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Science Forum Index » Energy - Hydrogen Forum » 861 Losers - Christopher and Corcoran
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| Richard Macdonald |
 Posted: Thu Mar 01, 2007 4:53 am |
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Dale hates having reality pointed out to him, as you can see his position
is a 0-4 loser and I haven't even left the letter "C". He needs to realize
that Regulations have no power except that given to them by statute:
From T.C. Memo. 2002-18, MARK CHRISTOPHER AND NANCY LOUISE CORCORAN,
Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No.
2947-01.
[affirmed by the Ninth Circuit TNT 235-6, No. 02-71577 (9th Cir.
11/12/2002), (unpublished opinion), (Supreme Court) cert. den. TNT 2003 TNT
97-4, No. 02-1481 (5/19/2003).]
Section 1 imposes an income tax on the income of every individual who is a
citizen or resident of the United States. Sec. 1.1-1(a)(1), Income Tax Regs.
Section 61(a) provides that except as otherwise provided in subtitle A
(income taxes) gross [5] income includes "all income from whatever source
derived," including compensation for services and interest. Secs. 61(a)(1),
(4). Section 85(a) provides that an individual's gross income includes
unemployment compensation.
Ignoring these statutory provisions, petitioners argue that their
compensation for services, unemployment compensation, and interest do not
constitute gross income because these items of income are not listed in
section 1.861-8(f), Income Tax Regs. Their argument is misplaced and takes
section 1.861-8(f), Income Tax Regs., out of context. The rules of sections
861-865 have significance in determining whether income is considered from
sources within or without the United States. The source rules do not exclude
from U.S. taxation income earned by U.S. citizens from sources within the
United States.
UNITED STATES TAX COURT
MARK CHRISTOPHER AND NANCY LOUISE CORCORAN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2947-01.
Filed January 18, 2002.
Mark Christopher Corcoran, pro se.
Timothy F. Salel, for respondent.
MEMORANDUM OPINION
WOLFE, Special Trial Judge: Respondent determined a deficiency of $4,155 in
petitioners' 1998 Federal income tax. In the answer to the petition
respondent asserted an accuracy related penalty of $831 pursuant to section
6662(a). At trial respondent filed a written motion for a penalty under
section [2] 6673(a)(1). All section references are to the Internal Revenue
Code in effect for 1998.
The issues for decision are: (1) Whether petitioners' compensation for
services, unemployment compensation, and interest received during 1998
constitute gross income; (2) whether petitioners are liable for an
accuracy-related penalty under section 6662(a); and (3) whether imposition
of a penalty under section 6673(a) is appropriate under the circumstances of
this case.
Some of the facts have been stipulated and are so found. The stipulation of
facts and the accompanying exhibits are incorporated herein by this
reference. Petitioners resided in Fallbrook, California, when they filed
their petition. Petitioners are well-educated people. Both graduated from
California State University at Long Beach. Mark Corcoran (petitioner)
received a bachelor's degree in business administration with an emphasis in
accounting. Petitioner Nancy Corcoran (Mrs. Corcoran) holds a master's
degree in education. Petitioner is an accountant for Global Outdoors, Inc.
Mrs. Corcoran teaches in the San Diego Catholic school system. During 1998,
petitioner received compensation for services of $13,269 and $5,773 from All
American Homes and Empire Marine, Inc., respectively. Petitioner also
received unemployment compensation of $168 from the California Employment
Development [3] Department. Mrs. Corcoran received $25,761 from the Roman
Catholic Bishop of San Diego with respect to her teaching job. Petitioners
also received interest on their bank account balances. In total, petitioners
received compensation for services of $44,803, unemployment compensation of
$168, and interest of $426. Petitioners jointly filed a 1998 Federal income
tax return. They filled in lines 7 through 56 of their Form 1040, U.S.
Individual Income Tax Return, with a zero on each line and claimed a refund
of $937.90. Petitioners attached to their tax return a Form W-2, Wage and
Tax Statement, reporting wages of $25,761 from Mrs. Corcoran's employer.
Respondent treated the $25,761 as if it were properly reported on the tax
return.
Petitioners stipulated that they received all the amounts that their
employers reported to the Internal Revenue Service on Forms W-2, as wages or
compensation paid to them. However, petitioners refused to stipulate that
such amounts constitute wages. Petitioners also stipulated that they
received all of the unemployment compensation and interest that respondent
determined were income. Petitioners do not challenge the facts on which
respondent's determinations are based or respondent's calculation of tax.
