                  T.C. Memo. 2006-253



                UNITED STATES TAX COURT



           WILLIAM M. LEGGETT, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 24854-04.                Filed November 21, 2006.

     P failed to file a Federal income tax return for
2002. R determined a deficiency and additions to tax
pursuant to secs. 6651(a)(1) and 6654(a), I.R.C.

     Held: P is liable for the deficiency determined
by R and additions to tax pursuant to secs. 6651(a)(1)
and 6654(a), I.R.C.

     Held, further, a penalty pursuant to sec. 6673,
I.R.C., is due from P and awarded to the United States
in the amount of $6,000.


William M. Leggett, pro se.

Monica J. Miller, for respondent.
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              MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge:   Respondent determined a Federal income tax

deficiency for petitioner’s 2002 taxable year in the amount of

$8,716, and additions to tax pursuant to sections 6651(a)(1) and

6654(a) of $2,614.80 and $291.26, respectively.1   The issues for

decision are:   (1) Whether petitioner is liable for a deficiency

and additions to tax on unreported income for the 2002 taxable

year; and (2) whether the Court should impose a penalty under

section 6673.

                         FINDINGS OF FACT

     Some of the facts have been deemed stipulated pursuant to

Rule 91(f), and additional facts have been stipulated by the

parties.2   The stipulations, with accompanying exhibits, are


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code) in effect for the year in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
     2
      The Court found petitioner’s objection to the proposed
stipulation of facts, based primarily on Fifth Amendment
assertions, to be meritless. Respondent assured petitioner and
the Court that “To the best of respondent’s knowledge, petitioner
has not currently, nor has he ever been, the subject of any
criminal tax or other criminal investigation by respondent, that
no criminal tax or other criminal investigation of petitioner is
contemplated or anticipated by respondent, and that there are no
indications that respondent ever even considered the imposition
of civil fraud penalties in petitioner’s several cases.” The
Fifth Amendment “protects against real dangers, not remote and
speculative possibilities.” Zicarelli v. N.J. State Commn. of
Investigation, 406 U.S. 472, 478 (1972). Furthermore, “In a
civil tax case, the taxpayer must accept the consequences of
                                                   (continued...)
                               - 3 -

incorporated herein by this reference.   At the time the petition

was filed, petitioner resided in Sorrento, Florida.

     Petitioner failed to file a Federal income tax return for

his 2002 taxable year.   During 2002, petitioner was self-employed

and installed residential and commercial heating and air-

conditioning units.   Petitioner received compensation from

Maronda Homes, Inc. and Victoria Investment Properties, Inc. in

the amounts of $4,585 and $22,247, respectively.   Petitioner also

received $14,544 in Social Security benefits.   During 2002,

petitioner was married to Martha Leggett.

     Respondent issued to petitioner a notice of deficiency on

October 5, 2004, for the above-mentioned deficiency and additions

to tax.3   Petitioner filed a timely petition disputing the

deficiency and additions to tax.   Petitioner argued at trial and

in documents submitted to the Court that he “does not and has not

engaged in an activity that produces ‘TAXABLE INCOME’, but only



     2
      (...continued)
asserting the Fifth Amendment and cannot avoid the burden of
proof by claiming the privilege and attempting to convert ‘the
shield * * * which it was intended to be into a sword’.” Lee v.
Commissioner, T.C. Memo. 2002-95 (citing United States v.
Rylander, 460 U.S. 752, 758 (1983)), affd. 61 Fed. Appx. 471 (9th
Cir. 2003); see also Stang v. Commissioner, T.C. Memo. 2005-154,
affd.     Fed. Appx.     (9th Cir., Sept. 15, 2006).
     3
      The parties filed posttrial a supplemental stipulation of
facts which stipulated that petitioner had additional income of
$7,601.48 and was entitled to deduct expenses of $5,944.47.
Respondent conceded that the deficiency and additions to tax
determined in the notice of deficiency would remain unaffected.
                               - 4 -

an exchange of intellectual and physical property for an agreed

upon perceived value in the only medium of exchange of the day

i.e. FRN’s [Federal Reserve Notes]”.    Petitioner also contended

that he is “a ‘native born American national’, not to be mistaken

as a ‘U.S. CITIZEN’” or taxpayer.

     Petitioner is no stranger to the Court.   Petitioner has

litigated two cases very similar to this instant case in which

petitioner did not file Federal income tax returns, respondent

determined deficiencies and additions to tax, and petitioner

presented arguments similar to those asserted here.   In a 2001

trial (2001 trial) that resulted in a bench opinion, the Court

explained to petitioner that taxable income includes money and

other goods received in exchange for services and urged

petitioner to file returns.   In a 2005 trial (2005 trial), the

Court again rejected petitioner’s arguments and awarded the

United States a penalty pursuant to section 6673 in the amount of

$5,000.   Leggett v. Commissioner, T.C. Memo. 2005-185.

                              OPINION

I.   Deficiency

     In general, respondent’s determination of a deficiency in

the notice of deficiency is presumed correct, and petitioner

bears the burden of showing that such determination was in error.

See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

Pursuant to section 7491(a), the burden of proof on factual
                               - 5 -

issues that affect the taxpayer’s tax liability may be shifted to

the Commissioner where the “taxpayer introduces credible evidence

with respect to any factual issue”.    The burden will shift only

if the taxpayer has, inter alia, complied with substantiation

requirements pursuant to the Internal Revenue Code, and

“cooperated with reasonable requests by the Secretary for

witnesses, information, documents, meetings, and interviews”.

