                         T.C. Memo. 2008-81



                       UNITED STATES TAX COURT



           GARY L. AND KAREN L. BOGGS, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1836-06.                Filed April 2, 2008.



     Gary L. and Karen L. Boggs, pro sese.

     Louis H. Hill, for respondent.



                         MEMORANDUM OPINION


     CHIECHI, Judge:    Respondent determined a deficiency of

$30,937.42 in, and an accuracy-related penalty of $5,040.55 under
                                - 2 -

section 6662(a)1 on, petitioners’ Federal income tax for their

taxable year 2003.

     We must decide whether to sustain the determinations in the

notice of deficiency that respondent issued to petitioners for

their taxable year 2003.   We shall sustain those determinations.

     Petitioners resided in Loveland, Ohio, at the time they

filed the petition.

     Petitioners jointly filed Form 1040, U.S. Individual Income

Tax Return, for their taxable year 2003 (2003 return).   In that

return, petitioners showed on page 1, line 7, “Wages, salaries,

tips, etc.” of $253,979.16.   Petitioners included with their 2003

return Form W-2, Wage and Tax Statement, issued to petitioner

Gary L. Boggs (Mr. Boggs), which showed that during 2003 Mr.

Boggs’s employer Makino, Inc., paid Mr. Boggs “WAGES, TIPS, OTHER

COMPENSATION” of $253,979.16.   In petitioners’ 2003 return,

petitioners showed on page 1, line 21, “Other income. * * * IRC

104(A)(2); IRC 167(A)” of “($75,600)".

     Petitioners included with their 2003 return a 53-page

document (including an exhibit) that was entitled “FORMAL TAX

RETURN PROTEST WITH MEMORANDUM OF LAW” (2003 return protest) and

that was addressed to the Internal Revenue Service Center in




     1
      All section references are to the Internal Revenue Code in
effect for the year at issue. All Rule references are to the Tax
Court Rules of Practice and Procedure.
                               - 3 -

Cincinnati, Ohio.   Petitioners signed their 2003 return and their

2003 return protest on August 10, 2004.

     Petitioners’ 2003 return protest contains statements,

contentions, arguments, and demands that the Court finds to be

frivolous and groundless.   For example, in the first three pages

of their 2003 return protest, petitioners assert in part:

          FOR THE RECORD: The undersigned is filing the
     attached Federal Individual Income tax return, for the
     year 2003, by special appearance, “under protest,
     without prejudice”, as required by law by the Commis-
     sioner of Internal Revenue * * *

       *       *       *       *       *       *       *

          As well, the attached Federal Individual Income
     tax return, for the year 2003, by special appearance,
     “under protest, without prejudice”, is not a frivolous
     document, for NOWHERE in the document does the under-
     signed state that “wages and salary do not constitute
     taxable income”. The IRS will try to make this claim,
     and it is false and fraudulent, and strictly fabricated
     by the IRS.

       *       *       *       *       *       *       *

          FOR THE RECORD: Because the IRS has failed re-
     peatedly in the duty to answer the undersigned’s,
     request for proper filing information, pursuant to 26
     USC § 6001, the tax status of the undersigned is un-
     known for lack of notice (due process). The IRS does
     not honor a request for a “Determination Letter” pursu-
     ant to 26 CFR § 601.201(a)(3). Therefore, the under-
     signed has submitted this tax return and filled in the
     lines on the face tax return with the so called help of
     the IRS instruction booklet by guessing at the law
     because the instruction book has no statutes or regula-
     tions listed. It would strongly appear that the IRS is
     attempting to circumvent due process by not being up
     front with the law, as the IRS has placed the under-
     signed in an impossible position as to following the
     proper procedures, which is a violation of law * * *
                         - 4 -

  *       *       *       *       *       *       *

Therefore, because it is now well known that the IRS
will not answer on point questions about an individuals
tax status, the undersigned exercises his right to file
this hereto attached IRS 1040 return under protest,
without prejudice. If what the undersigned has stated
regarding the IRS’s refusal to answer on point ques-
tions about an individuals tax status, then please
inform the undersigned in writing of this change in
policy. The specific information needed by the under-
signed is the “taxing statute” which applied to my
occupation as a private sales engineer, same said as a
private independent contractor, and the statutes and
regulations which apply to the process of filing a
return and supplying the proper information on the
return. If the undersigned cannot receive the proper
information from the IRS, how can a tax return be filed
under the penalties of perjury. * * *

