T.C. Memo. 2011-130
UNITED STATES TAX COURT
EDWARD E. SLINGSBY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 30935-09. Filed June 13, 2011.
Edward E. Slingsby, pro se.
Robyn R. Gilliom, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
VASQUEZ, Judge: Respondent determined a $2,793 deficiency
in petitioner’s 2007 Federal income tax based on unreported
income. The sole issue for decision is whether petitioner is
liable for the deficiency.1
1
Petitioner argues for the first time in his posttrial
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FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulations of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Illinois when he filed the petition.
In 2007 petitioner worked for Skokie Motor Sales, Inc.
(Skokie). Skokie reported on Form W-2, Wage and Tax Statement,
that it had paid $28,598 in wages to petitioner in 2007 and had
withheld Federal income tax. In addition, Interactive Brokers,
L.L.C. (Interactive), petitioner’s investment broker, reported on
Form 1099-DIV, Dividends and Distributions, that it had paid $57
in qualified dividends to petitioner in 2007. Petitioner does
not dispute receiving these payments.
In 2007 petitioner paid mortgage interest of $4,658.82 and
real estate taxes of $2,190.63 for his primary residence in
Illinois. He also paid mortgage interest of $7,694.81 and real
estate taxes of $3,707.34 for a second home in Michigan. In
1
(...continued)
brief that he is entitled to itemized deductions for real estate
taxes and mortgage interest payments. However, as will be
discussed in our findings of fact, petitioner elected the
standard deduction on his 2007 Federal income tax return and he
did not assert a claim for deductions in his petition.
Accordingly, petitioner is deemed to have waived this argument
and the deductions are not at issue in this case. See Rule
34(b)(4).
Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code) in effect for the year in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
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addition, petitioner paid mortgage interest of $6,484.64 on a
home equity line of credit.
Petitioner timely filed Form 1040, U.S. Individual Income
Tax Return, for 2007, on which he reported zero income from wages
or qualified dividends and zero taxable income.2 He checked the
box for “single” filing status and claimed the corresponding
standard deduction--he did not claim any deductions for real
estate taxes or mortgage interest payments. Petitioner reported
$2,187.76 as Federal income tax withheld from Forms W-2 and 1099
and requested a refund in that amount.
OPINION
I. Deficiency
Section 61(a) defines gross income as all income from
whatever sources derived, including compensation for services and
dividends.
As a general rule, the taxpayer bears the burden of proving
the Commissioner’s deficiency determinations incorrect. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Section
7491(a), however, provides that if the taxpayer introduces
credible evidence and meets certain other prerequisites, the
Commissioner shall bear the burden of proof with respect to
factual issues relating to the taxpayer’s liability for a tax
2
Petitioner reported $1,306 of gross income from
unemployment compensation.
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imposed under subtitle A or B of the Code. Since petitioner has
failed to introduce credible evidence, section 7491(a) does not
apply. See Davenport v. Commissioner, T.C. Memo. 2009-248.
Petitioner does not dispute receiving the wage and dividend
income determined by respondent and shown in the notice of
deficiency. Rather, petitioner argues, inter alia, that earnings
he received from his employer for performing services are not
taxable because Skokie is not a trade or business paying wages as
contemplated by Congress and that the Form W-2 Skokie issued is
invalid as a matter of law.3
In his petition, at trial, and on brief, petitioner advanced
shopworn arguments characteristic of tax-protester rhetoric that
have been universally rejected by this and other courts. See
Wilcox v. Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg. T.C.
Memo. 1987-225; Sawukaytis v. Commissioner, T.C. Memo. 2002-156,
affd. 102 Fed. Appx. 29 (6th Cir. 2004). The U.S. Court of
Appeals for the Seventh Circuit, the court to which appeal in
this case would lie, has classified one of petitioner’s exact
arguments, that the term “employee” for purposes of section
3401(c) does not include privately employed wage earners, as “a
preposterous reading of the statute.” United States v. Latham,
754 F.2d 747, 750 (7th Cir. 1985). We shall not painstakingly
3
We rejected similar arguments by petitioner with respect
to the collection of his tax liabilities for 1999 through 2004 in
Slingsby v. Commissioner, T.C. Memo. 2011-3.
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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). Accordingly, we conclude that
petitioner is liable for the deficiency.
II. Section 6673(a)(1) Penalty
Section 6673(a)(1) authorizes the Court to impose a penalty
not to exceed $25,000 if the taxpayer took frivolous or
groundless positions in the proceeding or instituted the
proceeding primarily for delay. A taxpayer’s position is
“frivolous” if it is “contrary to established law and unsupported
by a reasoned, colorable argument for change in the law.”
Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986).
We warned petitioner that his arguments were frivolous and
have been universally rejected by this and other courts. We
further advised petitioner that the Court may impose a penalty of
up to $25,000 if he were to proceed with such arguments.
Although respondent has not moved for a section 6673(a)(1)
penalty and we refrain from imposing the penalty at this time, we
take this opportunity to warn petitioner that we may impose this
penalty if he returns to the Court and proceeds in a similar
manner in the future. See Pierson v. Commissioner, 115 T.C. 576
(2000).
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In reaching all of our holdings herein, we have considered
all arguments made by the parties, and to the extent not
mentioned above, we conclude they are irrelevant or without
merit.
To reflect the foregoing,
Decision will be entered
for respondent.