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The additions to tax under section 6651(a)(1) are based on
respondent's determination that petitioner's failure to file
income tax returns for the years in issue was not due to
reasonable cause.
Petitioner's Petition
Petitioner filed an eight page typewritten petition for
redetermination on May 26, 1995. The crux of petitioner's
position is that wages are not income, apparently because of the
provisions of sections 83 and 7701(e) and the notion that a
person's labor is property in which the person has a basis equal
to its fair market value. Thus, the petition includes the
following allegations:
When a lessee disposes of, or damages, property
belonging to the lessor, is the amount needed to
compensate the lessor to be included in the lessor's
gross income when paid to him by the lessee? NO. The
Respondent cannot tax as gross income, therefore, the
amount received for labor or services of an employee or
contractor, disposed of by an employer or customer of a
contractor, without violating � 7701(e)[2] which says
that service contracts shall be treated as leases of
2 Sec. 7701(e) provides in part as follows:
(e) Treatment of Certain Contracts for Providing
Services, Etc.--For purposes of chapter 1--
(1) In General.--A contract which purports to
be a service contract shall be treated as a lease of
property if such contract is properly treated as a
lease of property, taking into account all relevant
factors including whether or not--
(A) the service recipient is in physical
possession of the property * * *
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