  *       *       *       *       *       *       *

     FOR THE RECORD: As stated before, the undersigned
is a private independent contractor, in the field of
manufacturing and machine tool sales, serving the
private sector, and does not in any way or form, oper-
ate in the capacity of a trust, estate, partnership,
syndicate, group, pool, joint venture, organization,
corporation association, joint-stock company, and
insurance company, nor any of the like which are cre-
ated or organized in the United States or under the law
of the United States or of any State. Nor does the
undersigned do any such work for any source under the
control of the Federal or State governments. There-
fore, pursuant to the following 12 points of protest,
and concerning the rate of tax as set forth in the 1040
instruction booklet, * * * which relates to the rate as
set forth in 26 USC § 1(d)), the undersigned holds the
general legal position that he is not constitutionally
to be found within the scope or purview of the statutes
which impose a income tax under 26 U.S.C. (IRC) § 1(a),
(b), (c), or (d), as those statutes impose an excise
(income) tax upon individuals who have been given a
government source privilege and economic position by
statute, regulations, or executive order. * * *

     The undersigned does not apologize for the length
of this document, the responsibility for the purposeful
                                - 5 -

       complication of the tax code, and the many court cases
       which undermined it, were not the work of the under-
       signed, but of an elite group of past and present
       government employees and officers, hell bent on de-
       stroying the simplistic of the original code. It is
       not for the government employee, or officer to shrug
       the responsibility of reading this document because of
       its length. As government employees, or officers must
       accept the responsibility their positions impose upon
       them by law, just as the private citizens must accept
       their duties. [Reproduced literally.]

       In the remaining 50 pages of their 2003 return protest,

petitioners continue to advance frivolous and groundless state-

ments, contentions, arguments, and demands, including the follow-

ing:

       The Corporation is allowed to deduct all production
       cost, be it what ever, yet the human machine under the
       IRS applied Income Tax Law is not allowed to deduct for
       all production cost, because the IRS does not allow a
       deduction for human maintenance nor deprecation for the
       human machine itself, which produces the machine tool
       sales services, that the undersigned supplies to the
       private sector. In retrospect, as an example, the
       Corporation in the printing business, is allowed to
       deduct for the printing press, its maintenance and
       repair cost, and the mental and physical labor required
       to operate the press to produce the printed material.
       The corporation is also allowed to deduct for the
       building and its maintenance that shelters the printing
       press and the labors who operate the press, 24 hours of
       the day and 365 days of the year. Yet, this human
       machine is not allowed to deduct for its needed shelter
       nor its maintenance cost.

         *       *       *       *       *       *       *

       Under the IRS’s general interpretation of the Internal
       Revenue Code (IRC) regarding a “trade or business”, the
       undersigned’s has been reduced to a human machine, that
       produces printed material by contract for private
       sector consumption. This human machine is compensated
       on a fee basis for its time engaged in the labors of a
       specific service to the private sector. Unlike an
                                - 6 -

     artificial entity, such as a corporation, this human
     machine has only one life time, with a certain number
     of hours of life. The hours of life expended by this
     human machine, in providing machine tool sales service
     cannot be recovered, as such, once an hour is spent in
     rendering service, it can never be retrieved, and there
     is nothing to make this human machine whole for the
     loss of life, except for the compensation as rendered
     by the private sector customers. * * *

         *       *       *      *         *      *       *

     Yet, a human life is limited, and as such can be mea-
     sured only in years, months, weeks, days, or even
     hours. The question becomes, what is a hour of human
     life worth, is it 100.00 is it 20.00, there can only
     one judge of what an hour of life is worth, and that is
     the value that the human being personally assigns to
     it. So the human being is allowed as a matter of right
     to negotiate by contract the level of compensation for
     the loss of life, its called a private contract. The
     compensation given to the private citizen or servant
     for loss of life, is excluded as income under the 16th
     Amendment. * * * [Reproduced literally.]

     Respondent issued a notice of deficiency to petitioners for

their taxable year 2003 (2003 notice).     In that notice, respon-

dent determined to disallow the $75,600 negative amount of “Other

income” that petitioners reported on page 1, line 21, of their

2003 return ($75,600 negative amount).     In the notice, respondent

also determined that petitioners are liable for the accuracy-

related penalty under section 6662(a).2

     Petitioners filed a 20-page petition commencing the instant

case.    The petition contains statements, contentions, and argu-


     2
      Respondent made certain other determinations in the notice
that are computational in that their resolution depends upon
whether the Court sustains respondent’s determination to disallow
the $75,600 negative amount.
                              - 7 -

ments that the Court finds to be frivolous and groundless.   For

example, in the petition, petitioners assert in part:

     the Commissioner’s Notice of Deficiency or income tax
     examination for the year 2003, at page 4, item 1(a)
     identified as “Other Income” in the amount of
     75,600.00. No such income (profit or gain) was re-
     ceived by this petitioner. This amount as listed, only
     represents a return or restoration of capital. The
     amount of life hours expended in human capital was
     2,520, this does not include the hours in preparation
     for the task to be accomplished, yet only the hours of
     life lost in performing the task.

