Krueger v. Commissioner

• Decision Date: 20 January 1987
• Docket Number: Docket No. 15566-82.
• Citation: 52 TCM (CCH) 1429,1987 TC Memo 37
• Parties: Robert G. Krueger v. Commissioner.
• Court: U.S. Tax Court

52 T.C.M. (CCH) 1429 (1987)

T.C. Memo. 1987-37.

Robert G. Krueger v. Commissioner.

Docket No. 15566-82.

United States Tax Court.

Filed January 20, 1987.

Robert G. Krueger, pro se. Stephen M. Friedberg, for the respondent.

Memorandum Findings of Fact and Opinion

PARKER, Judge:

Respondent determined deficiencies in and additions to petitioner's Federal income tax as follows:

                Section 6653(b)
                Year Deficiency Addition1
                  1978 ......  $11,327.00      $5,663.50
                  1979 ......    7,524.28       3,762.39
                

After concessions,² the issues for decision are:

(1) Whether petitioner failed to report taxable income in the amounts determined by respondent;

(2) Whether petitioner incurred deductible itemized expenses in an amount in excess of that conceded by respondent for each year;

(3) Whether petitioner incurred any deductible traveling expenses while away from home in the pursuit of a trade or business within the meaning of section 162(a)(2);

(4) Whether petitioner incurred deductible moving expenses within the meaning of section 217(a); and

(5) Whether all or any part of the underpayment of tax each year was due to petitioner's fraud within the meaning of section 6653(b).

Findings of Fact

Some of the facts have been stipulated and are so found. The stipulation of facts and the exhibits attached thereto are incorporated herein by this reference. Also, certain deemed admissions and the exhibits attached to the request for admissions are incorporated herein by this reference.³

Petitioner Robert G. Krueger resided in Vinton, Virginia at the time he filed his petition in this case. Petitioner was married to Joy Krueger at all times pertinent to this case. Mr. Krueger was the sole wage earner in the family during the taxable years 1978 and 1979, and Mrs. Krueger did not file any tax returns those years. Mr. and Mrs. Krueger had two dependent children those years.

Petitioner is an electrician and a member of the International Brotherhood of Electrical Workers (AFL-CIO-CLC). Prior to 1978, petitioner obtained employment primarily through his local union located in Roanoke, Virginia and worked on construction jobs within the general vicinity of his home in Vinton, Virginia.⁴ Beginning in 1978, securing employment in that area of the country became increasingly difficult, and petitioner began searching elsewhere for work.

Around the end of January of 1978, petitioner left the Virginia area and traveled to Arizona in search of employment, putting his name on the various out-of-work lists he could find in that state. Petitioner secured employment and started work on February 13, 1978, with the Bechtel Power Corporation (hereinafter referred to as Bechtel) at a coal fired power plant under construction in St. Johns, Arizona. A power plant of that type takes seven to eight years to construct. After working in St. Johns for several months, petitioner decided to move his family to Arizona. The traveling expenses claimed by petitioner are for the period before his family moved to Arizona.

In late May or early June of 1978, petitioner returned to Vinton, Virginia and sold his house. The household furniture had been placed in a warehouse in Roanoke, Virginia at the end of April in anticipation of the sale and the family's departure for Arizona. Petitioner sold the house for $27,500 and the closing on the sale was held on June 9, 1978. Petitioner incurred closing costs on the sale in the amount of $3,653.90.⁵

On or about June 6, 1978, petitioner and his family departed from Virginia and arrived in Arizona a couple of days later. The moving expenses claimed for 1978 relate to this move. On June 23, 1978, shortly after they arrived in Arizona, petitioner and his wife purchased a Transamerica 5th wheel trailer. He and his family lived in this trailer throughout the remainder of 1978 and for all of 1979.

Petitioner worked for Bechtel in St. Johns, Arizona from February 13, 1978, to March 18, 1979, at which time he was laid off or fired from his job. Petitioner then moved his trailer and family to LaPlace, Louisiana where he began to work at a refinery on April 1, 1979. It is unclear whether petitioner was fired or laid off by his employer in Louisiana, but in any event, the project was still going when he left. Petitioner then moved his trailer and his family back to St. Johns and again began working for Bechtel at the power plant on July 2, 1979, where he worked throughout the rest of the year.⁶

