Bartlett v. Commissioner, Docket No. 27909-83.

• Decision Date: 10 September 1984
• Docket Number: Docket No. 27909-83.
• Citation: 1984 TC Memo 480,48 TCM (CCH) 1066
• Parties: Dale W. Bartlett and Mary L. Bartlett v. Commissioner.
• Court: U.S. Tax Court

48 TCM (CCH) 1066

1984 TC Memo 480

T.C. Memo. 1984-480.

Dale W. Bartlett and Mary L. Bartlett v. Commissioner.

Docket No. 27909-83.

United States Tax Court.

Filed September 10, 1984.

Dale W. Bartlett and Mary L. Bartlett, pro se, Richland, Wash. Blake W. Ferguson and Charles E. Williams, for the respondent.

Memorandum Opinion

CANTREL, Special Trial Judge:

This case is before the Court on respondent's Motion for Summary Judgment filed on July 23, 1984, pursuant to Rule 121, Tax Court Rules of Practice and Procedure.¹

Respondent, in his notice of deficiency issued to petitioners on June 29, 1983, determined a deficiency in petitioners' Federal income tax for the taxable calendar year 1980 in the amount of $3,534.00 and an addition to the tax under section 6653(a)² in the amount of $177.00. The deficiency is based on the disallowance of an adjustment to income claimed by petitioners in the amount of $16,309.00.³

Petitioners, at paragraph⁴ of their timely filed petition, recite —

A. On each of the counts listed in the deficiency notice, the Commissioner errs in that the tax forms mislead the petitioner to report more than was required.

B. Petitioner now understands and concurs with the 16th Amendment and does not believe that he or she is a subject of the tax nor that the amount called deficient is correct.

C. Petitioner therefore makes this special appearance to serve notice, petitioner questions the commissioner's or the court's jurisdiction.

D. Revenue Commissioner is further advised that Petitioner (a U.S. citizen) demands all rights under the U.S. Constitution and more specifically the right to trial by jury.4

Respondent filed his answer on November 28, 1983, on which date the pleadings were closed. Respondent's motion was filed more than 30 days after the pleadings were closed. See Rules 34, 36, 38 and 121.

Sufficiency of the Pleadings. Rule 34(b) provides in pertinent part that the petition in a deficiency action shall contain "* * * clear and concise assignments of each and every error which the petitioner alleges to have been committed by the Commissioner in the determination of the deficiency or liability * * *" and "* * * clear and concise lettered statements of the facts on which petitioner bases the assignments of error * * *."

It is clear beyond doubt that the petition raises no justiciable error respecting either of respondent's determinations.⁵ Moreover, it is equally clear that no justiciable facts appear anywhere in the petition. In our view, petitioners are yet others in a seemingly unending parade of tax protesters bent on glutting the docket of this Court and others with frivolous and groundless claims (all of which have been summarily rejected by this Court and others on innumerable occasions) and they have instituted this proceeding primarily for delay. As best we understand this record, we answer their frivolous and groundless contentions hereinbelow.

Respondent issued a valid notice of deficiency, a timely petition was filed and this Court has jurisdiction of this case. Sections 6212, 6213, and 6214.

The determinations made by respondent in his notice of deficiency are presumed correct; the burden of proof is on petitioners not respondent to show those determinations are wrong, and the imposition of the burden of proof is constitutional. Welch v. Helvering 3 USTC ¶ 1164, 290 U.S. 111 (1933); Rockwell v. Commissioner 75-1 USTC ¶ 9324, 512 F. 2d 882, 887 (9th Cir. 1975);⁶ Rule 142(a).

This Court generally (as is the case here) will not look behind a deficiency notice to examine evidence used or the propriety of the Commissioner's motives or of the administrative policy or procedures involved in making his determinations. Proesel v. Commissioner Dec. 36,514, 73 T.C. 600 (1979); Greenberg's Express, Inc. v. Commissioner Dec. 32,640, 62 T.C. 324, 327 (1974).

The U.S. Tax Court is a court of record established under Article I of the Constitution of the United States and duly empowered to hear and decide cases within the authority entrusted to it including this case. Burns, Stix Friedman & Co.v. Commissioner Dec. 31,114, 57 T.C. 392 (1971); sections 7441 and 7442. See also Rowlee v. Commissioner Dec. 40,228, 80 T.C. 1111, 1114-1115 (1983), appeal dismissed (2nd Cir. 1984), which thoroughly devitalizes petitioners' contention that the United States Tax Court is not a constitutional court.

