                     T.C. Summary Opinion 2001-63



                       UNITED STATES TAX COURT



                ELLIOT VIRGIL WILKERSON, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket Nos. 429-00S, 3379-00S.           Filed April 30, 2001.


     Elliot Virgil Wilkerson, pro se.

     Robert W. West, for respondent.



     COUVILLION, Special Trial Judge:    These consolidated cases

were heard pursuant to section 7463 in effect when the petitions

were filed.1    The decisions to be entered are not reviewable by

any other court, and this opinion should not be cited as

authority.




     1
          Unless otherwise indicated, section references
hereafter are to the Internal Revenue Code in effect for the
years at issue.
                                - 2 -


     Respondent determined deficiencies of $714 and $8,804 in

petitioner's Federal income taxes for 1997 and 1998,

respectively.

     The sole issue for decision is whether, by virtue of an

agreement between petitioner's employer and the labor union of

which petitioner was a member, the compensation paid to

petitioner for the 2 years at issue is excludable from income

under section 61(a).

     Some of the facts were stipulated.   Those facts and the

accompanying exhibits are so found and are incorporated herein by

reference.   Petitioner's legal residence at the time the

petitions were filed was Dothan, Alabama.

     During the years at issue, petitioner was an equipment

operator for Great Northern Nekoosa Corp., a subsidiary of

Georgia Pacific Corp. (the company) at a wood-chipping mill known

as the Cedar Springs operation.   Petitioner began his work with

the company in 1978.    He was a member of Local 1703 of the United

Paperworkers International Union, AFL-CIO (the union).    There was

a collective bargaining agreement between the company and the

union.

     Sometime prior to the years at issue, the company made plans

to construct a new mill at Cedar Springs and considered having

the new mill operated by contract employees who would not be

members of the union.   As expected, the union vehemently opposed
                               - 3 -


such plans; however, after several conferences and meetings

between the union and the company, an agreement was reached that

would allow union workers to operate the new mill.   A memorandum

of understanding (the memorandum) was entered into between the

company and the two unions that represented the employees.    In

the memorandum, the employees agreed that there would be "no

grievances, arbitrations, NLRB charges, or any other litigation

surrounding the new longwood chipping operations."   This

provision represented a forfeiture of rights that the employees

had in the collective bargaining agreement.   The new mill,

accordingly, was staffed by the company's union employees,

including petitioner.   For the 2 years at issue, petitioner's

employment was at the new mill and was subject to the terms of

the memorandum.

     For the year 1997, petitioner's wages with the company were

$60,300, and, for 1998, his wages were $60,461.   On his Federal

income tax return for 1997, petitioner included the $60,300 as

income; however, he later filed an amended return for 1997 in

which he excluded from income the $60,300 in wages he earned with

the company.   On his Federal income tax return for 1998,

petitioner did not include as income any wage or salary income,

including the $60,461 paid to him by the company.
                               - 4 -


     Petitioner's 1997 amended return was not processed by the

Internal Revenue Service as a return but was instead treated as a

claim for refund, which was disallowed.

     In the notice of deficiency for 1998, respondent determined

that the $60,461 petitioner earned from the company during 1998

constituted salary or wage income.     In the notice of deficiency

for 1997, respondent determined that petitioner failed to include

in income a State income tax refund of $2,540 petitioner received

that year.

     Petitioner conceded the State income tax refund for 1997 but

contends he made an overpayment of taxes for 1997 because of his

inclusion of the wages he received from the company that year.

For 1998, petitioner contends the wages he received that year

from the company are not includable in gross income.

     Petitioner contends that, because he and the other employees

of the company forfeited certain rights they otherwise possessed

as employees under the collective bargaining agreement, they were

reduced to what he referred to as "nonentities", and, as such,

their income is not taxable.   Petitioner argues that he and his

fellow employees were reduced to a status "less than all other

taxpayers" and, therefore, should not be liable for Federal

income taxes.

     Petitioner cited no authority for his position, and, indeed,

there is no such authority to support his position.
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     Section 61 provides that gross income includes "all income

from whatever source derived," unless otherwise provided.    The

Supreme Court has consistently given this definition of gross

income a liberal construction "in recognition of the intention of

Congress to tax all gains except those specifically exempted."

Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 430 (1955); see

also Roemer v. Commissioner, 716 F.2d 693, 696 (9th Cir. 1983),

revg. 79 T.C. 398 (1982) (all realized accessions to wealth are

presumed taxable income, unless the taxpayer can demonstrate that

an acquisition is specifically exempted from taxation).

Moreover, section 1.61-2(a)(1), Income Tax Regs., provides that

"wages, salaries, commissions paid salesmen * * * are income to

the recipients unless excluded by law".

     The amounts petitioner received from his employer

represented payments for his services.    Those amounts represented

compensation for services rendered.     Those amounts are includable

in gross income.    Whatever rights petitioner surrendered or

forfeited in his employment relationship with the company have no

bearing on the tax consequences of the amounts paid to petitioner

for his services.   Petitioner's argument, therefore, is rejected,

and respondent is sustained.
                             - 6 -


    Reviewed and adopted as the report of the Small Tax Case

Division.



                                     Decisions will be entered

                             for respondent.