Rather, petitioners, by selectively analyzing statutes, regulations, and
judicial authorities out of context, have reached the conclusion that their
compensation for services, [4] unemployment compensation, and interest do
not constitute gross income.
Petitioners argue: (1) There is no law making petitioners liable for a
personal income tax; (2) petitioners have no gross income pursuant to
section 861 et seq. concerning gross income from sources within the United
States and without the United States; and (3) the notice of deficiency with
respect to petitioners' 1998 return is invalid because petitioners allegedly
were denied an administrative hearing and because respondent failed to carry
the burden of proof at the administrative level. At the outset we note that
petitioners' arguments are without factual or legal foundation. Their
contentions are reminiscent of standard tax protester rhetoric. They have
presented as exhibits copies of materials apparently prepared and
distributed by an organization opposed to compliance with the income tax
laws. While petitioners' arguments certainly do not require refutation "with
somber reasoning and copious citation of precedent", Crain v. Commissioner,
737 F.2d 1417 (5th Cir. 1984), we shall, nevertheless, briefly discuss some
of the issues raised.
Section 1 imposes an income tax on the income of every individual who is a
citizen or resident of the United States. Sec. 1.1-1(a)(1), Income Tax Regs.
Section 61(a) provides that except as otherwise provided in subtitle A
(income taxes) gross [5] income includes "all income from whatever source
derived," including compensation for services and interest. Secs. 61(a)(1),
(4). Section 85(a) provides that an individual's gross income includes
unemployment compensation.
Ignoring these statutory provisions, petitioners argue that their
compensation for services, unemployment compensation, and interest do not
constitute gross income because these items of income are not listed in
section 1.861-8(f), Income Tax Regs. Their argument is misplaced and takes
section 1.861-8(f), Income Tax Regs., out of context. The rules of sections
861-865 have significance in determining whether income is considered from
sources within or without the United States. The source rules do not exclude
from U.S. taxation income earned by U.S. citizens from sources within the
United States. See, e.g., Williams v. Commissioner, 114 T.C. 136, 138-139
(2000) (rejecting claim that income is not subject to tax because it is not
from any of the sources listed in sec. 1.861-8(a), Income Tax Regs.); Aiello
v. Commissioner, T.C. Memo. 1995-40 (rejecting claim that the only sources
of income for purposes of sec. 61 are listed in sec. 861); Great-West Life
Assur. Co. v. United States, 230 Ct. Cl. 477, 678 F.2d 180, 183 (1982) ("The
determination of where income is derived or 'sourced' is generally of no
moment to either United States citizens or United States corporations, for
[6] such persons are subject to tax under section 1 and section 11,
respectively, on their worldwide income.").
Petitioners' procedural arguments likewise are without merit. Petitioners
argue that the notice of deficiency is invalid because they allegedly were
denied an administrative hearing, and because respondent failed to carry the
burden of proof at the administrative level.
The record is unclear as to whether petitioners were provided the
opportunity for an administrative hearing. Regardless, it is readily
apparent that an administrative hearing in this case would have been futile.
Petitioners never disputed the amounts omitted from their tax return. Their
positions were certainly not going to be accepted by the Internal Revenue
Service. See Madge v. Commissioner, T.C. Memo. 2000-370 (rejecting taxpayer's
due process claim in a deficiency suit and finding that an administrative
hearing would have been futile), affd. per curiam without published opinion
___ F.3d ___ (8th Cir. 2001). As a general rule, this Court will not look
behind a deficiency notice to examine the evidence used, the propriety of
respondent's motives, or the administrative policy or procedure that informs
respondent's determinations. Pietanza v. Commissioner, 92 T.C. 729, 735
(1989), affd. without published opinion 935 F.2d 1282 (3d Cir. 1991);
Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324, 327 (1974); see
Snyder v. [7] Commissioner, T.C. Memo. 2001-255. A trial before the Tax
Court is a proceeding de novo; our determination of a taxpayer's liability
is based on the merits of the case and not on the record developed at the
administrative level. Greenberg's Express, Inc. v. Commissioner, supra at
328. With regard to the burden of proof as it pertains to their liability
for the deficiency in their income tax, petitioners' long-winded arguments
are misplaced. The resolution of their liability for the deficiency does not
depend on which party has the burden of proof. Petitioners have stipulated
the amounts omitted from their tax return. There are no material facts in
dispute. Since only legal issues remain, the burden of proof is irrelevant.
Nis Family Trust v. Commissioner, 115 T.C. 523, 538 (2000). Accordingly, we
sustain respondent's deficiency determination.
