In Uncategorized on 10/08/2012 at 17:37

That’s Judge David Gustafson; by way of illustration of the foregoing, as the high-priced lawyers say, see my blogpost “We’ll Come to You”, 9/18/12, where I describe how Judge G offered to conduct John Carter’s trial in the prison where John was a-servin’ of his time.

Tax Court is closed today, 10/8/12, so no decisions or orders issued. I was suffering from Tax Court withdrawal, so I found an order of Judge G’s from 10/5/12, Michael J. Sylvia III, Docket No. 23908-11. Judge G helps Mike out by answering four questions Mike poses in his pre-trial brief, and incidentally showing what frivolous arguments are and the consequences thereof.

Candidates for the RTRP qualification  won’t be asked questions like these on their exam, although maybe they should be.

Judge G: “1. ‘Is the notice of deficiency valid?’ The apparent answer to his question is: yes. Mr. Sylvia’s point seems to be that the notice of deficiency is based on reports from third parties of amounts that they paid to Mr. Sylvia, and he challenges those reports. A taxpayer may indeed raise a ‘reasonable dispute’ about third-party reporting. See section 6201(d). However, it appears (though we cannot yet determine finally) that the nature of the challenge is that Mr. Sylvia contends that the amounts reported to do not constitute taxable income for various frivolous reasons. If, as he seems to admit, the payors on the reports really did pay money to Mr. Sylvia in exchange for his work or property, then the amounts are taxable, and the notices of deficiency would be upheld in that regard.

“2. ‘By what statute, if any, has the petitioner been made liable for a tax?’ The answer is: section 1 of the Internal Revenue Code (26 U.S.C.).

3. ‘Was the petitioner engaged in an activity that is subject to tax?’ The income tax is imposed not on activities but on ‘income from whatever source derived’, including ‘[c]ompensation for services’. I.R.C. sec. 61(a)(1). For example, if Mr. Sylvia was paid compensation for his labor, then that compensation is taxable income.

4. ‘Does the petitioner have zero basis in his labor? Yes. ‘The argument that a taxpayer has a basis in labor equal to its fair market value would effectively eliminate taxes on wages and is frivolous.’ Beard v. United States, 580 F.Supp. 881, 882 (E.D.Mich.1984).” Order, p. 1.

Then Judge G tells Sylvia all about it: “America is a free country, and citizens have the right to advocate for their views, to petition for redress of grievance, and to lobby Congress for the revision of our laws. However, no one has the right to make doomed, frivolous arguments in Tax Court litigation only to delay the inevitable assessment of their obvious tax liability.” Order, p. 2.

And Judge G tells Sylvia to play fair or expect a Section 6673 penalty if he doesn’t.

Can’t wait for the decision.

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