       *       *       *       *       *       *        *

     * * * the Commissioner’s Notice of Deficiency or income
     tax examination for the year 2003, at page 5, item
     17(a) identified as (Accuracy-IRC 6662 - $5,040.55.
     This petitioner objects, as this is a accuracy penalty,
     for filing a false tax return, this cannot be applied,
     because this petitioner filed the IRS expected tax
     return under protest, without prejudice. The IRS Form
     1040 has never been approved under law by the OMB.

       *       *       *       *       *       *        *

          Labor is human capital, each type of human capital
     is subject to depreciation * * *

       *       *       *       *       *       *        *

          Under the IRS’s false interpretation of the Inter-
     nal Revenue Code (IRC) this petitioner has been reduced
     to a human machine, that produces services by contract
     for private sector consumption. This human machine is
     compensated on a fee basis for its time engaged in the
     labors of a specific service to the private sector.
     Unlike an artificial entity, such as a corporation,
     this human machine has only one lifetime, with a cer-
     tain number of hours of life. The hours of life ex-
     pended by the human machine, in providing service
     cannot be recovered, as such, once an hour is spent in
     rendering service, it can never be retrieved, and there
     is nothing to make this human machine whole for the
     loss of life, except for the compensation as rendered
     by the private sector customers. * * *
                              - 8 -

       *       *       *       *       *       *        *

     Yet, human life is limited, and as such can be measured
     only in years, months, weeks, days, or even hours. The
     legal question becomes, what is a hour of human life
     worth, is it 100.00 or is it 20.00, there can only be
     one judge of what an hour of life is worth, and that is
     the value that the human being personally assigns to
     it. Each type of human capital is subject to deprecia-
     tion. So the human being is allowed as a matter of
     right to negotiate by contract the level of compensa-
     tion for their loss of life, its called a citizens
     private service contract. The compensation given to
     the private citizen or servant for loss of life, is
     excluded as income under the 16th Amendment. * * *

       *       *       *       *       *       *        *

     * * * the compensation given to the private servant or
     worker for loss of life, is “a restoration of capital
     for taxation purposes”, and therefore because it is not
     a gain or profit, it is excluded as the type of income
     under the 16th Amendment. The labor of a private
     citizen is property, and capital is property. A return
     of original capital or investment is not a taxable
     event under Sixteenth Amendment * * *

       *       *       *       *       *       *        *

     * * * The right to life is a personal and natural right
     of this petitioner, the loss of life is a personal
     injury, this natural and absolute right to life is lost
     when the government purportedly imposes a tax upon the
     compensation received for such said loss (hours, days,
     weeks) of life. In other words, the government is
     imposing a tax upon “my loss of life”, and the greater
     my loss of life, the greater the tax imposed. This
     action in the course of due process, is wholly uncon-
     stitutional. * * * [Reproduced literally.]

     In an Order dated September 18, 2007, the Court indicated

that the petition contains statements, contentions, and arguments

that the Court finds to be frivolous and groundless.   In that

Order, the Court also reminded petitioners about section
                              - 9 -

6673(a)(1) and admonished them that if they continued to advance

frivolous and/or groundless statements, contentions, and argu-

ments, the Court would impose a penalty not in excess of $25,000

on them under that section.

     On September 18, 2007, petitioners submitted to the Court

(1) a pretrial memorandum for petitioners with a “Memorandum of

Law and Facts” attached (collectively, petitioners’ pretrial

memorandum) that the Court had filed and (2) a document entitled

“PETITIONERS’ OBJECTIONS TO RESPONDENT’S STIPULATION OF FACTS”

that the Court did not have filed.    Petitioners’ pretrial memo-

randum contains statements, contentions, and arguments that the

Court finds to be frivolous and groundless.   For example, in

petitioners’ pretrial memorandum, petitioners indicated that they

expected to make the following three motions:

     1. Motion by the petitioners to strike agency argu-
     ments of law, as presented by respondent upon the U.S.
     Tax Court record, for IRS’s failure to exhaust adminis-
     trative remedies.

