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CURTIS v. COMMISSIONER OF INTERNAL REVENUE
T.C. Memo. 2013-12
LAUREL ANN CURTIS, Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5657-10.
United States Tax Court.
Filed January 14, 2013.
Laurel Ann Curtis, pro se.1
MEMORANDUM FINDINGS OF FACT AND OPINIONTHORNTON, Chief Judge. Respondent determined the following deficiencies in and additions to petitioner's Federal income tax:2
Additions to tax
Sec. Sec. Sec.
Year Deficiency 6651(f) 6651(a)(2)1 6654
1994 $13,579 $9,845 $3,395 $700
1995 12,568 9,112 3,142 686
1996 191,576 138,893 47,894 10,197
1997 161,180 116,856 40,295 8,683
19982 23,716 17,194 5,929 1,076
1 On brief respondent conceded that petitioner is not liable for additions to tax
under sec. 6651(a)(2) for taxable years 1994 through 1997.
2 In his answer respondent conceded that there is no deficiency or addition to
tax for tax year 1998.
The issues for decision are: (1) whether petitioner is required to include in income certain amounts she received as rental income during tax years 1994, 1995, and 19963; (2) whether petitioner is required to include in income certain amounts she received as capital gain income from the sale of real property during tax years 1996 and 19974; (3) whether petitioner's failure to file Federal income tax returns for the tax years 1994 through 1997 (years at issue) was fraudulent within the meaning of section 6651(f);5 (4) whether the section 6654 addition to tax applies to petitioner's failure to pay estimated taxes for the years at issue; and (5) whether the Court should impose a penalty on petitioner under section 6673(a)(1). FINDINGS OF FACTThe parties have stipulated some facts, which we find accordingly.6 The stipulation of facts together with the attached exhibits is incorporated herein by this reference. When she filed her petition, petitioner lived in Oregon.
1. Petitioner was represented by counsel Ronald H. Hoevet throughout the pretrial proceedings. When petitioner's case was called for trial, however, Mr. Hoevet moved for leave to withdraw as counsel on grounds that he could not "assert a position unless there is a basis of law and fact for doing so that is not frivolous." Respondent did not object to this motion, which the Court granted.
2. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the relevant taxable years, and all Rule references are to the Tax Court Rules of Practice and Procedure. Monetary amounts are rounded to the nearest dollar.
3. In the stipulation of settled issues the parties agreed to the amounts of rental income petitioner received during tax years 1994 through 1997. In agreeing to these amounts, respondent conceded that petitioner did not receive rental income of $16,233, $15,533, $15,589, and $37,268 for tax years 1994, 1995, 1996, and 1997, respectively, as determined in the notice of deficiency.
4. In the stipulation of settled issues the parties agreed to the amount of net capital gain income petitioner received from the sale of real property during tax years 1996 and 1997. In agreeing to these amounts, respondent conceded that petitioner did not receive $106,900 in capital gain income during tax year 1997, as determined in the notice of deficiency.
5. Respondent argues that if the Court does not find petitioner liable for the addition to tax pursuant to sec. 6651(f) for the years at issue, the Court should find petitioner liable in the alternative for the sec. 6651(a)(1) addition to tax for the years at issue.
6. At trial petitioner stated that she wanted to "challenge some of the figures and statements in the stipulated facts" because she signed the stipulation of facts without having "the information in order to act appropriately." Stipulations are generally treated as "conclusive admissions". Rule 91(e). We may disregard stipulations where justice so requires if the evidence contrary to the stipulation is substantial or the stipulation is clearly contrary to the facts disclosed by the record. Cal-Maine Foods, Inc. v. Commissioner, 93 T.C. 181, 195 (1989); see Loftin & Woodward, Inc. v. United States, 577 F.2d 1206, 1232 (5th Cir. 1978); Jasionowski v. Commissioner, 66 T.C. 312, 317-318 (1976). Petitioner did not specify the stipulations with which she disagreed and did not address the issue on brief. Accordingly, we do not set aside the stipulations because petitioner presented no evidence contrary to them and because we treat petitioner's failure to address the issue on brief, in effect, as a concession. See Rule 151(e)(4) and (5); Sundstrand Corp. & Subs. v. Commissioner, 96 T.C. 226, 344 (1991).
7. Irwin Schiff is the author of several publications, including The Biggest Con: How the Government is Fleecing You (1976); How Anyone Can Stop Paying Income Taxes (1982); and The Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes (1990). His activities in protest of the tax laws are well known to this Court. See, e.g., Carrillo v. Commissioner, T.C. Memo. 2005-290; Schiff v. Commissioner, T.C. Memo. 1992-183. Schiff has been convicted of numerous tax-related crimes, including conspiracy to defraud the Government for the purpose of impeding and impairing the Internal Revenue Service, assisting in the preparation of false income tax returns, tax evasion, and filing false income tax returns. See United States v. Cohen, 510 F.3d 1114, 1117 n.2 (9th Cir. 2007).