The Bartletts are not entitled to a jury trial. Because there is no common law right of action against the sovereign, the Seventh Amendment does not apply to suits against the United States. McElrath v. United States, 102 U.S. 426, 440, 26 L. Ed. 189 (1880). Therefore the denial of the right to a jury in Tax Court is not unconstitutional. Lonsdale v. Commissioner 81-2 USTC ¶ 9772, 661 F. 2d 71, 72 (5th Cir. 1981); Olshausen v. Commissioner 60-1 USTC ¶ 9142, 273 F. 2d 23, 27-28 (9th Cir. 1959), cert. denied, 363 U.S. 820, 80 S. Ct. 1256, 4 L. Ed. 2d 1517 (1960). Moreover, by paying the tax and perfecting a refund suit the Bartletts could have obtained a jury trial. They voluntarily chose not to do this." McCoy v. Commissioner 83-1 USTC ¶ 9152, 696 F. 2d 1234, 1237 (9th Cir. 1983), affg. Dec. 37,967 76 T.C. 1027 (1981).

Summary Judgment. Although we could have made a determination in respondent's favor on the basis of the pleadings alone, we prefer to rely on respondent's affirmative showing here. In his motion for summary judgment, respondent maintains that there is no genuine issue of material fact either as to the amount of the deficiency or the imposition of the negligence addition. Respondent has submitted the affidavit of Blake W. Ferguson, respondent's trial counsel, which provides, in pertinent part —

4. That attached hereto as Exhibit A is a true and correct copy of the United States Federal Income Tax Return (Form 1040) filed by the petitioners for the taxable year 1980.

5. That attached hereto as Exhibit B is a true and correct copy of the statutory notice of deficiency dated June 29, 1983.

The affidavit is subscribed and sworn to under oath. Each document referred to in the affidavit was attached as a part thereof. Petitioners, as indicated hereinbefore, have submitted no response to respondent's motion.

Among the documents submitted as part of Exhibit A, the Form 1040 filed by petitioners for taxable calendar year 1980, are nine Forms W-2, each with the name and social security number of the respective petitioner. There are various employers listed on the Forms W-2. The Forms W-2 show that petitioners received wage income in 1980 from their respective employers in the aggregate amount of $34,967.25.

Petitioners reported their wages in full on line 8, Wages, salaries, tips, etc., of their Form 1040. On line 9 they reported interest income of $274.66. They then deducted, on line 21, Other income, an amount of $16,309.02, characterizing this deduction as "Factor Discount on Receivables Sold". By use of this impermissible procedure they reported a total income of line 22 of $18,932.89.

The purpose of summary judgment under Rule 121 is to "pierce" the pleadings to determine if any genuine issues of material fact exist for determination. C. Wright, A. Miller & M. Kane, 10 Federal Practice and Procedure: Civil, sec. 2712 (2d ed. 1983).⁷ A decision will be rendered on a motion for summary judgment if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. Rule 121(b). The burden of proving that there is no genuine issue of material fact is on the moving party. Adickes v. Kress & Co., 398 U.S. 144, 157 (1970); Graf v. Commissioner Dec. 40,123, 80 T.C. 944, 946 (1983); Espinoza v. Commissioner Dec. 38,853, 78 T.C. 412, 416 (1982).

On a motion for summary judgment the presumptive correctness of respondent's determinations will permit judgment in respondent's favor, without trial, unless the nonmoving party introduces evidence, in his pleading or otherwise, showing that there is a genuine issue of material fact. Abramo v. Commissioner Dec. 38,746, 78 T.C. 154, 163-164 (1982). See Parkinson v. Commissioner 81-1 USTC ¶ 9415, 647 F. 2d 875, 876 (9th Cir. 1981), which sustains this standard.

Here, respondent maintains that he has met his burden of showing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. For the reasons discussed hereinbelow, we agree.

I. Adjustment to Income for Factor Discount. The first principle of Federal income taxation is "that income must be taxed to him who earns it." Commissioner v. Culbertson 49-1 USTC ¶ 9323, 337 U.S. 733, 739-740 (1949). See also United States v. Basye 73-1 USTC ¶ 9250, 410 U.S. 441, 449 (1973); Johnson v. United States, 698 F. 2d 372, 374 (9th Cir. 1982); Benningfield v. Commissioner Dec. 40,465, 81 T.C. 408, 418 (1983).⁸ The courts will not permit this rule to be defeated by contractual arrangements designed to deflect the incidents of Federal income taxation away from the one who earns the income. Benningfield v. Commissioner, supra at 418-419. See also United States v. Basye, supra at 449-450; Lucas v. Earl 2 USTC ¶ 496, 281 U.S. 111, 114-115 (1930). The fact that the contractual arrangement is binding for state law purposes is irrelevant to the determination of who earns the income for Federal income tax purposes. Benningfield v. Commissioner, supra at 418-419.

Income is earned by the person who controls the earning of the income. Benningfield v. Commissioner, supra at 419; Johnson v. Commissioner Dec. 39,069, 78 T.C. 882, 891 (1982); American Savings Bank v. Commissioner Dec. 30,881, 56 T.C. 828, 839 (1971). "* * * Determining who earns the income depends upon which person or entity in fact controls the earning of the income, not who ultimately receives the income. * * *." Benningfield...