The second issue for decision is whether petitioners are liable for the
section 6662(a) accuracy-related penalty for 1998. Section 6662(a) imposes a
20-percent penalty on underpayments attributable to, among other things, the
taxpayer's negligence or disregard of rules or regulations. Negligence is
defined to include the "failure to make a reasonable attempt to comply" with
the tax laws. Sec. 6662(c). A position with respect to an item is
attributable to negligence if it lacks a reasonable basis. Sec.
1.6662-3(b)(1), Income Tax Regs. The term "disregard" [8] includes any
careless, reckless or intentional disregard of rules or regulations. Sec.
6662(c); sec. 1.6662-3(b)(2), Income Tax Regs. "'[I]ntentional disregard
occurs when a taxpayer who knows or should know of a rule or regulation
chooses to ignore its requirements.'" Cramer v. Commissioner, 64 F.3d 1406,
1414 (9th Cir. 1995)(quoting Hansen v. Commissioner, 820 F.2d 1464, 1469
(9th Cir. 1987)), affg. 101 T.C. 225 (1993). By failing to report income and
persistently refusing to acknowledge their tax liability with respect to
undisputed revenues, despite self-professed familiarity with the tax laws,
petitioners have behaved unreasonably and have intentionally disregarded the
rules and regulations. These circumstances, which are not disputed,
demonstrate that respondent has satisfied his burden of production under
section 7491(c) for his determination of the accuracy-related penalty based
on negligence or disregard of rules or regulations. Higbee v. Commissioner,
116 T.C. 438, 448-449 (2001). Accordingly, we sustain respondent's
determination of the accuracy-related penalty under section 6662(a).
By motion at the conclusion of trial, respondent requested that the Court
impose a penalty under section 6673(a). Section 6673(a)(1) authorizes this
Court to require a taxpayer to pay to the United States a penalty not in
excess of $25,000 if, inter alia, the taxpayer's position in the proceeding
is frivolous. A [9] position maintained by a taxpayer 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). Sanctions are properly imposed when the taxpayer knew or
should have known that his claim or argument was frivolous. Hansen v.
Commissioner, supra at 1470; Nis Family Trust v. Commissioner, supra at 544.
Petitioners knew or should have known that their position was frivolous. Mr.
Corcoran has been trained as an accountant and has been employed in that
capacity. He testified that he has spent 4 years researching the tax laws.
One month before trial, respondent's counsel sent a letter to petitioners
clearly outlining the relevant Code sections. He warned petitioners that
respondent would move for the Court to impose the section 6673(a) penalty if
they continued to pursue their frivolous arguments. Petitioners ignored our
precedents and the warnings from respondent's counsel. At trial petitioners
introduced numerous inappropriate exhibits, including a copy of a Peanuts
Cartoon featuring Snoopy. They have wasted limited judicial and
administrative resources. Accordingly, we shall require petitioners to pay a
$2,000 penalty to the United States under section 6673(a).
To the extent not herein discussed, we have considered petitioners' other
arguments and found them to be meritless.
[10]
To reflect the foregoing, An appropriate order and decision will be entered
for respondent.
--
Richard A. Macdonald, CPA/EA
Be thankful we're not getting all
the government we're paying for.
-- Will Rogers |
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| Paul A. Thomas |
| Posted: Thu Mar 01, 2007 11:21 am |
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"Richard Macdonald" <rmacdonald@verizon.net> wrote
Quote: From T.C. Memo. 2002-18, MARK CHRISTOPHER AND NANCY LOUISE CORCORAN,
Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No.
2947-01.
[affirmed by the Ninth Circuit TNT 235-6, No. 02-71577 (9th Cir.
11/12/2002), (unpublished opinion), (Supreme Court) cert. den. TNT 2003
TNT 97-4, No. 02-1481 (5/19/2003).]
MEMORANDUM OPINION
WOLFE, Special Trial Judge: Respondent determined a deficiency of $4,155
in petitioners' 1998 Federal income tax.
You'd at least think they'd be haggling over some serious money.
In 1998 a $4155 tax amount related to about $27,700 of taxable income.
Doubting they had things like a mortgage to itemize, adding the standard
deduction and two personal exemptions, they're sitting close to $40,200 of
gross income (minimum from wages, interest, etc. Slightly higher if they
had kids.......
Less if that $4255 amount included penalties and interest.
Poor kids.......
With parents like that......
They're doomed...
--
Paul A. Thomas, CPA
Athens, Georgia
paulthomascpapc@bellsouth.net |
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