Kindred v. Commissioner

• Decision Date: 19 November 1979
• Docket Number: Docket No. 10475-77.
• Citation: 39 TCM (CCH) 490
• Parties: George Lee Kindred v. Commissioner.
• Court: U.S. Tax Court

39 TCM (CCH) 490

T.C. Memo. 1979-457(M).

George Lee Kindred v. Commissioner.

Docket No. 10475-77.

United States Tax Court.

Filed November 19, 1979.

George Lee Kindred, pro se, 9600 Cedar Lake Road, Pinckney, Mich. Richard A. Witkowski, for the respondent.

Memorandum Findings of Fact and Opinion

FEATHERSTON, Judge:

Respondent determined the following deficiencies in petitioner's Federal income taxes and additions to tax:

                                           Section    Section
                Taxable                    6651(a)     6654
                  Year       Deficiency   Addition   Addition
                  1967 ..... $2,642.75     $660.69    $83.13
                  1968 .....    950.57      237.64     29.91
                  1969 .....  2,512.63      628.16     79.05
                  1970 .....  1,482.22      370.56     46.25
                  1971 ..... $  993.93     $248.48    $31.27
                  1972 .....    697.68      174.42     21.95
                  1973 .....    844.96      211.24     26.58
                  1974 .....  1,024.81      256.20     32.23
                  1975 .....    970.18      242.55     41.66
                

Four issues are presented for decision:

1. Whether petitioner received taxable income in the amounts determined by respondent or in any amounts during 1967 through 1975.

2. Whether petitioner is liable under section 1401¹ for self-employment taxes for 1967 through 1975.

3. Whether petitioner is liable under section 6651(a) for the addition to tax for failure to file an income tax return for each of the years 1967 through 1975.

4. Whether petitioner is liable under section 6654 for the addition to tax for underpayment of estimated tax for 1967 through 1975.

Findings of Fact

At the time the petition was filed in this case, petitioner was a legal resident of Pinckney, Michigan. For the taxable years 1967, 1968, and 1969, petitioner filed Forms 1040 which contained no information from which a tax liability could be computed. Across the face of the Form 1040 for 1967 the following was written:

PROTEST. I plead the following parts of the U.S. Constitution: The Preamble — Art. 1, sec. 1 — Art. 1, sec. 2, clause 3 — Art. 1, sec. 8, clause 1 — Art. 1, sec. 8, clause 2 — Art. 1, sec. 8, clause 5 — Art. 1, sec. 8, clause 6 — Art. 1, sec. 9, clause 2 — Art. 1, sec. 9, clause 3, 4, 7 — Art. 1, sec. 10, clause 1 — and other Articles — plus Amendments 1, 4, 5, 6, 7, 8, 9, 10, 13, & 14, sec. 1.

Statements of similar import were inscribed on the Forms 1040 filed for 1968 and 1969. Petitioner filed no income tax returns for 1970, 1971, 1972, 1973, 1974, and 1975.

During the taxable years 1967 through 1975, petitioner was self-employed. During 1967 and 1968, petitioner was paid $14,094.85 and $2,955.44, respectively, by Rose Hill Realty, Inc. During 1968, 1969, and 1970, petitioner was paid $1,035, $12,589.05, and $9,281.70 by Howell Town & Country Realty. In 1968, petitioner received $3,000 from Jack Stastuk of Jack Stastuk Associates (Associates); this sum was advanced to petitioner on the understanding that it would be repaid from earnings with Associates.

During the course of an examination with respect to petitioner's income tax liability for 1968 through 1975, petitioner failed or refused to provide the examining agent with any information as to the amount or source of his income for those years. He maintained no checking, savings, or other bank accounts. He conducted all of his financial transactions by use of currency or money orders. Petitioner received no inheritances during 1967 through 1975.

During 1967 through 1975, petitioner, his wife, and three children lived on a small farm near Pinckney, Michigan. In 1968, petitioner purchased this farm on a sales contract on which he paid $180 per month. In addition, he paid taxes on the farm; the taxes, which were increasing, amounted to $1,000 per year at the time of the trial. He also paid heating and other utility bills. On this farm, petitioner raised food crops and chickens. Part of the food for his family was derived from these crops, from eggs laid by the chickens, and from chickens butchered for table use. Some of the produce grown on the farm was exchanged with neighbors for other food items.

