                      T.C. Memo. 1999-361



                     UNITED STATES TAX COURT



               DOUGLAS J. CRAWFORD, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 14736-97.             Filed October 29, 1999.



     Douglas J. Crawford, pro se.

     Gretchen A. Kindel, for respondent.



                       MEMORANDUM OPINION

     WOLFE, Special Trial Judge:    Respondent determined

deficiencies in petitioner's Federal income tax for the taxable

years 1991 and 1993 and additions to tax for failure to file
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timely Federal income tax returns pursuant to section 6651(a)(1)1

as follows:

                                         Additions to Tax
           Year        Deficiency        Sec. 6651(a)(1)

           1991          $3,074             $106.50
           1993           2,156              539.00

     Following concessions by respondent,2 the issues for

decision are:     (1) Whether the Tax Court has jurisdiction to

consider petitioner's constitutional objections; (2) whether

assignment of a case to a Special Trial Judge pursuant to section

7443A(b)(3) violates petitioner's constitutional rights; (3)

whether unemployment compensation received by petitioner in 1991

should be included in petitioner's 1991 gross income; (4) whether

petitioner is liable for an addition to tax pursuant to section

6651 for failing to file a Federal income tax return for 1991;

and (5) whether petitioner is liable for a penalty under section

6673(a).

     The evidence in this case consists of a stipulation of facts

with the attached exhibits (incorporated herein by reference) and




1
     All section references are to the Internal Revenue Code in
effect for the tax years in issue, unless otherwise indicated.
All Rule references are to the Tax Court Rules of Practice and
Procedure.
2
     Respondent has conceded that petitioner is not liable for
any deficiency in income tax or addition to tax for the taxable
year 1993. Respondent also conceded that petitioner used the
standard deduction in computing his 1990 Federal income tax and
that petitioner's refund of State income taxes is not includable
in petitioner's 1991 income.
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oral testimony and exhibits admitted at trial.   When the petition

was filed, petitioner lived in San Diego, California.

                           Background

      Petitioner failed to file an income tax return for the year

1991.   Respondent determined a deficiency in petitioner's 1991

Federal income tax of $3,074 using information provided by third

parties.   In the notice of deficiency, respondent determined that

petitioner failed to report wages, interest, and dividends of

$23,714 and taxable unemployment compensation of $2,280.

Petitioner claims that $570 of the unemployment compensation he

received in 1991 relates to the 1990 taxable year and should not

be included in his 1991 gross income.    Petitioner also objects to

the assignment of this case to a Special Trial Judge for hearing

and decision and asserts that the assignment violates his

constitutional rights.   Petitioner further asserts that the Tax

Court is jurisdictionally barred from deciding constitutional

questions.

                            Discussion

1.   Constitutional Arguments

      Petitioner's constitutional arguments are wholly frivolous.

      Petitioner asserts that the Tax Court is unconstitutional

because it was established pursuant to the provisions of Article

I of the U.S. Constitution rather than Article III.   This

argument is wholly without merit.   It is well established that

functions such as those performed by the Tax Court can be
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entrusted to Article I courts.    See Freytag v. Commissioner, 501

U.S. 868 (1991); Redhouse v. Commissioner, 728 F.2d 1249 (9th

Cir. 1984), affg. 79 T.C. 355 (1982); Nash Miami Motors, Inc. v.

Commissioner, 358 F.2d 636 (5th Cir. 1966), affg. T.C. Memo.

1964-230; Rowlee v. Commissioner, 80 T.C. 1111 (1983).

Additionally, the Court of Appeals for the Ninth Circuit, to

which an appeal in this case would normally lie, has stated:    "we

have often upheld Tax Court decisions which were based on a

constitutional inquiry."    Rager v. Commissioner, 775 F.2d 1081,

1083 (9th Cir. 1985), affg. T.C. Memo. 1984-563.

     Petitioner further argues that he is denied due process of

law and equal protection by being required to pay the deficiency

as a precondition to litigating in the U.S. District Court.    A

taxpayer has alternative avenues of judicial review available to

contest the Commissioner's determination of a deficiency in tax.

