Terry I. and Louise Major - Page 7

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          issued to Terry in 2001 reflecting nonemployee compensation of              
          $8,812.72.  The declaration of Deborah S. Kerns, a paralegal                
          analyst employee at Principal Life Insurance Company, was offered           
          into evidence.  Attached to Ms. Kerns’s declaration was a copy of           
          a Form 1099-INT issued to Louise for interest paid to her in 2001           
          in the amount of $343.58.  Respondent also sought to admit into             
          evidence the declaration of Marlene Mills, an employee of Mellon,           
          and the attached Form 1099-B issued to Louise in 2001 for                   
          demutualization compensation received in the form of cash in the            
          amount of $18,037.50.  The Court admitted these declarations into           
          evidence despite Terry’s objections.                                        
          I.   Contentions of the Parties                                             
               Petitioners contended that they were not required to file a            
          Federal income tax return for the taxable year 2001.                        
          Specifically, they argued that they did not receive any amounts             
          that constitute gross income and asserted that respondent’s                 
          evidentiary documents were inadmissible.  Petitioners raised tax            
          protester arguments in opposition to the constitutionality of the           
          filing requirement of section 6011.                                         
               Respondent claimed that petitioners earned income in the               
          form of compensation and interest for 2001.  Since petitioners              
          did not provide any evidence or documentation to contradict                 
          respondent’s evidence, respondent contended that the                        

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