Opinion
Docket No. 22921-19.
03-16-2021
DAVID L. ADKISON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is
ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Kathleen Kerrigan at Los Angeles, California, containing her oral findings of fact and opinion rendered at the trial session at which the case was heard.
In accordance with the oral findings of fact and opinion, decision shall be entered for respondent.
(Signed) Kathleen Kerrigan
Judge Bench Opinion by Judge Kathleen Kerrigan February 11, 2021 David L. Adkison v. Commissioner Docket No. 22921-19
THE COURT: The Court has decided to render in this case the following as its oral findings of fact and opinion, which shall not be relied upon as precedent in any other case. This Bench Opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code (Code) and Rule 152 of the Tax Court Rules of Practice and Procedure.
Unless otherwise indicated, all section references are to Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. All monetary amounts are rounded to the nearest dollar.
By notice of deficiency dated September 30, 2019, the Internal Revenue Service (IRS or respondent) determined a deficiency in petitioner's Federal income tax for 2016 of $16,265 and a penalty of $3,313 pursuant to section 6662(a). After respondent's concession the only issues for our consideration are whether petitioner received unreported taxable wages of $20,665 and unreported taxable retirement income of $71,665 for 2016.
A remote trial of this case was conducted on February 9, 2021 during the Los Angeles, California trial session. Petitioner represented himself and Daniel V. Triplett represented respondent. The parties' stipulation of facts and accompanying exhibits were admitted into evidence. Petitioner was the only witness. We find the following facts:
FINDINGS OF FACT
Petitioner resided in South Dakota when he timely filed his petition. During 2016 petitioner was an employee of the State of California and received wages of $20,665. He received $71,725 in retirement payments from the California Public Employee's Retirement System (CalPERS) in 2016.
Petitioner timely filed his Form 1040, U.S. Individual Income Tax Return for 2016. On his return petitioner reported zero dollars for wages. He reported $71,725 for pensions and annuities with a taxable amount of zero. Attached to his return were two Forms 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. One form was a substitute for a Form W-2 and on this form, petitioner reported $2,457 of Federal income tax was withheld. On the second Form 4852, petitioner checked that it was a substitute for a 1099-R and reported a gross distribution of $71,725 with taxable amount of zero and Federal income tax of $13,140 withheld.
The State of California filed a Form W-2, Wage and Tax Statement, reporting petitioner was paid $20,665 in wages and $2,457 was withheld in Federal income. CalPERS filed a Form 1099-R, Distributions from Pensions, Annuities, Retirement, or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., reporting a distribution of taxable retirement income of $71,725 and Federal income tax withheld of $13,140.
OPINION
Generally, the Commissioner's determinations in a notice of deficiency are presumed correct, and the taxpayer bears the burden of proving those determinations erroneous. Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). In unreported income cases such as this, the Commissioner must establish "some evidentiary foundation" connecting the taxpayer with the income-producing activity or demonstrating that the taxpayer actually received unreported income. See Weimerskirch v. Commissioner, 596 F.2d 358, 361-362 (9th Cir. 1979), rev'g 67 T.C. 672 (1977); see also Edwards v. Commissioner, 680 F.2d 1268, 1270-1271 (9th Cir. 1982) (holding that the Commissioner's assertion of a deficiency is presumptively correct once some substantive evidence is introduced demonstrating that the taxpayer received unreported income).
If the Commissioner introduces some evidence that the taxpayer received unreported income, the burden shifts to the taxpayer, who must establish by a preponderance of the evidence that the deficiency was arbitrary or erroneous. See Hardy v. Commissioner, 181 F.3d 1002, 1004 (9th Cir. 1999), aff'g T.C. Memo. 1997-97. Respondent met the burden of production as to the unreported income determined in the notice of deficiency. Respondent produced a Certified Wage and Income Transcript for a Form W-2 and a Form 1099-R for 2016. Petitioner does not dispute receipt of the income. He has not shown that the burden of proof should shift to respondent as to any relevant factual issue.
Gross income generally includes all income from whatever source derived, including wages, from retirement plans, and interest. Sec. 61(a); Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-430 (1955); Wilcox v. Commissioner, 848 F.2d 1007, 1008 (9th Cir. 1988), aff'g T.C. Memo. 1987-225; sec. 1.61-2(a)(1), Income Tax Regs. The United States Supreme Court has held consistently that Congress defined gross income to exert the "the full measure of its taxing power." Commissioner v. Glenshaw Glass Co., 348 U.S. at 429 (quoting Helvering v. Clifford, 309 U.S. 331, 334 (1940)).
Petitioner did not make any valid arguments that his wages or retirement distributions are excludable from gross income because of any specific provision of law. See Rodriguez v. Commissioner, T.C. Memo. 2009-92. Instead, he advanced frivolous constitutional and statutory arguments that wages and retirement distributions from the State of California are not income for federal income tax purposes. We do not need to discuss petitioner's frivolous and groundless arguments. See Heisey v. Commissioner, T.C. Memo. 2002-41, slip op. at 4, aff'd, 59 F. App'x 233 (9th Cir. 2003). 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 (5th Cir. 1984). We discourage petitioner from making such arguments in the future.
A decision will be entered for respondent regarding the deficiency. This concludes the Court's oral Findings of Fact and Opinion in this case.
(Whereupon, at 11:42 a.m., the above-entitled matter was concluded.)