On his initial Form W-4, dated February 13, 1978, that he filled out when he first commenced working for Bechtel, petitioner claimed one exemption with respect to withholding allowances. Four days later he filed another Form W-4, claiming to be exempt from taxation.⁷ Thereafter, and throughout the end of the taxable year 1979, petitioner filed the following Forms W-4 with Bechtel:

                Date Marital Status Allowances Claimed
                     4/24/78     Married           40 allowances
                     5/18/78     Married           29 allowances
                     7/13/78     Married          Exempt Status
                     9/19/78     Married           10 allowances
                     9/27/78     Married           40 allowances
                     7/03/79     Married          Exempt Status
                

Petitioner signed each of these Forms W-4 under the penalties of perjury. On the forms in which he claimed exempt status, petitioner certified that he incurred no liability for Federal income tax for the previous year and did not anticipate incurring any liability for Federal income tax in the present year. Those statements were false, and petitioner knew they were false at the time he signed the forms. On the forms in which he claimed 10 to 40 withholding exemptions or allowances, he certified that the number claimed did not exceed the number to which he was entitled. Those statements were false, and petitioner knew they were false at the time he signed the forms.

On three different occasions, Bechtel warned petitioner about filing improper W-4's. In response to petitioner's Form W-4 dated April 24, 1978, on which he claimed 40 withholding allowances, Bechtel advised petitioner by letter dated May 2, 1978, of potential civil and criminal penalties for filing an improper Form W-4. Bechtel requested petitioner to either furnish support for the exemptions claimed or to file a revised Form W-4 disclosing the proper number of exemptions to which he was entitled. Bechtel issued to petitioner essentially identical letters dated May 22, 1978, and October 18, 1978, in response to petitioner's Forms W-4 dated May 18, 1978, and September 27, 1978, respectively. Petitioner never filed a corrected Form W-4.⁸ As a result of the false Forms W-4 that petitioner filed with Bechtel during the years in issue, only $1,219.22 of Federal income tax was withheld by Bechtel during 1978 and no Federal income tax was withheld by Bechtel during 1979.

For the taxable years 1969 through 1977, petitioner had filed proper Federal income tax returns (Forms 1040), reporting his wage income and claiming various deductions and exemptions in each of those years. Petitioner usually received a refund of a few hundred dollars each year. For the taxable year 1978, petitioner submitted a Form 1040 to the Internal Revenue Service containing his name, address, and social security number. On this Form 1040, petitioner checked the filing status of married filing separately and claimed a total of four personal and dependency exemptions. This form was signed and dated, but contained no information with respect to petitioner's income and deductions. Instead of reporting his income and deductions, petitioner inserted the phrase "object: self incrimination" or the word "none" on lines 8 to 66 of the form.⁹ Petitioner submitted a similar Form 1040 to the Internal Revenue Service for the taxable year 1979.

At the time he prepared the Forms 1040 for 1978 and 1979, petitioner was neither the target of a grand jury investigation nor subject to any other criminal investigation into his affairs, either tax or otherwise. At that time petitioner had no reason to believe that there was any criminal investigation or possible criminal charge involving him. The Internal Revenue Service returned both of petitioner's Forms 1040 to him, informing him that they were not proper tax returns. The Internal Revenue Service wrote to petitioner, advising him as follows:

The U.S. Individual Income Tax Return form we received from you for the above year is not acceptable as an income tax return because it does not contain information required by law, and it does not comply with Internal Revenue Code requirements.

This is your notice of the legal requirements for filing Federal individual income tax returns. Failure to file a required return may subject you to prosecution under Internal Revenue Code section 7203. The requirements, and an explanation of the penalty, are shown on the back of this letter.

We have enclosed two blank income tax return forms and an addressed envelope for your convenience in filing a proper return.

Petitioner never filed proper tax returns for the taxable years 1978 and 1979.

During the taxable year 1978, petitioner received wages from Bechtel in the amount of $31,999.28. During the taxable year 1979, petitioner received wages from Bechtel in the amount of $24,075. These wages were properly reported by Bechtel on the wage and tax statements (Forms W-2) issued to petitioner for each of the years. Petitioner also received wages in 1979 from the Lambert Electric Company totaling $4,934, and from the W.E. Mason Corporation totaling $268. The record contains no information as to the nature of this employment or where the jobs were located.

After the essentially blank Forms 1040 had been filed by petitioner, the Internal Revenue Service, by letter dated May 27, 1980, advised him that a criminal investigation had commenced regarding his tax liability for the taxable years 1977, 1978, and 1979. Thereafter, by letter dated February 3, 1981, the Internal Revenue Service...