Sec. 7491(a)(2).   Section 7491(a) does not apply in this case

because petitioner did not produce any credible evidence.

     In unreported income cases, the Commissioner must come

forward with evidence establishing a minimal foundation, which

may consist of evidence linking the taxpayer to an income-

producing activity.   Weimerskirch v. Commissioner, 596 F.2d 358,

360-361 (9th Cir. 1979), revg. 67 T.C. 672 (1977); Petzoldt v.

Commissioner, 92 T.C. 661, 689 (1989).    If the Commissioner

introduces some evidence that the taxpayer received unreported

income, then the burden shifts to the taxpayer to show by a

preponderance of the evidence that the deficiency was arbitrary

or erroneous.   Hardy v. Commissioner, 181 F.3d 1002, 1004 (9th

Cir. 1999), affg. T.C. Memo. 1997-97.    The Court concludes, based

on the stipulated facts, that respondent has established a

minimal foundation.   Accordingly, the burden shifts to

petitioner.
                                  - 6 -

      In petitioner’s previous cases the Court specifically

rejected as meritless petitioner’s argument that taxable income

does not include an exchange of personal services for property.

The Court shall not further address petitioner’s repeated

argument “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).    Therefore, the Court sustains respondent’s

determination of petitioner’s 2002 tax deficiency.

II.   Additions to Tax

      The Commissioner bears the burden of production in any court

proceeding with respect to an individual’s liability for

penalties or additions to tax.     Sec. 7491(c).   To meet this

burden, the Commissioner must present “sufficient evidence

indicating that it is appropriate to impose the relevant penalty”

or addition to tax.      Higbee v. Commissioner, 116 T.C. 438, 446

(2001).   In instances where an exception to the penalty or

addition to tax is afforded upon a showing of substantial

authority, reasonable cause, or similar provisions, the taxpayer

bears the burden of raising and prevailing on these issues.        Id.

at 446-447.

      Section 6651(a)(1) imposes a 5-percent addition to tax for

each month or portion thereof a required return is filed after

the prescribed due date, not to exceed 25 percent in the
                               - 7 -

aggregate, unless such failure to file timely is due to

reasonable cause and not due to willful neglect.    Although not

defined in the Code, “reasonable cause” is described by the

applicable regulations as the exercise of “ordinary business care

and prudence”.   Sec. 301.6651-1(c)(1), Proced. & Admin. Regs.;

see also United States v. Boyle, 469 U.S. 241, 246 (1985).

“[W]illful neglect” is interpreted as a “conscious, intentional

failure or reckless indifference.”     United States v. Boyle, supra

at 245.   Respondent has met the burden of production as

petitioner admitted he never filed a Federal income tax return

for 2002.   Petitioner did not present any evidence to suggest

that his failure to file was due to reasonable cause.    Therefore,

the Court sustains respondent’s determination of the addition to

tax pursuant to section 6651(a)(1).

     Section 6654(a) imposes an addition to tax for failure to

pay estimated income tax where there has been underpayment of

estimated tax by the taxpayer.4   Petitioner did not remit any

payment as he did not file a Federal income tax return.    The

record reflects that no taxes were withheld, as petitioner was

self-employed, and that no payments of estimated tax were made.

Any burden of production on the part of respondent is satisfied.


     4
      The Court takes judicial notice of Leggett v. Commissioner,
T.C. Memo. 2005-185, which together with the holding in this case
establishes that estimated tax was due. See sec. 6654(d)(1)(B)
and the flush language where, as here, no return was filed for
the previous tax year 2001.
                                 - 8 -

The Court also concludes that petitioner does not fit within any

of the exceptions enumerated in section 6654(e).5      Therefore, the

Court sustains respondent’s determination of the addition to tax

pursuant to section 6654(a).

III. Section 6673 Penalty

     Section 6673(a)(1) authorizes the Tax Court to impose a

penalty not in excess of $25,000 on a taxpayer for proceedings

instituted primarily for delay or in which the taxpayer’s

position is frivolous or groundless.      “A petition to the Tax

Court, or a tax return, is frivolous 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).

     Respondent, on brief, has asked the Court to impose a

penalty under section 6673(a)(1).    In petitioner’s 2005 trial,

petitioner was ordered to pay $5,000 to respondent for asserting

meritless and frivolous arguments.       Leggett v. Commissioner,


     5
      Sec. 6654(e) provides two mechanical exceptions to the
addition to tax. First, the addition is not applicable if the
tax shown on the taxpayer’s return for the year in question (or,
if no return is filed, the taxpayer’s tax for that year), reduced
for these purposes by any allowable credit for wage withholding,
is less than $1,000. Sec. 6654(e)(1). Second, the addition is
not applicable if the taxpayer’s tax for the full 12-month
preceding taxable year was zero and the taxpayer was a citizen or
resident of the United States. Sec. 6654(e)(2). The Court has
concluded that petitioner is liable for a deficiency for 2002
that net of withholding exceeds $1,000. Petitioner’s tax
liability for 2001 was greater than zero. See Leggett v.
Commissioner, supra.
                                 - 9 -

supra.   Petitioner asserted similar arguments in the instant case

despite repeated warnings by the Court that his arguments were

meritless and frivolous.   Therefore, the Court concludes that a

penalty of $6,000 should be imposed on petitioner.

     The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.       To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

     To reflect the foregoing,


                                              An appropriate decision

                                         will be entered.