During this period, petitioner was actively engaged in what has been called a tax revolt movement. He spent approximately 6 months in prison in 1971 on a charge of contempt for refusal to obey a court order directing him to disclose his income records to the Michigan State income tax authorities. Following his release, he traveled to numerous places throughout the United States to attend tax revolt meetings where he made speeches on the Constitution and its relationship to the tax laws and on the growing power and extent of the government. In these speeches, he described how some individuals were filing income tax returns which contained no information with respect to their income and others were refusing to file any income tax returns at all.

At each of these meetings, a hat or other receptacle was placed on a table or was passed through the crowd, and contributions were given petitioner. Also, at these meetings, printed literature, at least some of which was furnished to petitioner without cost, was distributed. Individuals who took the literature made contributions. Petitioner also received contributions through the mails. The contributors of all these funds made the donations to petitioner primarily in order to enable him to carry on his tax revolt activities. Petitioner maintained no records with respect to either these donations or income of any sort which he received.

During 1971 through 1975, petitioner made tax revolt speeches and received moneys at various locations throughout the United States, including cities in New York, Illinois, Missouri, and California, and in Washington, D.C., as well as in numerous cities in Michigan nearer his home, such as Lansing, Muskegon, Howell, Grand Haven, Allegan, and Detroit.

In estimating the amounts of petitioner's taxable income for 1967, 1968, 1969, and 1970, respondent determined that petitioner received commission income in the amounts of $14,094.85, $6,990.44, $12,589.08, and $9,281.70, respectively. For 1971 through 1975, the examining agent used information obtained from the Department of Labor, Bureau of Labor Statistics (hereinafter Labor), for certain categories of expenses incurred by a four-member family in the lower income level, nonmetropolitan area of the north-central region. From the figures published by Labor, the examining agent subtracted the amounts included for taxes to derive a base total income figure, which he adjusted to compute a figure applicable to a family of five.

Opinion

1. Income Tax Liability

Petitioner disputes respondent's determination for the entire period at issue. In the petition, he alleges that he had no income during 1971 through 1975 but subsisted "off the land, and by reason of God, Yahweh, Jesus Christ's Blessings, and by virtue of savings and frugality, and via the charity of family and friends." He characterizes respondent's determination for that period, which was based on Labor's statistics, as erroneous and arbitrary; the nature of the determination, in his view, shifts the burden of proof to respondent.

There is no merit to petitioner's contentions. As to 1967 through 1970, the parties stipulated that petitioner received payments from Rose Hill Realty, Inc., in the amounts of $14,094.85 in 1967 and $2,955.44 in 1968. The parties further stipulated that petitioner received commissions from Howell Town & Country Realty in the amounts of $1,035 in 1968, $12,589.05 in 1969, and $9,281.70 in 1970. Except for an additional $3,000 discussed below, these are the precise amounts of income which respondent determined that petitioner received in 1968, 1969, and 1970. As to these amounts, respondent's determination must be sustained.

In 1968, petitioner received $3,000 from Associates. In his reply to respondent's interrogatories, which was admitted in evidence, petitioner characterized this $3,000 as an amount loaned to petitioner, a portion each week, which "was to have been paid back out of an commissions Petitioner had coming." Petitioner testified that, after he left its employ, Associates tried to collect the funds advanced to him. In the light of all the evidence, we have concluded that this $3,000 was a loan to petitioner and is not taxable to him in 1968. Cf. Beaver v. Commissioner Dec. 30,380, 55 T.C. 85, 91-92 (1970).

As to 1971 through 1975, petitioner filed no income tax returns. On audit, he failed or refused to furnish any information to the examining agent on which an estimate of his income could be based. An investigation by the Internal Revenue Service revealed no bank accounts or other bank or business transactions which would reflect the source or amount of his taxable income. Testimony at the trial confirmed that petitioner had no bank accounts and that he paid all his bills by use of currency or money orders.

The examining revenue agent was aware of petitioner's speechmaking activities which, as described in our Findings, included collections of funds and of his open and flagrant defiance of the government and its taxing authorities. Because the agent could locate no evidence which would indicate the amount of petitioner's income, he determined the deficiencies on the basis of Labor's statistics showing the amount of income required for the support of lower income families with four members in a nonmetropolitan area in the north-central region of the United States and adjusted those figures to derive the amount of income required to support a family of five.

In circumstances of this case, we think the procedure followed by the examining agent was reasonable. In Gliddio v. Commissioner Dec. 30,254, 54 T.C. 1530 (1970), an individual who had been arrested for accepting wagers filed no income tax returns. Sustaining a determination of the amount of the taxpayer's income based on a table furnished by Labor, the Court stated in part (supra at 1533):

* * * section 6212(a) provides for the

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