     2. Motion by the petitioners to strike the alleged
     Commissioner’s Notice of Deficiency as legally invalid.

     3. Motion by the petitioners to stand upon the law
     brief as attached to the purported 2003 tax return.
     [Reproduced literally.]

     In petitioners’ pretrial memorandum, petitioners listed the

following as the issues that they intended to raise in this case:

     1.   Whether the respondent’s IRS Form 4549A is a valid
     Notice of Deficiency, see memorandum of law and exhib-
     its in the hereto following.
                             - 10 -

     2.   Whether the IRS’s Form 1040 has a legally valid
     OMB number, and does it give a valid Tennessen Warning
     (Notice) with or upon the face of the form, see memo-
     randum of law and exhibits in the hereto following.

     3.   Whether the IRS, under their primary jurisdiction
     was required to answer the legal issues as raised by
     the petitioner in the tax return protest document, see
     memorandum of law in the hereto following.

     4.   Whether the IRS can impose a tax without setting
     forth the Congressional taxing statute, as has been
     done in the IRS Form 4549A, and the following state-
     ments as set forth by the respondent in the filed
     pretrial document.

          “1. Whether petitioners are entitled to claim a
          deduction for depreciation of “human capital” for
          the taxable year 2003 in the amount of $75,600.
          2.   Whether petitioners are liable for the accu-
          racy related penalty under the provisions of
          I.R.C. 6662(a) for the taxable year 2003 in the
          amount of $5,040.55.
          3.   Whether petitioners are entitled to claim a
          deduction for itemized deductions for the taxable
          year 2003 in the amount of $2,268.00. (This is a
          computational adjustment.)
          4.   Whether petitioners are entitled to claim
          exemptions for the taxable year 2003 in the amount
          of $6,588.00. (This is a computational adjust-
          ment.)
          5.   Whether petitioners are liable for alterna-
          tive minimum tax for the taxable year 2003 in the
          amount of $5,866.13, (This is a computational
          adjustment.)” [Reproduced literally.]

     In petitioners’ pretrial memorandum, petitioners indicated

that they “do not intend to call any witnesses, but reserves

[sic] the right to cross examine, the respondent.”

     In an Order dated September 20, 2007, the Court again

reminded petitioners about section 6673(a)(1) and again admon-

ished them that if they continued to advance frivolous and/or
                               - 11 -

groundless statements, contentions, and arguments, the Court

would impose a penalty on them under that section.

     When this case was called from the calendar for the Court’s

trial session in Cincinnati, Ohio, the Court reminded petition-

ers, once again, about section 6673(a)(1) and admonished them,

once again, that if they continued to advance frivolous and/or

groundless statements, contentions, and arguments, the Court

would impose a penalty on them under that section.

     This case was recalled for a pretrial conference on the

record.   At that pretrial conference, the Court and the parties

discussed petitioners’ refusal to sign a stipulation of facts

containing only three paragraphs that stipulated (1) the resi-

dence of petitioners at the time they filed the petition,

(2) their 2003 return, and (3) the 2003 notice.   In support of

their refusal to stipulate those matters, petitioners raised what

the Court finds to be frivolous and groundless contentions and

arguments.   For example, in refusing to stipulate their 2003

return, Mr. Boggs stated:   “the 1040 we believe is an incorrect

document in some relevance.”   The Court asked Mr. Boggs to

explain why the document was “an incorrect document”.   According

to Mr. Boggs, the 2003 return is “missing several key require-

ments”.   At that point during the pretrial conference, the Court

again reminded petitioners about section 6673(a)(1) and again

admonished them that if they continued to advance frivolous
                               - 12 -

and/or groundless statements, contentions, and arguments, the

Court would impose a penalty on them under that section.       Peti-

tioners agreed to stipulate their residence at the time they

filed the petition, their 2003 return, and the 2003 notice.

     At the pretrial conference, the Court asked petitioners what

issues they intended to raise at trial.    Mr. Boggs responded that

petitioners intended to argue at trial that the $75,600 negative

amount is correct because it is a “restoration of capital, return

to capital.”    The Court asked Mr. Boggs what was the “capital” to

which he was referring.   Mr. Boggs responded “Human capital.”

The Court told Mr. Boggs that petitioners’ position was frivo-

lous.

