                         T.C. Memo. 2006-91



                       UNITED STATES TAX COURT



                LAWRENCE HOROWITZ, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 3422-05, 3854-05.     Filed May 2, 2006.



     Lawrence Horowitz, pro se.

     Donald A. Glasel, for respondent.



                         MEMORANDUM OPINION


     COHEN, Judge:    Respondent determined deficiencies of $7,515,

and $13,352 in petitioner’s Federal income taxes for 2001 and

2002, respectively.   Respondent also determined additions to tax

of $1,690.20 and $2,766.37 under section 6651(a)(1) and $297.24

and $406.91 under section 6654 for 2001 and 2002, respectively.
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     Respondent also determined additions to tax under section

6651(a)(2).   In each of the answers, respondent conceded the

additions to tax under section 6651(a)(2) and, accordingly,

alleged increases in the additions to tax under section

6651(a)(1).   The issue remaining for decision is whether a

penalty should be awarded to the United States under section

6673.   Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

                            Background

     All of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioner resided in Calverton, New York, at the time that he

filed his petitions.   The petitions alleged no facts showing

errors in respondent’s determinations but set forth frivolous tax

protester arguments, including that “petitioner could find no

statute or regulation making petitioner liable for an income

tax”.   In his petitions, petitioner admitted that he failed to

file Federal income tax returns for 2001 and 2002.

     After these cases were set for trial, respondent sent to

petitioner requests for admissions for each year, setting forth

the items of income received by petitioner, petitioner’s failure

to file income tax returns for either year, and petitioner’s
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failure to pay estimated taxes for either year.   The items of

income identified included wages, interest, and dividends

reported by third-party payors and comprising the unreported

income determined in the notices of deficiency for 2001 and 2002.

The requests for admissions, however, mischaracterized certain

income from sale of stocks and/or bonds as “ordinary income”.    At

the time of trial, the parties stipulated to all of the items of

income received by petitioner, and respondent conceded that the

receipts from sale of stocks and/or bonds were capital gains.

However, because petitioner failed to present any information

concerning his holding period or basis in the stocks or bonds

sold, the gross proceeds are includable in petitioner’s income as

short-term capital gains.

     Petitioner’s frivolous claims that his income is not subject

to tax were repeated in filings in these cases subsequent to the

petitions, including motions to continue in order to conduct

frivolous discovery, and in his trial memorandum.   Petitioner was

warned by respondent and by the Court prior to trial that his

arguments were frivolous and that a penalty might be imposed.

Petitioner persisted in making his frivolous arguments at the

time of trial.

                            Discussion

     Petitioner’s arguments that the items of income that he

received are not taxable have long been recognized as stale,
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groundless, and frivolous.    Section 1 imposes an income tax on

petitioner’s taxable income.    Section 63 defines taxable income

as gross income minus deductions.    Section 61 defines gross

income as including wages and the other categories of receipts

admitted by petitioner.   Arguments to the contrary have been

consistently rejected and characterized as frivolous in

innumerable cases.   No further discussion of them is merited.

See Connor v. Commissioner, 770 F.2d 17, 20 (2d Cir. 1985); Crain

v. Commissioner, 737 F.2d 1417, 1418 (5th Cir. 1984); Cabirac v.

Commissioner, 120 T.C. 163, 167 (2003).    Petitioner’s arguments

concerning respondent’s procedures are similarly frivolous and

lacking in merit.

     Section 6673 provides:

     SEC. 6673(a).   Tax Court Proceedings.--

          (1) Procedures instituted primarily for delay,
     etc.--Whenever it appears to the Tax Court that--

               (A) proceedings before it have been
          instituted or maintained by the taxpayer primarily
          for delay,

               (B) the taxpayer’s position in such
          proceeding is frivolous or groundless, or

               (C) the taxpayer unreasonably failed to
          pursue available administrative remedies,

     the Tax Court, in its decision, may require the
     taxpayer to pay to the United States a penalty not in
     excess of $25,000.

Notwithstanding prior warnings, petitioner has been undeterred.

A penalty shall be awarded to the United States in each of these
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consolidated cases in the amount of $5,000, for a total of

$10,000.

     To reflect any recomputation required as a result of

recharacterizing petitioner’s gains from sales of stocks and

bonds as short-term capital gains,


                                           Decisions will be entered

                                      under Rule 155.
