                         T.C. Memo. 2005-185



                       UNITED STATES TAX COURT



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



     Docket No. 13291-04.             Filed July 26, 2005.


     William M. Leggett, pro se.

     Monica J. Miller, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:    Respondent determined a $3,285 deficiency

in, an $821.25 addition to tax pursuant to section 6651(a)(1)1

on, and a $131.29 addition to tax pursuant to section 6654(a) on



     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                                - 2 -

petitioner’s 2001 Federal income tax.    The issues for decision

are:    (1) Whether income received by petitioner in 2001 is

taxable; (2) whether petitioner is liable for self-employment tax

for 2001; (3) whether petitioner is liable for an addition to tax

pursuant to section 6651(a)(1) for 2001; (4) whether petitioner

is liable for an addition to tax pursuant to section 6654(a) for

2001; and (5) whether to impose a penalty pursuant to section

6673.

                          FINDINGS OF FACT

       Pursuant to Rule 91(f), some of the facts have been deemed

stipulated and are so found.    The stipulation of facts and the

attached exhibits are incorporated herein by this reference.    At

the time he filed the petition, petitioner resided in Florida.

Petitioner’s Prior Tax Court Case

       In October 2001, petitioner participated in a trial before

this Court regarding his 1994, 1995, and 1996 tax years (2001

trial).    The issues in the 2001 trial regarded unreported income

(deficiencies), delinquency additions to tax, and estimated tax

additions to tax for 1994, 1995, and 1996.

       Petitioner did not dispute receiving the moneys listed in

the statutory notice of deficiency for 1994, 1995, and 1996; he

merely disputed that these amounts met the definition of income.

       Before the 2001 trial, petitioner sent respondent a request

for admissions.    Respondent responded to the request for
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admissions, but petitioner was not satisfied with respondent’s

answers.    For example, petitioner asked respondent to “‘admit

that no statute contained in Title 26 of the U.S. Code--United

States Code, makes Petitioner liable for the tax in the instant

action with which--which made him a taxpayer.’”     Respondent

responded:    “‘Denies and alleges that Petitioner knows that he is

liable for federal income tax,’ based on the fact that in

previous years” petitioner filed tax returns.

     During the 2001 trial, petitioner asked the Court to give

him a definition of income, and petitioner stated that he was

pursuing his case in an effort to find out what is taxable

income.    The Court referred petitioner to section 61 and advised

petitioner that money and other goods received in exchange for

his personal services are taxable income.

     After learning that petitioner had not filed Federal income

tax returns for 1997, 1998, 1999, and 2000, the Court admonished

petitioner that he needed to file his returns and that it was not

too late.    The Court advised petitioner:   “You have been duped,”

and petitioner responded:    “I know.”   The Court admonished

petitioner not to let this situation happen again.

     At the 2001 trial, the Court rendered a bench opinion.      We

sustained revised (lowered) deficiencies of $28,596 and $9,771

for 1994 and 1996, respectively.    We sustained the $6,628
                                - 4 -

deficiency for 1995 determined in the notice of deficiency.     We

also sustained the additions to tax.

       The Court based our holding on “the invalidity of the

taxpayer’s arguments with regard to the nontaxability of the

income received from * * * his air-conditioning and heating

business.”    The Court further noted:   “The evidence is also clear

and overwhelming that the taxpayer has somehow bought on to some

tax protester scheme.”

       We concluded by stating: “hopefully, he [petitioner] will be

anxious to pay his full share of taxes in the years ahead, and

file his returns timely and avoid the situation he’s currently

in.”

Petitioner’s Current Tax Court Case

       During 2001, petitioner was married to Martha Leggett.

Petitioner failed to file Federal income tax returns for 1997,

1998, 1999, 2000, and 2001.

       In 2001, petitioner received Social Security benefits of

$14,208.    In 2001, petitioner received $4,010 from Maronda Homes,

Inc. (Maronda), and $5,890 from Rain-Tile Roofing, Inc. (Rain-

Tile), in exchange for personal services rendered.

                               OPINION

I.     Deficiencies

       Generally, respondent’s deficiency determinations set forth

in the notices of deficiency are presumed correct, and petitioner
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bears the burden of showing the determination is in error.    Rule

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

7491(a), however, shifts the burden of proof to the Commissioner

with respect to a factual issue affecting the tax liability of a

taxpayer who meets certain preliminary conditions.   Petitioner

failed to cooperate with respondent and did not produce any

credible evidence with respect to any matter in this case.    See

sec. 7491(a).   Furthermore, petitioner did not claim that section

7491(a) applies.   Accordingly, section 7491(a) does not apply in

this case.

     A.   Taxable Income

     Pursuant to Rule 91(f), petitioner has admitted receiving

the income in issue.   Petitioner, however, testified at trial

that he did not believe he received Social Security benefits of

$14,208 in 2001--the amount he is deemed to have stipulated to

pursuant to Rule 91(f).    He testified that he thought his monthly

check in 2001 was for $1,057--which would total $12,684 for 2001.

Petitioner relies on his own testimony to establish this lower

amount.   Petitioner’s testimony was conclusory and not credible.

Under the circumstances presented here, we are not required to,

and generally do not, rely on petitioner’s testimony to sustain

his burden of establishing error in respondent’s determinations.

