                       T.C. Memo. 2004-137



                     UNITED STATES TAX COURT



                 LYNDON D. SINELE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7801-02.            Filed June 10, 2004.


     Jerrold N. Arnowitz (specially recognized) and John L.

Hause (specially recognized), for petitioner.1

     D. Sean McMahon, for respondent.


     1
        At calendar call, Mr. Arnowitz and Mr. Hause advised the
Court that they had just been retained by petitioner. The Court
asked if they were admitted to practice before the Court. Mr.
Arnowitz and Mr. Hause advised the Court that although they were
admitted to practice in Massachusetts, they were in the process
of being admitted to the Court. Between calendar call and the
trial, both Mr. Arnowitz and Mr. Hause were admitted to practice
before the Court. At trial, Mr. Hause appeared on behalf of
petitioner.

     Subsequent to the trial, petitioner filed two motions to
extend time to file his opening brief. In the motions, he stated
that he could no longer afford Mr. Arnowitz and Mr. Hause and
they no longer represented him. It is unclear, however, whether
Mr. Arnowitz and Mr. Hause represented petitioner during the
briefing period as Mr. Arnowitz and Mr. Hause have not filed a
motion to withdraw as counsel and no briefs were filed by
petitioner.
                                 - 2 -


             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:     Respondent determined a $7,411 deficiency

in and a $1,457 penalty pursuant to section 66622 on petitioner’s

2000 Federal income tax.    After concessions,3 the issues for

decision are:   (1) Whether during 2000 petitioner received

$29,490.83 in income from Dynamex Operations East, Inc.

(Dynamex); and (2) whether petitioner is liable for the section

6662 penalty for 2000.

                           FINDINGS OF FACT

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

The oral stipulation of facts and the referenced exhibits are

incorporated herein by this reference.    At the time he filed the

petition, petitioner resided in Claycomo, Missouri.

     During 2000, petitioner worked for Professional Express,

Inc. (PEI), and Dynamex.    During 2000, petitioner received wage

income of $1,414.56 from PEI, and he received income of




     2
        Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
     3
        Petitioner conceded that during 2000 he received
$1,414.56 in wage income from Professional Express, Inc. At
trial, petitioner failed to address respondent’s self-employment
tax determination with respect to income from Dynamex, other than
to dispute receiving the amount subject to self-employment tax.
Petitioner failed to file any briefs. Accordingly, the
application of self-employment tax is computational.
                               - 3 -

$29,490.83 from Dynamex in exchange for services he performed for

Dynamex as an independent contractor.

     Petitioner timely filed his Federal income tax return for

2000 (2000 return).   Petitioner’s 2000 return contained all zeros

except for $125 listed as Federal income tax withheld, total

payments, amount overpaid, and amount he wanted refunded.

Attached to his 2000 return was (1) a Form W-2, Wage and Tax

Statement, from PEI listing $1,414.56 in wages, (2) a Form 1099-

MISC, Miscellaneous Income, from Dynamex listing $29,490.83 in

nonemployee compensation (Form 1099), and (3) a 2-page document

containing frivolous and groundless arguments regarding why he

was not subject to tax.

     On or about June 4, 2001, in response to a letter from

respondent regarding his 2000 tax year, petitioner mailed

respondent a 6-page letter containing frivolous and groundless

arguments regarding why he was not subject to tax.

     Respondent issued petitioner a notice of deficiency

determining a $7,411 deficiency and a $1,457 section 6662 penalty

for 2000.   The deficiency and penalty were based on the amounts

PEI and Dynamex paid to petitioner in 2000 and corresponding

adjustments for self-employment tax.

     Petitioner filed a petition and an amended petition

contesting respondent’s determination.   Petitioner designated

Boston, Massachusetts, as the place of trial.
                                - 4 -

     Respondent made several attempts to contact petitioner in

advance of trial, including sending a Branerton letter, in order

to stipulate facts and documents for trial.   In response to

respondent’s Branerton letter, petitioner advised respondent that

he would not be available to meet until the day of calendar call.

Petitioner later advised respondent that he would be in Boston on

the Friday before calendar call to meet with respondent and

discuss the stipulation of facts.   Petitioner did not show up for

this meeting.

     Petitioner first contacted Mr. Arnowitz and Mr. Hause the

Thursday before calendar call, and he retained them to represent

him the next day (the Friday before calendar call).

