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interest is the type of income that is taxable under the Internal
Revenue Code.1
Background
Petitioners resided at Coquille, Oregon, at the time their
petition was filed in this case. Petitioners filed Forms 1040,
U.S. Individual Income Tax Return, for years prior to 1992. For
1992 and subsequent years, including the years in issue,
petitioners filed Forms 1040NR, U.S. Nonresident Alien Income
Tax Return, generally reflecting that they were not subject to
income tax. For the years 1994, 1995, and 1996, petitioner
Ronald Joling hauled goods by truck in return for compensation.
During the years 1994, 1995, and 1996, petitioners owned the
Myrtle Lane Motel, from which they received income from rental
proceeds. During the years 1994, 1995, and 1996, petitioners
received income from payments received for the sale of real
property. For 1996, each petitioner received income from a
1 In their argument, petitioners reference sec. 1.6662-
4(d)(3)(iii), Income Tax Regs., concerning the definition of
“substantial authority” for purposes of the accuracy-related
penalty of sec. 6662. No accuracy-related penalty, however, is
in issue here. Respondent determined income tax deficiencies and
additions for delinquency (late-filing) and failure to pay
estimated tax. In that regard, petitioners have admitted that
they did not report income and/or file Forms 1040, U.S.
Individual Income Tax Return, for the years in issue.
Accordingly, we assume that petitioners’ reference to substantial
authority is some form of guideline or standard by which they
personally measure their acceptance of their legal conclusion
that the income tax is, in reality, an excise tax, a subject that
is discussed infra.
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