In 1996 Mr. Schiff incorporated Freedom Foundation, Inc., in Nevada to propagate his views concerning the voluntary nature of the income tax. Petitioner was listed as the treasurer of Freedom Foundation, Inc., from 1996 through 1999.
8. Petitioner also filed a complaint regarding tax years 1983 through 1993 with the Oregon Tax Court. On June 30, 2004, the Oregon Tax Court issued its opinion in that case, finding that rental income petitioner received was taxable by the State. The court also awarded the Oregon Department of Revenue $5,000 in damages, as well as attorney's fees because it found that "[t]here is no objectively reasonable basis for * * * [petitioner's] legal positions." Curtis v. Dep't of Revenue, 17 Or. Tax 414, 424-425 (Or. T.C. 2004). On June 3, 2005, the Supreme Court of Oregon affirmed the decision. Curtis v. Dep't of Revenue, 112 P.3d 330 (Or. 2005).
9. On appeal, the U.S. Court of Appeals for the Ninth Circuit remanded the case for clarification as to the evidence this Court relied upon in its findings regarding the amounts of petitioner's unreported income. See Curtis v. Commissioner, 232 F.3d 893 (9th Cir. 2000), rev'g and remanding T.C. Memo. 1996-484. On remand, this Court reentered its original order and decision. See Curtis v. Commissioner, T.C. Memo. 2001-308, aff'd in part and rev'd in part, 73 Fed. Appx. 200 (9th Cir. 2003). Petitioner appealed that decision to the Court of Appeals for the Ninth Circuit, which affirmed most of this Court's findings, including the imposition of the sec. 6673(a) penalty, and reversed and remanded the case for clarification of a discrepancy regarding one of the tax years. See Curtis v. Commissioner, 73 Fed. Appx. 200. On August 19, 2004, we entered a decision in that case.
10. Although sec. 7491 may shift the burden to the Commissioner in certain circumstances, the section is applicable only to court proceedings that arise in connection with examinations commencing after July 22, 1998. See Williams v. Commissioner, 123 T.C. 144, 146 n.3 (2004); Nis Family Trust v. Commissioner, 115 T.C. 523, 537 (2000). The examination in this case commenced in April 1998; therefore, sec. 7491 is not applicable.
11. Petitioner offers numerous arguments generally objecting to the imposition of an income tax, including: (1) there can be no deficiency unless a return was filed; (2) the Commissioner has no authority to assess an estimated tax unless it is a tax payable by stamp; (3) only corporate entities can have income under sec. 61; (4) respondent is not legally authorized to prepare a substitute for return; (5) real estate rents are not subject to the income tax authorized by the Sixteenth Amendment; and (6) no U.S. citizen is statutorily liable for an income tax. Petitioner's meritless arguments have repeatedly been rejected by this and other courts. See, e.g., Wilcox v. Commissioner, 848 F.2d 1007, 1008 (9th Cir. 1988), aff'g T.C. Memo. 1987-225; Carter v. Commissioner, 784 F.2d 1006, 1009 (9th Cir. 1986); Charczuk v. Commissioner, 771 F.2d 471 (10th Cir. 1985), aff'g T.C. Memo. 1983-433; Wnuck v. Commissioner, 136 T.C. 498 (2011); Lawson v. Commissioner, T.C. Memo. 2009-147; Turner v. Commissioner, T.C. Memo. 2004-251. 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." See Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984).
12. Petitioner's argument that the SFRs respondent prepared are invalid because respondent failed to comply with sec. 6020(b) is meritless. Sec. 6020(b) allows the Secretary (or other authorized internal revenue officer or employee) to prepare a return "from his own knowledge and from such information as he can obtain through testimony or otherwise." See also sec. 301.6020-1(a)(1), Proced. & Admin. Regs. The regulations provide that a substitute for return is valid if it "identifies the taxpayer by name and taxpayer identification number, contains sufficient information from which to compute the taxpayer's tax liability, and purports to be a return." Sec. 301.6020-1(b)(2), Proced. & Admin. Regs. Additionally, the return must be signed by an internal revenue officer or employee to signify that the officer or employee has "adopted the document as a return for the taxpayer." Id. The SFRs respondent prepared are valid under the regulations. See Malone v. Commissioner, T.C. Memo. 1998-372 (finding that taxpayers failed to state a claim upon which relief could be granted when they argued that SFRs not signed by taxpayers were invalid).
13. As previously noted, respondent has conceded that petitioner has no deficiency and is not liable for additions to tax for 1998.
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