T.C. Memo. 2000-217
UNITED STATES TAX COURT
ROBERT EMMETT ROBERTSON, III, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 20076-96. Filed July 18, 2000.
P and R filed stipulations that resolved most of the
issues in this case. R conceded the issues not resolved by
the stipulations. P asks us to characterize certain items
as business income (Sched. C) rather than Sched. B interest
income. The characterization of these items will not change
P’s deficiency.
Held: We decline to hold that the items in question
are business income.
Robert Emmett Robertson III, pro se.
Robert E. Williams, Jr., for respondent.
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MEMORANDUM FINDINGS OF FACT AND OPINION
CHABOT, Judge: Respondent determined deficiencies in
individual income tax and additions to tax under sections
6651(a)(1)1 (late filing of tax return) and 6653(a) (negligence,
etc.) against petitioner as follows:
Additions to Tax
Year Deficiency Sec. 6651 Sec. 6653(a) Sec. 6653(a)(1) Sec. 6653(a)(2)
1981 $11,194 $560
1982 14,406 $3,602 $720 50% interest
on $14,406
1983 2,843 142 50% interest
on 2,843
1984 1,212 165 61 50% interest
on 1,212
1985 6,332 317 50% interest
on 6,332
After concessions2 the issue for decision is whether a
certain income item for 1981 and a certain income item for 1982
should be treated as income from trades or businesses or as
interest income, not from trades or businesses.
FINDINGS OF FACT
Some of the facts have been stipulated; the stipulations and
the stipulated exhibits are incorporated herein by this
reference.
1
Unless indicated otherwise, all section references are to
sections of the Internal Revenue Code of 1954 as in effect for
the years in issue.
2
The parties filed two sets of stipulations, with a total of
63 paragraphs, resolving numerous issues. At trial, respondent
orally conceded all the additions to tax and all the remaining
matters in dispute, except for the issue for decision in this
opinion.
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When the petition was filed in the instant case, petitioner
resided in Baltimore, Maryland.
Procedural History
The instant case was first calendared for trial at a trial
session beginning January 26, 1998. Petitioner’s January 2,
1998, continuance motion was granted because of petitioner’s
representations as to his health status.
The case was then calendared for trial at the Baltimore,
Maryland, trial session, beginning December 14, 1998. At the
December 14, 1998, trial session petitioner orally moved that the
case be continued and that the place of trial be moved from
Baltimore to Washington, D.C. Respondent did not object to this
motion. The case was continued, the place of trial was changed
to Washington, D.C., and jurisdiction of the instant case was
retained by the same division of the Court.
After a series of telephone calls to assist the parties to
either settle or sharpen the unsettled issues, on August 24,
1999, the case was calendared for trial at the Washington, D.C.,
trial session beginning November 29, 1999.
At the November 29, 1999, calendar call, petitioner asked
that the case be set for trial at the end of the 2-week session.
On December 10, 1999, the case was recalled for trial. The
parties filed two sets of stipulations with a total of 63
paragraphs. These stipulations disposed of substantially all the
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issues. Respondent then orally conceded all the additions to
tax, a 1981 partnership loss item, and a 1981 capital loss item
resulting in a carryover to 1982. Respondent’s counsel
represented that this disposed of all the issues, except that
petitioner had advised him “approximately five minutes ago” of an
intent to raise another issue.
After some discussion as to petitioner’s contentions, the
following colloquy occurred:
THE COURT: You were prepared -- today was supposed to
be the trial, so you were prepared to offer whatever
evidence you need to offer on this matter, or do you think
that the evidence in the record is sufficient to enable you
to make your argument?
MR. ROBERTSON: I think what we have entered on the
record is sufficient, yes, I do.
Petitioner then filed (1) a Motion for Continuance to Remedy
Discovery Improperly Denied Petitioner, (2) a Motion for
Continuance due to Difficulty Stipulating, (3) a Motion for
Continuance to Subpoena Witnesses Necessitated by Belated Denial
of Transcript, (4) a Motion for Continuance to Obtain Transcript
Evidence Improperly Denied Petitioner, and (5) a Motion to Set
Aside Results of 1989 Hearing Made Defective by Lack of
Transcript. After oral argument, the Court denied all of these
motions for reasons set forth in the transcript of proceedings.
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The “Dispute”
On his 1981 tax return, petitioner reported $10,513 as
income on a Schedule C under the business name Project
Identification Team. The parties’ stipulations include the
following:
15. For 1981, the petitioner received interest income
in the amount of $11,219 from Fidelity Investments.
16. For 1981, the petitioner reported as gross
receipts on his 1981 tax return, Schedule C, $10,513 of the
$11,219 interest income which he received from Fidelity
Investments.
17. For 1981, the petitioner did not report anywhere
on his 1981 tax return the remaining $706 [$11,219 - $10,513
= $706] in interest income received from Fidelity
Investments.
* * * * * * *
30. For 1981, the $10,513 reported by petitioner on
his 1981 Schedule C as gross receipts was actually interest
income.
* * * * * * *
35. For 1982, the petitioner received $12,298 in
interest income from Fidelity Investments.
OPINION
Petitioner contends that certain income from Fidelity
Investments ($10,513 for 1981, $12,298 for 1982) should be
treated as Schedule C business income rather than Schedule B
nonbusiness interest income.
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Respondent contends that petitioner has failed to carry his
burden of proof and that the matters are not properly before the
Court.
We agree with respondent’s conclusion and in part with
respondent’s analysis.
Firstly, at trial we repeatedly asked petitioner whether the
change in characterization of the income would make any
difference to the decision to be entered for any of the years in
the instant case. Neither at trial nor on brief did petitioner
direct our attention to any way in which the decision would be
affected, and the Court has not found in the record any way in
which the decision would be affected, except to possibly increase
a deficiency because of self-employment tax. Under these
circumstances, we decline to determine in the instant case
whether the income items are properly Schedule C items. See
Chevron Corp. v. Commissioner, 98 T.C. 590 (1992); LTV Corp. v.
Commissioner, 64 T.C. 589 (1975).
Secondly, petitioner has not directed our attention to, and
we have not found, any evidence in the record from which we might
fairly conclude that it is more likely than not that either of
petitioner’s Fidelity Investment income items for 1981 and 1982
is income from a trade or business then carried on by petitioner.
Thirdly, the parties’ stipulations explicitly provide that
the 1981 income item reported by petitioner as Schedule C gross
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receipts was actually interest income; the parties seem to read
the stipulation as to the 1982 item the same way. We conclude
that justice does not require us to relieve petitioner from the
effect of the parties’ stipulations. See Rule 91(e), Tax Court
Rules of Practice and Procedure; Louisiana Land & Exploration Co.
v. Commissioner, 90 T.C. 630, 648 (1988).
_____________________________
Time after time petitioner has interposed objections or new
considerations which have had the effect of delaying resolution
of the instant case and only rarely have affected the decision to
be entered. Petitioner stated that the matters dealt with in
this opinion were raised after discussion with an unnamed tax
adviser. Notwithstanding petitioner’s frequent protestations
about his inability to understand the tax laws and our agreement
with him that much of the Internal Revenue Code would challenge
an Einstein, we are satisfied from our observations of petitioner
that he has a reasonably good understanding of the essentials of
those Code provisions that apply to him. Under these
circumstances, if petitioner proceeds in a like manner in a
future case, he should understand that the Court may be inclined
to give serious consideration to imposition of a penalty under
section 6673. Petitioner may not be then able to hide behind the
asserted advice of his unnamed tax adviser.
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To give effect to the parties’ stipulations and respondent’s
concessions,
Decision will be entered
under Rule 155.