                        T.C. Memo. 1998-425



                      UNITED STATES TAX COURT


         RICHARD J. AND ANNA J. SINSIGALLI, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent.


     Docket Nos. 18130-97, 13107-98.     Filed November 25, 1998.


     Richard J. and Anna J. Sinsigalli, pro se.

     Richard A. Stone, for respondent.


                        MEMORANDUM OPINION

     POWELL, Special Trial Judge:   These consolidated cases were

heard pursuant to the provisions of section 7443A(b)(3) and Rules

180, 181, and 182.1




     1
         Unless otherwise indicated, 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.
                               - 2 -

     Respondent determined deficiencies in petitioners' 1995 and

1996 Federal income taxes in the amounts of $2,209 and $2,591,2

respectively.   Respondent also determined an accuracy-related

penalty under section 6662(a) for 1995 in the amount of $442.     At

the time the petitions were filed, petitioners resided in Forest

Hill, Maryland.

     The issues are whether petitioners are entitled to

miscellaneous deductions in excess of those allowed by respondent

for 1995, whether wages received by petitioner(s) in 1995 and

1996 are taxable, and whether petitioners are liable for an

accuracy-related penalty pursuant to section 6662(a) for 1995.

     The facts may be summarized as follows.   During the years in

issue, petitioner Richard J. Sinsigalli was employed by Frederick

Ward Associates as a design engineer.   For the taxable year 1995,

petitioners filed a joint Federal income tax return in which they

claimed itemized deductions in the amount of $31,332.3    Upon

examination, respondent disallowed $16,221 claimed as

miscellaneous deductions.

     For the taxable year 1996, petitioners submitted a Form 1040

with "0.00" shown for their income and deductions.    Petitioners


     2
         The first page of the notice of deficiency for 1996
reflects a deficiency in the amount of $2,951. This apparently
was due to a transposition error. The computation page of the
notice shows a deficiency amount of $2,591, and, at trial,
respondent verified that the lower amount was correct.
     3
         Figures are rounded to the nearest dollar.
                                - 3 -

claimed an overpayment in the amount of $495 for withholding

payments.   Respondent issued a notice of deficiency based on a

taxable income in the amount of $29,058 and deductions for

personal exemptions and a standard deduction in the respective

amounts of $5,100 and $6,700.

     On petitioners' motion, these cases were consolidated for

trial, briefing, and opinion and calendared for trial at the

Court's Trial Session commencing October 5, 1998, in Baltimore,

Maryland.   At trial, a stipulation of facts was submitted in each

case signed by respondent and both petitioners.   Petitioner

Richard J. Sinsigalli (petitioner) argued petitioners' position.

Petitioners do not dispute that the wages were received, nor do

petitioners dispute respondent's disallowance of the

miscellaneous deductions.   Rather, they argue that wages are not

taxable income.

                            Discussion

     Section 61(a)(1) defines "gross income * * * [to mean] all

income from whatever source derived, including (but not limited

to) * * * [c]ompensation for services".   "Wages * * * are income

to the recipients".   Sec. 1.61-2(a)(1), Income Tax Regs.

Moreover, this Court and all others have consistently rejected

the argument in various forms that wages are not taxable.    See,

e.g., Rowlee v. Commissioner, 80 T.C. 1111, 1119-1122 (1983).
                                  - 4 -

     With respect to the disallowance of miscellaneous deductions

pertaining to 1995, petitioners have the burden of establishing

that they are entitled to the deductions claimed.    Rule 142;

INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992).     After

this Court rejected the argument that wages were not income,

petitioner was given ample opportunity to present argument and

evidence disputing respondent's determinations.    Petitioner

refused.   We, therefore, sustain respondent's determinations.

     Respondent determined that petitioners are liable for an

accuracy-related penalty under section 6662(a) for 1995 for

negligence.    Section 6662(a) provides that "there shall be added

to the tax an amount equal to 20 percent of the portion of the

underpayment to which this section applies."    Section 6662

applies to "the portion of any underpayment which is attributable

to", inter alia, negligence or disregard of the rules or

regulations.   Sec. 6662(b)(1).    Negligence "includes any failure

to make a reasonable attempt to comply with the provisions * * *

[of the Internal Revenue Code], and the term 'disregard' includes

any careless, reckless, or intentional disregard."    Sec. 6662(c).

Petitioners again have the burden of establishing that the

determination of the penalty was erroneous.     Tweeddale v.

Commissioner, 92 T.C. 501, 505 (1989).     Petitioners presented no

evidence or argument concerning respondent's determination.
                               - 5 -

Respondent's determination of the accuracy-related penalty under

section 6662(a) for 1995 is sustained.

     Section 6673(a) provides that, if the Court determines that

the position of the taxpayer is frivolous or groundless or that

the taxpayer instituted or maintained the proceeding primarily

for delay, the Court can award a penalty in an amount not in

excess of $25,000.   While we eschew awarding a penalty in these

cases, if petitioner persists in his argument that wages are not

income or other similarly frivolous arguments, we shall not be so

constrained the next time.

                                       Decisions will be

                               entered for respondent.
