T.C. Memo. 1998-425
UNITED STATES TAX COURT
RICHARD J. AND ANNA J. SINSIGALLI, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
Docket Nos. 18130-97, 13107-98. Filed November 25, 1998.
Richard J. and Anna J. Sinsigalli, pro se.
Richard A. Stone, for respondent.
MEMORANDUM OPINION
POWELL, Special Trial Judge: These consolidated cases were
heard pursuant to the provisions of section 7443A(b)(3) and Rules
180, 181, and 182.1
1
Unless otherwise indicated, 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.
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Respondent determined deficiencies in petitioners' 1995 and
1996 Federal income taxes in the amounts of $2,209 and $2,591,2
respectively. Respondent also determined an accuracy-related
penalty under section 6662(a) for 1995 in the amount of $442. At
the time the petitions were filed, petitioners resided in Forest
Hill, Maryland.
The issues are whether petitioners are entitled to
miscellaneous deductions in excess of those allowed by respondent
for 1995, whether wages received by petitioner(s) in 1995 and
1996 are taxable, and whether petitioners are liable for an
accuracy-related penalty pursuant to section 6662(a) for 1995.
The facts may be summarized as follows. During the years in
issue, petitioner Richard J. Sinsigalli was employed by Frederick
Ward Associates as a design engineer. For the taxable year 1995,
petitioners filed a joint Federal income tax return in which they
claimed itemized deductions in the amount of $31,332.3 Upon
examination, respondent disallowed $16,221 claimed as
miscellaneous deductions.
For the taxable year 1996, petitioners submitted a Form 1040
with "0.00" shown for their income and deductions. Petitioners
2
The first page of the notice of deficiency for 1996
reflects a deficiency in the amount of $2,951. This apparently
was due to a transposition error. The computation page of the
notice shows a deficiency amount of $2,591, and, at trial,
respondent verified that the lower amount was correct.
3
Figures are rounded to the nearest dollar.
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claimed an overpayment in the amount of $495 for withholding
payments. Respondent issued a notice of deficiency based on a
taxable income in the amount of $29,058 and deductions for
personal exemptions and a standard deduction in the respective
amounts of $5,100 and $6,700.
On petitioners' motion, these cases were consolidated for
trial, briefing, and opinion and calendared for trial at the
Court's Trial Session commencing October 5, 1998, in Baltimore,
Maryland. At trial, a stipulation of facts was submitted in each
case signed by respondent and both petitioners. Petitioner
Richard J. Sinsigalli (petitioner) argued petitioners' position.
Petitioners do not dispute that the wages were received, nor do
petitioners dispute respondent's disallowance of the
miscellaneous deductions. Rather, they argue that wages are not
taxable income.
Discussion
Section 61(a)(1) defines "gross income * * * [to mean] all
income from whatever source derived, including (but not limited
to) * * * [c]ompensation for services". "Wages * * * are income
to the recipients". Sec. 1.61-2(a)(1), Income Tax Regs.
Moreover, this Court and all others have consistently rejected
the argument in various forms that wages are not taxable. See,
e.g., Rowlee v. Commissioner, 80 T.C. 1111, 1119-1122 (1983).
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With respect to the disallowance of miscellaneous deductions
pertaining to 1995, petitioners have the burden of establishing
that they are entitled to the deductions claimed. Rule 142;
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). After
this Court rejected the argument that wages were not income,
petitioner was given ample opportunity to present argument and
evidence disputing respondent's determinations. Petitioner
refused. We, therefore, sustain respondent's determinations.
Respondent determined that petitioners are liable for an
accuracy-related penalty under section 6662(a) for 1995 for
negligence. Section 6662(a) provides that "there shall be added
to the tax an amount equal to 20 percent of the portion of the
underpayment to which this section applies." Section 6662
applies to "the portion of any underpayment which is attributable
to", inter alia, negligence or disregard of the rules or
regulations. Sec. 6662(b)(1). Negligence "includes any failure
to make a reasonable attempt to comply with the provisions * * *
[of the Internal Revenue Code], and the term 'disregard' includes
any careless, reckless, or intentional disregard." Sec. 6662(c).
Petitioners again have the burden of establishing that the
determination of the penalty was erroneous. Tweeddale v.
Commissioner, 92 T.C. 501, 505 (1989). Petitioners presented no
evidence or argument concerning respondent's determination.
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Respondent's determination of the accuracy-related penalty under
section 6662(a) for 1995 is sustained.
Section 6673(a) provides that, if the Court determines that
the position of the taxpayer is frivolous or groundless or that
the taxpayer instituted or maintained the proceeding primarily
for delay, the Court can award a penalty in an amount not in
excess of $25,000. While we eschew awarding a penalty in these
cases, if petitioner persists in his argument that wages are not
income or other similarly frivolous arguments, we shall not be so
constrained the next time.
Decisions will be
entered for respondent.