                        T.C. Memo. 1997-307



                      UNITED STATES TAX COURT



                   DEAN G. STEELE, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 14897-96.               Filed July 2, 1997.



     Dean G. Steele, pro se.

     Blake Ferguson and Timothy Lohrstorfer, for respondent.



                        MEMORANDUM   OPINION


     PANUTHOS, Chief Special Trial Judge:      This case was heard

pursuant to the provisions of section 7443A(b)(3) and Rules 180,

181, and 182.1   Respondent determined a deficiency in


     1
       All section references are to the Internal Revenue Code
in effect for the year at issue. All Rule references are to the
                                                        (continued...)
                                   - 2 -

petitioner's 1993 Federal income tax in the amount of $5,302 and

additions to tax pursuant to sections 6651(a) and 6654(a) in the

amounts of $1,326 and $224, respectively.      The issues for

decision are:    (1) Whether petitioner is liable for taxes on

nonemployee compensation and interest income earned by him in

1993; (2) whether petitioner is liable for additions to tax for

failure to file a return and failure to pay estimated tax; and

(3) whether petitioner is subject to a penalty under section

6673(a)(1).

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.     Petitioner resided in

Lakeland, Florida, at the time the petition was filed.

     For the year ended December 31, 1993, petitioner earned the

following amounts of nonemployee compensation from the following

sources:

          Source of Compensation                Amount

     Phoenix Home Life Mutual                     $918
     Phoenix Home Life Mutual                    5,703
     Mutual of Omaha Insurance Co.              14,399
     Protective Life Insurance Co.                 924

         Total                                  21,944

     Petitioner earned the following amounts of interest from the

following sources during the year ended December 31, 1993:


     1
     (...continued)
Tax Court Rules of Practice and Procedure.
                               - 3 -

               Source of Interest                Amount

     Publix Employee Federal Credit Union        $334
     Lexington Federal                             11

       Total                                     $345

     Petitioner did not file a Federal income tax return for the

taxable year ended December 31, 1993.

     Petitioner argues that the income tax is not a direct tax

but an excise tax.   He further suggests that the excise tax is a

tax on taxable activities and that the terms "excise tax" and

"privilege tax" are synonymous.     He concludes that respondent has

not submitted any evidence that petitioner has engaged in any

"privileged activities resulting in the requisite amount of

income to incur a tax liability for 1993".

     We begin by noting that respondent's determinations are

presumed correct, and petitioner bears the burden of proving that

those determinations are erroneous.    Rule 142(a); Welch v.

Helvering, 290 U.S. 111, 115 (1933).    Moreover, deductions are a

matter of legislative grace, and petitioner bears the burden of

proving that he is entitled to any deductions claimed.     INDOPCO,

Inc. v. Commissioner, 503 U.S. 79, 84 (1992).

     Petitioner did not file a Federal income tax return for the

taxable year 1993.   Respondent determined, and petitioner has

agreed, that petitioner earned nonemployee compensation and

interest income in 1993.   This Court, as well as other Federal

courts, has consistently and uniformly held for many years that
                               - 4 -

compensation is income.   E.g., Beard v. Commissioner, 793 F.2d

139 (6th Cir. 1986), affg. per curiam 82 T.C. 766 (1984); Coleman

v. Commissioner, 791 F.2d 68, 70 (7th Cir. 1986); Carter v.

Commissioner, 784 F.2d 1006, 1009 (9th Cir. 1986); Olson v.

United States, 760 F.2d 1003, 1005 (9th Cir. 1985); United States

v. Burton, 737 F.2d 439, 441 (5th Cir. 1984); Gattuso v.

Pecorella, 733 F.2d 709, 710 (9th Cir. 1984); Funk v.

Commissioner, 687 F.2d 264, 265 (8th Cir. 1982), affg. T.C. Memo.

1981-506; Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir.

1981), affg. T.C. Memo. 1981-122; United States v. Romero, 640

F.2d 1014, 1016 (9th Cir. 1981).

     Petitioner's arguments are basic protester rhetoric.    As the

Court of Appeals for the Fifth Circuit has remarked: "We perceive

no need to refute these arguments 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).   We need not say any more.

     Respondent's determination with respect to the deficiency

and additions to tax is sustained.

     We now consider respondent's motion for an award of a

penalty against petitioner under section 6673(a).

     As relevant herein, section 6673(a)(1) authorizes the Tax

Court to require a taxpayer to pay to the United States a penalty

not in excess of $25,000 whenever it appears that proceedings

have been instituted or maintained by the taxpayer primarily for
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delay or that the taxpayer's position in such proceeding is

frivolous or groundless.

     The record in this case convinces us that petitioner was not

interested in disputing the merits of either the deficiencies in

income taxes or the additions to tax determined by respondent in

the notice of deficiency.   Rather, the record demonstrates that

petitioner regards this case as a vehicle to protest the tax laws

of this country and espouse his own misguided views.

     A petition to the Tax Court is frivolous "if it is contrary

to established law and unsupported by a reasoned, colorable

argument for change in the law."   Coleman v. Commissioner, supra

at 71.   Petitioner's position, as set forth in the petition, as

well as in the other documents that petitioner submitted,

consists solely of tax protester rhetoric and legalistic

gibberish.   Based on well established law, petitioner's position

is frivolous and groundless.

     We are also convinced that petitioner instituted and

maintained this proceeding primarily, if not exclusively, for

purposes of delay.   Having to deal with this matter wasted the

Court's time, as well as respondent's.   Moreover, taxpayers with

genuine controversies may have been delayed.

     Finally, we are convinced that petitioner is, and was at the

time that he filed his petition, well aware of the provisions of

section 6673(a), as demonstrated by the references to that

section in correspondence between petitioner and respondent which
                                 - 6 -

was attached to respondent's motion.       Nevertheless, petitioner

chose to ignore well-established precedent of this and other

Federal courts and pursue instead his protest agenda.

     In view of the foregoing, we will exercise our discretion

under section 6673(a)(1) and require petitioner to pay a penalty

to the United States in the amount of $1,500.        Coleman v.

Commissioner, supra at 71-72; Crain v. Commissioner, supra at

1417-1418; Coulter v. Commissioner, 82 T.C. 580, 584-586 (1984);

Abrams v. Commissioner, 82 T.C. 403, 408-411 (1984).

     To reflect the foregoing,

                                         An appropriate order and

                                   decision will be entered.
