Ronald and Dorthea Joling - Page 3

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          interest is the type of income that is taxable under the Internal           
          Revenue Code.1                                                              
               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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