See Lerch v. Commissioner, 877 F.2d 624, 631-632 (7th Cir. 1989),

affg. T.C. Memo. 1987-295; Geiger v. Commissioner, 440 F.2d 688,
                                 - 6 -

689-690 (9th Cir. 1971), affg. per curiam T.C. Memo. 1969-159;

Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).

     Furthermore, petitioner did not introduce into evidence his

Social Security checks or any documents establishing the amount

of his Social Security checks.    If a party fails to introduce

evidence within that party’s possession, we may presume the

evidence would be unfavorable to that party.    Wichita Terminal

Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162

F.2d 513 (10th Cir. 1947).

     Petitioner’s only argument regarding the taxability of the

income in issue is a shopworn argument characteristic of tax-

protester rhetoric 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).    We shall not painstakingly

address 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).

     Accordingly, we sustain respondent’s determination regarding

the amount of taxable income received by petitioner.

     B.    Self-Employment Tax

     Section 1401 imposes self-employment tax on self-employment

income.   Section 1402 defines net earnings from self-employment
                                - 7 -

as the gross income derived by an individual from the carrying on

of any trade or business by such individual less allowable

deductions attributable to such trade or business.

      Respondent determined that petitioner’s income from Maronda

and Rain-Tile is subject to self-employment tax.   Petitioner’s

only argument is a shopworn argument characteristic of tax-

protester rhetoric that has been universally rejected by this and

other courts.   Accordingly, we sustain respondent’s determination

regarding petitioner’s liability for self-employment tax.

II.   Additions to Tax

      Section 7491(c) provides that the Commissioner will bear the

burden of production with respect to the liability of any

individual for additions to tax.   “The Commissioner’s burden of

production under section 7491(c) is to produce evidence that it

is appropriate to impose the relevant penalty, addition to tax,

or additional amount”.    Swain v. Commissioner, 118 T.C. 358, 363

(2002); see also Higbee v. Commissioner, 116 T.C. 438, 446

(2001).   If a taxpayer files a petition alleging some error in

the determination of an addition to tax or penalty, the

taxpayer’s challenge will succeed unless the Commissioner

produces evidence that the addition to tax or penalty is

appropriate.    Swain v. Commissioner, supra at 363-365.   The

Commissioner, however, does not have the obligation to introduce
                               - 8 -

evidence regarding reasonable cause or substantial authority.

Higbee v. Commissioner, supra at 446-447.

     A.   Section 6651(a)(1)

     Respondent determined that petitioner is liable for an

addition to tax pursuant to section 6651(a)(1) for 2001.     Section

6651(a)(1) imposes an addition to tax for failure to file a

return on the date prescribed (determined with regard to any

extension of time for filing), unless such failure is due to

reasonable cause and not due to willful neglect.

     Petitioner did not file a return for 2001.    Accordingly,

respondent has met his burden of production for the section

6651(a)(1) addition to tax for 2001.

     Petitioner has not established that his failure to timely

file for 2001 was due to reasonable cause.   See Higbee v.

Commissioner, supra at 446-447.   Accordingly, petitioner is

liable for the section 6651(a)(1) addition to tax for 2001.

     B.   Section 6654(a)

     Section 6654 imposes an addition to tax for failure to pay

estimated income tax.   Respondent submitted no evidence that

petitioner failed to pay estimated tax for 2001.    Furthermore,

the stipulations do not establish that petitioner failed to pay

estimated tax for 2001.   Accordingly, we conclude that respondent

has not satisfied his burden of production regarding this issue
                                - 9 -

and petitioner is not liable for the addition to tax pursuant to

section 6654(a) for 2001.

III. Section 6673

     Section 6673(a)(1) authorizes this Court to require a

taxpayer to pay to the United States a penalty not to exceed

$25,000 if the taxpayer took frivolous or groundless positions in

the proceedings or instituted the proceedings primarily for

delay.   A position maintained by the taxpayer is “frivolous”

where 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); see also Hansen v.

Commissioner, 820 F.2d 1464, 1470 (9th Cir. 1987) (section 6673

penalty upheld because taxpayer should have known claim was

frivolous).

     Petitioner’s only argument in this case was that his income

was not taxable.    Petitioner was advised at the 2001 trial and at

the trial of the instant case of the Code provisions regarding

the taxability of his income.   We advised petitioner at the 2001

trial that his arguments were frivolous.   We conclude petitioner

advanced frivolous and groundless positions in these proceedings.

     We also are convinced that petitioner instituted the

proceedings primarily for delay.   In addition to again advancing

an argument the Court advised him was frivolous at the 2001 trial
                              - 10 -

and the instant trial, petitioner stated:   “Well, I don’t have

enough information to refute anything at this point.”

     We advised petitioner at the 2001 trial that his arguments

were frivolous, and we admonished him against advancing them

again.   Our admonition at the 2001 trial was insufficient to

deter petitioner from returning to the Court and advancing the

same frivolous and groundless position in the instant case.

Furthermore, respondent advised petitioner by letter of the

provisions of section 6673, but it also was insufficient to deter

petitioner from returning to the Court and advancing a frivolous

and groundless position in the instant case.

     Accordingly, in light of the fact that petitioner took

frivolous or groundless positions in this proceeding and

instituted this proceeding primarily for delay, pursuant to

section 6673(a) we hold petitioner is liable for a $5,000

penalty.

     To reflect the foregoing,


                                         Decision will be entered

                                    for respondent.
