                         T.C. Memo. 1997-574



                       UNITED STATES TAX COURT



                  LONNIE R. LOWMAN, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6694-97.                  Filed December 29, 1997.



     Lonnie R. Lowman, pro se.

     Dennis R. Onnen, for respondent.


                         MEMORANDUM OPINION


     RUWE, Judge:   Respondent determined deficiencies in

petitioner's Federal income taxes and additions to tax as

follows:

                                         Additions to tax
  Year      Deficiency        Sec. 6651(a)(1)      Sec. 6654(a)

  1993       $11,183             $1,068               $146
  1994        12,289              2,356                433
  1995         9,792              1,775                371
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     Petitioner resided in Basehor, Kansas, when he filed his

petition in this case.

     This case is before the Court on respondent's motion for

judgment on the pleadings, pursuant to Rule 120(a),1 and motion

for imposition of sanctions under section 6673.    A judgment on

the pleadings is appropriate where the pleadings raise no genuine

issue of material fact.   See Abrams v. Commissioner, 82 T.C. 403,

408 (1984); Brayton v. Commissioner, T.C. Memo. 1989-664, affd.

without published opinion 923 F.2d 861 (9th Cir. 1991).

     In his petition, petitioner seems to allege that

respondent's determination was improper because the Commissioner

lacked constitutional authority to assess and collect the tax in

issue.   On September 11, 1997, after several unsuccessful

attempts to schedule a conference with petitioner, respondent

sent requests for admission to petitioner, and on October 3,

1997, respondent received petitioner's response.    On October 2,

1997, petitioner served a request for admissions on respondent.

     Petitioner's answers to respondent's requests for admission

were evasive and unresponsive.    In response to respondent's

request that petitioner admit that he was a resident of Basehor,

Kansas, petitioner admitted he dwells in Basehor, Kansas, but

denied he was a resident "for want of [the] meaning of the term."

     1
      Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code in effect for the
taxable years in issue.
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In response to respondent's request that petitioner admit that he

received wages from the U.S. Postal Service during the years

1993, 1994, and 1995 in the amounts of $50,366, $45,454, and

$47,681, respectively, petitioner argued that Federal Reserve

notes do not represent money and also denied the requested

admission "for want of [the] meaning of '$'."2   Upon request for

admission that petitioner had failed to file income tax returns

for the years 1993, 1994, and 1995, petitioner responded by

stating that he was not required to file income tax returns.

     The arguments presented by petitioner have been rejected

repeatedly over the years and are entirely without merit.    It is

well settled that wages received in exchange for services

rendered constitute taxable income, Beard v. Commissioner, 82

T.C. 766, 770 (1984), affd. per curiam 793 F.2d 139 (6th Cir.

1986), and that Federal Reserve notes constitute legal tender

which must be reported on a taxpayer's Federal income tax return.

United States v. Weir, 679 F.2d 769, 770 (8th Cir. 1982).     The

constitutional claim asserted by petitioner is equally without

merit and warrants no further discussion.   See McCoy v.


     2
      Petitioner also denied respondent's request that he admit
receipt of interest income, income tax refund, dividend income, a
distribution from a retirement plan, and capital gain income for
the years in issue "for want of [the] meaning of the term '$'."

     Generally, a party's evasive or incomplete response to
requests for admission is treated as a failure to respond. Rules
90, 104(d); see, e.g., Cochrane v. Commissioner, 107 T.C. 18, 23-
24 (1996).
                               - 4 -

Commissioner, 76 T.C. 1027, 1029-1030 (1981), affd. 696 F.2d 1234

(9th Cir. 1983).

     On the basis of petitioner's responses to respondent's

requests for admission, petitioner's own request for admissions,

and petitioner's response to respondent's motion for judgment on

the pleadings, it is clear that petitioner's entire position is

based on his frivolous constitutional argument and his theory

that Federal Reserve notes do not represent money, dollars, or

legal tender.   No useful purpose would be served by affording the

parties further hearing on this matter.

     Finally, we must consider respondent's motion for imposition

of sanctions under the provisions of section 6673.    Section

6673(a)(1) allows 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.   A taxpayer's position is frivolous or

groundless if it is contrary to established law and unsupported

by a reasoned, colorable argument for change in the law.        Coleman

v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986); Sicalides v.

Commissioner, T.C. Memo. 1989-164.     We have awarded such a

penalty in other cases in which taxpayers have raised the same

tax protester type arguments as does petitioner.    See, e.g.,

Casper v. Commissioner, 805 F.2d 902, 905-906 (10th Cir. 1986),

affg. T.C. Memo. 1985-154; Koch v. Commissioner, T.C. Memo. 1988-

499; Fedele v. Commissioner, T.C. Memo. 1985-569; Hartman v.
                              - 5 -

Commissioner, T.C. Memo. 1985-482.     In our opinion, such a

penalty is appropriate in this case.    Under these circumstances,

we award a penalty in the amount of $1,000 to the United States.



                                           An appropriate order and

                                      decision will be entered.