                               OPINION

I.   The Deficiency

     A.   Burden of Proof

     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 a 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 liability of the taxpayer for a tax imposed under

subtitle A or B of the Code.
                                - 5 -

     At calendar call, petitioner for the first time disputed

receiving the income from Dynamex or attaching the Form 1099 to

his 2000 return.    At trial, petitioner did not present evidence

with respect to any factual issue relevant to ascertaining his

liability for income tax for 2000.4     Petitioner merely objected

to documents respondent wished to submit, and we received, as

evidence.    As petitioner presented no credible evidence, he bears

the burden of proof.5

     B.     Gross Income

     Petitioner conceded receiving wage income from PEI.     The

issue is whether petitioner received gross income from Dynamex.

     Section 61 defines gross income as all income from whatever

source derived.    Gross income includes compensation for services.

Sec. 61(a)(1).

     Respondent submitted petitioner’s 2000 return, which

included the Form 1099 that was attached to the 2000 return

(listing $29,490.83 in income paid to petitioner from Dynamex),

and business records of Dynamex establishing the payments Dynamex



     4
        Petitioner was not present at the calendar call or trial.
The four oral stipulations of fact Mr. Hause agreed to at trial
were: (1) Petitioner’s Social Security number and petitioner was
a citizen of the United States; (2) petitioner’s residence at the
time he filed the petition; (3) petitioner timely filed his 2000
return; and (4) during 2000 petitioner received $1,414.56 in wage
income from PEI.
     5
        We note, however, that our resolution of this issue does
not depend on which party bears the burden of proof.
                                - 6 -

made to petitioner in 2000.    The documentary evidence establishes

that Dynamex paid petitioner $29,490.83 in nonemployee

compensation in 2000.    Petitioner’s claim that he did not receive

this income is without merit.    Accordingly, we sustain

respondent’s deficiency determination.

II.   Section 6662 Penalty

      Pursuant to section 6662(a), a taxpayer may be liable for a

penalty of 20 percent on the portion of an underpayment of tax

due to negligence or disregard of rules or regulations or a

substantial understatement of income tax.     Sec. 6662(b).    An

“understatement” is the difference between the amount of tax

required to be shown on the return and the amount of tax actually

shown on the return.    Sec. 6662(d)(2)(A).   A “substantial

understatement” exists if the understatement exceeds the greater

of (1) 10 percent of the tax required to be shown on the return

for a taxable year or (2) $5,000.    See sec. 6662(d)(1).

      Section 7491(c) provides that the Commissioner shall bear

the burden of production with respect to the liability of any

individual for penalties.    The Commissioner, however, does not

have the obligation to introduce evidence regarding reasonable

cause or substantial authority.     Higbee v. Commissioner, 116 T.C.

438, 446 (2001).   The evidence establishes that petitioner’s

understatement for 2000 exceeds the greater of 10 percent of the
                               - 7 -

tax required to be shown on the 2000 return or $5,000.

Accordingly, respondent has met his burden of production.

     Petitioner did not present any evidence indicating

reasonable cause or substantial authority.    Secs. 6662, 6664.

Accordingly, we sustain respondent’s penalty determination.

III. Section 6673 Penalty

     Section 6673(a)(1) authorizes this Court to require a

taxpayer to pay to the United States a penalty not to exceed

$25,000 if the taxpayer took frivolous positions in the

proceedings or instituted the proceedings primarily for delay.

     It is clear to the Court that petitioner has instituted and

maintained this proceeding primarily for delay.    The Court

granted several requests to extend the time for petitioner to

perform certain actions including the time to file an amended

petition and two motions to extend time to file opening brief.

Notably, petitioner never filed any briefs.

     Additionally, petitioner refused to meet with respondent in

advance of trial to prepare his case for trial.    He designated

Boston, Massachusetts, as the place of trial even though he lived

in Missouri, and he did not appear at trial.    He presented a new

theory of the case at calendar call (petitioner denied receiving

money from Dynamex or attaching a Form 1099 to his 2000 return),

and made respondent obtain new evidence on the eve of trial to

rebut the new theory.   We believe this new theory was contrived
                                 - 8 -

by petitioner to delay trial by attempting to make it difficult

for respondent to be ready to proceed.

     Accordingly, we shall impose a penalty of $5,000 pursuant to

section 6673.

     To reflect the foregoing,

                                           Decision will be entered

                                      for respondent.