     This case was recalled for trial.    The Court made the

stipulation of facts and the exhibits attached thereto (i.e.,

petitioners’ 2003 return and the 2003 notice) part of the record

in this case.   Before the trial began, the Court focused peti-

tioners on the 2003 notice and the disallowance by respondent of

the $75,600 negative amount.   The Court asked petitioners whether

it was their position that that negative amount is correct, to

which Mr. Boggs responded that that was their position.    The

Court asked petitioners to explain their position.    The following

exchange took place:

          MR. BOGGS: The deduction was based upon my under-
     standing of the case law that provided that any part of
     a wage is a -- includes a return on human capital. And
     based on human capital not being taxable under the
                                - 13 -

     Sixteenth Amendment, I adjusted -- that number is
     calculated at 48 weeks a year, five days a week, ten
     and a half hours a day, times $30 an hour. * * *

           THE COURT:   A deduction for human capital.

          MR. BOGGS:    A non-taxable restoration of human
     capital.

          THE COURT: Right. So you’re basically trying to
     depreciate human capital.

          MR. BOGGS: I don’t think depreciation is the
     correct word. I don’t believe depreciation is the
     correct word. It’s a return of human capital. Any
     part of my human machine, my human body, has a -- has a
     labor content, has a waste content, if you will. Once
     I’ve used it up, I can’t get it back. That is my
     capital.

          THE COURT: And I told you earlier and I’ll tell
     you again, that is a frivolous argument. It is one I
     will reject and it is one as to which if you make it, I
     will impose sanctions.

       *        *        *       *       *       *       *

          * * * And there is no evidence to introduce with
     respect to that, that’s just shear argument on your
     part. [Reproduced literally from transcript.]

     The Court explained to petitioners that the purpose of a

trial is to introduce evidence into the record on which the Court

may find facts.     The Court further advised petitioners that there

would be no need for a trial if they intended to advance at trial

only arguments about the law.    The Court informed petitioners

that caselaw is not evidence, although one can rely on caselaw in

order to support a legal argument.

     After the Court explained the purpose of a trial and the

difference between evidence and argument, Mr. Boggs stated:
                              - 14 -

     Yes. And I -- and if I may just add, I had requested
     -- I did not wish to come to Tax Court. I had re-
     quested to settle this at the administrative level and
     we had submitted several documents to try to obtain the
     proper taxing statute and obtain the proper -- the
     proper, if you will, evidence so that I would not have
     to go -- come to Tax Court, and to get a proper legal
     opinion at the administrative [level] * * * [Repro-
     duced literally from transcript.]

     Mr. Boggs then reaffirmed petitioners’ position regarding

the $75,600 negative amount as follows:

     The case law that I presented in the argument -- in the
     arguments all along, support the -- in my belief, in my
     understanding of the law, support that a deduction is
     valid. * * * [Reproduced literally from transcript.]

     Based upon the exchange between the Court and Mr. Boggs when

this case was recalled for trial, the Court concluded that a

trial was not necessary in this case, and the case was submitted

on the basis of the stipulation of facts and exhibits that were

part of the record.

     Petitioners bear the burden of proving that respondent’s

determinations in the 2003 notice are erroneous.   Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933).

     Petitioners proffered no evidence and advanced no argument

establishing that respondent’s determinations in the 2003 notice

are wrong.   Instead, despite the Court’s repeated warnings to

petitioners, they persisted in advancing statements, contentions,

and arguments in support of their position in this case that the

Court finds to be frivolous and groundless.   On the record before

us, we shall sustain the determinations in the 2003 notice.
                             - 15 -

     We turn now to section 6673(a)(1), a provision that the

Court brought to petitioners’ attention on numerous occasions.

Section 6673(a)(1) authorizes the Court to impose a penalty in

favor of the United States in an amount not to exceed $25,000

whenever it appears that a taxpayer’s position in a proceeding is

frivolous and/or groundless or that the taxpayer institutes or

maintains a proceeding in the Court primarily for delay.

     Despite repeated admonitions to petitioners that the Court

would impose a penalty on them under section 6673(a)(1) if they

continued to advance frivolous and/or groundless statements,

contentions, and arguments, they continued to do so throughout

the course of the proceedings in this case.

     On the record before us, we find that petitioners’ position

in this case is frivolous and groundless and that petitioners

instituted and maintained this case primarily for delay.    Accord-

ingly, we shall impose a $10,000 penalty on petitioners under

section 6673(a)(1).

     We have considered all of petitioners’ statements, conten-

tions, arguments, and requests that are not discussed herein, and

we find them to be without merit and/or irrelevant.

     To reflect the foregoing,


                                      Decision will be entered for

                                 respondent.
