables representing petitioner's characteristics were
selected. Respondent was unsure how petitioner's age was
determined. Apparently, petitioner's race was presumed by the
revenue agent's observations. Respondent did not have
petitioner's specific physical address and used only a general
Bay Area statistic. The record is silent regarding how
petitioner's marital status and family composition were
determined. Respondent also classified petitioner as a renter;
however, the record is silent as to if and where a title search
was conducted.
Petitioner did not file Federal income tax returns for the
taxable years in issue.
OPINION
Issue 1. Unreported Wages and Nonemployee Compensation
Respondent determined that petitioner received and failed to
report wages and nonemployee compensation of $9,130, $12,158, and
$22,927 for 1990, 1991, and 1993, respectively.
Petitioner does not challenge the merits of respondent's
determination. Petitioner testified that he is not a tax
protester. Petitioner's arguments, however, consisted of
hackneyed tax protester rhetoric that has been universally
1
(...continued)
of the numbers shown therein.
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rejected by this and other courts. See, e.g., Wilcox v.
Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg. T.C. Memo.
1987-225. We shall not painstakingly address petitioner's
assertions "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 to say, petitioner is subject to
Federal income tax during the relevant years, and we sustain
respondent's determination.
Issue 2. Additional Unreported Income
Utilizing Bureau of Labor Statistics' data, respondent
determined that, in addition to the above referenced wages and
nonemployee compensation, petitioner had unreported income of
$21,178, $19,771, and $10,913 for 1990, 1991, and 1993,
respectively.
Every taxpayer is required to maintain adequate records of
taxable income. Sec. 6001. Petitioner did not maintain adequate
records from which the amount of his income or Federal income tax
liability could be computed. In the absence of such records, a
taxpayer's income may be reconstructed by any method that, in the
Commissioner's opinion, clearly reflects income. Sec. 446(b);
Parks v. Commissioner, 94 T.C. 654, 658 (1990). The
Commissioner's method need not be exact but must be reasonable.
Holland v. United States, 348 U.S. 121 (1954). The reliance on
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Bureau of Labor Statistics' data in reconstructing a taxpayer's
income has been held to be reasonable. Giddio v. Commissioner,
54 T.C. 1530 (1970); Bennett v. Commissioner, T.C. Memo. 1998-96.
Respondent attempted to obtain information from petitioner
once he had been identified as a nonfiler. Petitioner was not
cooperative. Respondent obtained information from the various
institutions that reported Form 1099 information regarding
petitioner. Respondent reconstructed petitioner's income using
this Form 1099 data. Respondent also increased petitioner's
income using amounts determined from the Bureau of Labor
Statistics. In doing so, respondent increased petitioner's 1990,
1991, and 1993 taxable income by $21,178, $19,771, and $10,913,
respectively.
Petitioner testified that he was single and that his living
expenses were minimal. Petitioner spent some part of the years
in issue living rent free with a friend. When petitioner did pay
rent during the years in issue, it varied from $250 to $350 per
month, which included utilities.2 Petitioner did not eat out
very often. Petitioner's phone bill was approximately $25 per
month. Petitioner did not have any medical expenses during the
years in issue and did not have medical insurance. Petitioner
2
Petitioner also testified that this amount included
food. From this amount approximately $20 to $30 per week was
spent on groceries.
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did, however, maintain a car during the years in issue, a 1979
Ford Pinto.
Petitioner has disproven that he had the additional income
determined by respondent by showing that his expenses were in
fact less than would be inferable from the Bureau of Labor
Statistics' data and did not exceed the amounts of wages and
nonemployee compensation identified above. Accordingly, we hold
that petitioner is not liable for the additional deficiencies
determined by respondent's utilizing Bureau of Labor Statistics'
data for the years in issue.
Issue 3. Addition to Tax Under Section 6651(a)(1)
Respondent determined an addition to tax under section
6651(a)(1) for failure to file a return. Petitioner did not file
Federal income tax returns for the years in issue. Accordingly,
respondent's determination on this issue is sustained.
Issue 4. Addition to Tax Under Section 6654(a)
Respondent determined an addition to tax under section
6654(a) for underpayment of individual estimated tax. Petitioner
failed to pay estimated tax during the years in issue.
Accordingly, respondent's determination on this issue is
sustained.
For the foregoing reasons,
Decision will be entered
under Rule 155.