The taxpayer may either pay the deficiency and sue for a refund

in the District Court or the Claims Court, or the taxpayer may

withhold payment and petition the Tax Court.    In either case, a

decision of the trial court may be reviewed in the Court of

Appeals and ultimately in the Supreme Court.    These procedures

satisfy due process.   See Redhouse v. Commissioner, supra;

Stonecipher v. Bray, 653 F.2d 398 (9th Cir. 1981); Willmut Gas &

Oil Co. v. Fly, 322 F.2d 301 (5th Cir. 1963).

     Petitioner has voluntarily chosen to have his dispute

resolved in this Court.    This Court operates pursuant to statute,
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and petitioner is subject to the statutory rules, including the

Special Trial Judges' authority to hear and decide cases under

section 7443A(b)(1), (2), and (3).      See Freytag v. Commissioner,

supra at 882.

2.   Determination of Deficiency

      Petitioner failed to file an income tax return for 1991.        In

determining petitioner's deficiency, respondent reconstructed

petitioner's income using information provided by third parties,

e.g., Form W-2, Form 1099-INT, and Form 1099-UC.     Petitioner does

not dispute the source or amount of income set forth in the

notice of deficiency.   Petitioner has stipulated to receiving the

amounts of income set forth in respondent's notice of deficiency.

Petitioner's contention is that $570 of the unemployment

compensation he received in 1991 relates to the year 1990 and

should not be included in his 1991 gross income.

      In reconstructing petitioner's 1991 income, respondent used

the cash receipts and disbursement method.     If no method of

accounting has been regularly used by the taxpayer, the

computation of taxable income shall be made under such method as,

in the opinion of the Secretary, clearly reflects income.       See

sec. 446(b).    Where a taxpayer keeps no established books or any

regular system of accounting, his income is to be recomputed on

the cash receipts and disbursement method.     See Kotmair v.

Commissioner, 86 T.C. 1253, 1258 (1986).     Under the cash receipts

and disbursement method, all items which constitute gross income
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are included for the taxable year in which they are actually or

constructively received.   See sec. 1.446-1(c)(1)(i), Income Tax

Regs.   Accordingly, unemployment compensation received by

petitioner in 1991 is properly includable in petitioner's 1991

gross income.

3.   Section 6651 Addition to Tax

      Section 6651(a) imposes an addition to tax for a taxpayer's

failure to file a required return on or before the specified

filing date, including extensions.        The addition to tax is

inapplicable, however, if the taxpayer shows that the failure to

file the return was due to reasonable cause and not willful

neglect.   See sec. 6651(a)(1).    To prove "reasonable cause",

taxpayers must show they exercised ordinary business care and

prudence and were still unable to file the return within the

statutorily prescribed time.   See Crocker v. Commissioner, 92

T.C. 899, 913 (1989).   Petitioner has not contradicted

respondent's assertion that he failed to file an income tax

return, nor has petitioner claimed that he had reasonable cause

for failing to file an income tax return.        Petitioner has not

provided this Court with any legal or factual justification for

not filing an income tax return for 1991.        We, therefore, hold

that petitioner is liable for the addition to tax for delinquent

filing as determined by respondent.
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4.   Section 6673(a)(1) Penalty

      Section 6673(a)(1) authorizes this Court to award a penalty

not in excess of $25,000 when proceedings have been instituted or

maintained primarily for delay, or where the taxpayer's position

is frivolous or groundless; i.e., it is contrary to established

law and unsupported by a reasoned, colorable argument for a

change in the law.   See Coleman v. Commissioner, 791 F.2d 68, 71

(7th Cir. 1986); Talmage v. Commissioner, T.C. Memo. 1996-114,

affd. without published opinion 101 F.3d 695 (4th Cir. 1996).        In

our view, under all the circumstances here, including the

concessions by respondent, a penalty in this case is not

appropriate.

      To reflect concessions,

                                          Decision will be entered

                                  under Rule 155.
