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Mr. Sulla acknowledges the authority of Treasury Regulations. In
Petitioner’s Memorandum of Points and Authorities in Opposition
to Motion for Summary Judgment (exhibit A to petitioner’s
memorandum), Mr. Sulla states: “When the Treasury regulations
are published they become official notice to the public of what
the law requires.” In that same document, he quotes from section
1. Moreover, in respondent’s counsel’s letter to Mr. Sulla dated
February 5, 2001 (the February 5 letter), respondent’s counsel
specifically directed Mr. Sulla to section 1.1-1(a), Income Tax
Regs., and quoted a portion of that regulation. In the February
5 letter, respondent’s counsel also advised Mr. Sulla that he had
misread section 861 and the associated regulations, and he
provided citations to cases rejecting the argument that the
regulations under section 861 provide a tax exemption for U.S.
source income of U.S. citizens. Mr. Sulla has indicated that he
read those cases. He should not, therefore, have missed the fact
that, in one of the cited cases, Williams v. Commissioner, 114
T.C. at 144, we penalized the taxpayer under section 6673(a)(1)
for raising frivolous arguments, stating: “Petitioner’s
arguments concerning the underlying deficiency amount to tax
protester rhetoric and are manifestly frivolous and groundless.”
Respondent’s counsel asked Mr. Sulla to provide him with any
cases supporting his position. Of course, Mr. Sulla did not do
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