- 16 - T.C. 523, 544 (2000). It is unclear to us whether petitioner is defending his initial arguments on the ground that, in good faith, he made those arguments in reliance on what he claims to be professional advice.2 In any event, that reliance is unsubstantiated. Petitioner relies on the 861 argument to defend against imposition of a section 6673(a)(1) penalty. The 861 argument is that the regulations under section 861 establish that petitioner’s income in the form of remuneration for services and bank interest received from sources within the United States is not taxable income (or is not “non-exempt income”). The 861 argument is contrary to established law and, for that reason, frivolous. In Corcoran v. Commissioner, T.C. Memo. 2002-18, the taxpayer made a similar argument. We characterized the taxpayer’s argument as “without factual or legal foundation”, and addressed it as follows: Section 1 imposes an income tax on the income of every individual who is a citizen or resident of the United States. Sec. 1.1-1(a)(1), Income Tax Regs. Section 61(a) provides that except as otherwise provided in subtitle A (income taxes) gross income 2 There is some question whether it is necessary for a court to find that a taxpayer acted in bad faith in order to impose a penalty on him under sec. 6673(a)(1)(B) for putting forth a frivolous or groundless position. Compare Branch v. I.R.S, 846 F.2d 36, 37 (8th Cir. 1988) (“A taxpayer’s asserted good faith is not relevant to the assessment of frivolous return [sec. 6702] penalties.”) with May v. Commissioner, 752 F.2d 1301, 1306 (8th Cir. 1985) (“showing of willfulness or lack of good faith is required [for section 6673(a)(1) damages]”).Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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