                         T.C. Memo. 2009-138



                       UNITED STATES TAX COURT



                  ARNOLD H. PUGH, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18062-07.               Filed June 15, 2009.



     Arnold H. Pugh, pro se.

     Diana P. Hinton, for respondent.



                         MEMORANDUM OPINION


     VASQUEZ, Judge:    This case is before the Court on

respondent’s motion for summary judgment and to impose a penalty

under section 6673.    All section references are to the Internal

Revenue Code, and all Rule references are to the Tax Court Rules

of Practice and Procedure.
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     After concessions,1 the issues for decision are whether

petitioner is liable for the deficiency for 2004, and whether

petitioner engaged in behavior warranting the imposition of a

penalty pursuant to section 6673(a).

                            Background

     At the time he filed the petition, petitioner resided in New

York.

     On Form W-2, Wage and Tax Statement, Verizon Services Corp.

reported to respondent that it paid $107,465 in wages to

petitioner in 2004.   On Form 1099-B, Proceeds From Broker and

Barter Exchange Transactions, National Financial Services L.L.C.

reported to respondent that petitioner received $9,361 in

proceeds from the sale of stocks and bonds in 2004.    On Form

1099-DIV, Dividends and Distributions, Verizon Communications

reported to respondent that it paid petitioner a $98 ordinary

dividend in 2004.   On Form 1099-INT, Interest Income, National

Financial Services L.L.C. reported to respondent that it paid

petitioner $2 interest income in 2004.    On Form 1099-INT,

JPMorgan Chase Bank NA reported to respondent that it paid

petitioner $38 interest income in 2004.



     1
        Respondent conceded that the $5,345 New York State tax
refund petitioner received in 2004 is not taxable income and that
petitioner is not liable for the sec. 6654(a) addition to tax.
In the petition petitioner failed to assign error to, and thereby
conceded, the additions to tax respondent determined under sec.
6651(a). Rule 34(b)(4).
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     On January 19, 2007, petitioner submitted a Form 1040, U.S.

Individual Income Tax Return, for 2004.   On his Form 1040

petitioner included $107,465 of wages, $42 of taxable interest

income, and $198 of ordinary dividends.   Petitioner did not

include capital gain income.   Petitioner also claimed on Schedule

A, Itemized Deductions, a deduction of $107,465 for “compensation

for services actually rendered.”

     Petitioner attached to his Form 1040 a Form 8275, Disclosure

Statement.   In the disclosure statement, petitioner argued that

his compensation for services (wages) was exempt from income

because:   (1) “The claim is founded upon a common law immunity

which rendered any money earned from the right of accession

immune from taxation”; (2) “The United States Code defined this

immunity as a ‘white citizen’ right”; and (3) his wages were not

taxable under a claim of right and under section 1341.

     Petitioner made similar arguments, notably that his wages

were not taxable under section 1341, on his 2003 Form 1040.

Petitioner’s 2003 tax year was at issue in docket No. 20893-06.

In an order and decision, the Court upheld respondent’s

determination not to allow a Schedule A itemized deduction for

wages for 2003 and imposed a $10,000 section 6673 penalty as the

Court determined that petitioner asserted only frivolous and

groundless arguments of claim of right and under section 1341.

The Court admonished petitioner that the Court would consider
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imposing a larger penalty if petitioner returned to the Court and

advanced similar arguments.

      Respondent issued petitioner a statutory notice of

deficiency determining a deficiency of $26,635 for 2004 and

additions to tax of $2,290.05, $763.35, and $242.35, pursuant to

sections 6651(a)(1) and (2) and 6654, respectively.

      Petitioner petitioned the Court.     Respondent moved for

summary judgment and to impose a penalty under section 6673.      A

hearing was held on respondent’s motion.      Petitioner failed to

appear at the hearing on the motion (nor was there anyone there

to represent him).

                              Discussion

I.   Summary Judgment

      Rule 121(a) provides that either party may move for summary

judgment upon all or any part of the legal issues in controversy.

Summary judgment is intended to expedite litigation and avoid

unnecessary and expensive trials.       Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).

      Full or partial summary judgment is appropriate “if the

pleadings, answers to interrogatories, depositions, admissions,

and any other acceptable materials, together with the affidavits,

if any, show that there is no genuine issue as to any material

fact and that a decision may be rendered as a matter of law.”

Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520
                                  - 5 -

(1992), affd. 17 F.3d 965 (7th Cir. 1994).      The moving party

bears the burden of proving that there is no genuine issue of

material fact, and factual inferences will be read in a manner

most favorable to the party opposing summary judgment.       Dahlstrom

v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.

Commissioner, 79 T.C. 340, 344 (1982).

      Upon review of the record, and viewing it in a light most

favorable to petitioner, we conclude that there is no genuine

issue as to any material fact and that a decision may be rendered

as a matter of law.

II.   Income

      A.   Income From Verizon Services Corp.

      Gross income includes compensation for services.      Sec.

61(a)(1).      In 2004 petitioner earned wages of $107,465 from

Verizon, and this amount is income to him.

      B.   Interest Income

      Gross income includes interest.     Sec. 61(a)(4).

Accordingly, the interest petitioner received in 2004 is income.

      C.   Dividends

      Gross income includes dividends.     Sec. 61(a)(7).

Accordingly, the dividend petitioner received in 2004 is income.
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       D.   Capital Gains

       Gross income includes gains from dealings in property.       Sec.

61(a)(3).     Accordingly, the $9,361 in proceeds from the sale of

stocks and bonds in 2004 is income.

       E.   Conclusion

       Petitioner advanced shopworn arguments characteristic of

tax-defier rhetoric, see Custer v. Commissioner, T.C. Memo.

2008-266, that has been universally rejected by this and other

courts, Wilcox v. Commissioner, 848 F.2d 1007 (9th Cir. 1988),

affg. T.C. Memo. 1987-225; Carter v. Commissioner, 784 F.2d 1006,

1009 (9th Cir. 1986).       In the order and decision in petitioner’s

case for tax year 2003, the Court advised petitioner that his

arguments were frivolous and groundless.      We have already

explained petitioner’s fallacies to him.       We shall not do so

again, as painstakingly addressing petitioner’s assertions “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).         On

the basis of the foregoing, we sustain respondent’s determination

of a deficiency in petitioner’s income tax.

III.    Section 6673(a)(1)

       Section 6673(a)(1) authorizes this Court to penalize up to

$25,000 a taxpayer who institutes or maintains a proceeding
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primarily for delay or pursues in this Court a position which is

frivolous or groundless.

     Petitioner’s conduct has convinced us that he maintained

this proceeding primarily for delay and to advance his frivolous

and groundless arguments.   Petitioner’s actions have resulted in

a waste of limited judicial and administrative resources that

could have been devoted to resolving bona fide claims of other

taxpayers.   See Cook v. Spillman, 806 F.2d 948 (9th Cir. 1986).

Petitioner’s insistence on making frivolous tax-defier arguments

indicates an unwillingness to respect the tax laws of the United

States.   Accordingly, in view of the fact that a $10,000 penalty

was not a sufficient deterrent, and petitioner was warned that he

faced a stiffer penalty if he made similar frivolous arguments

with the Court, we shall require petitioner to pay a penalty of

$15,000 to the United States pursuant to section 6673.

     To reflect the foregoing,


                                              An appropriate order

                                         will be issued, and decision

                                         will be entered under

                                         Rule 155.
