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For the Board of DEAN F. ANDAL
Equalization: Chairman

JOHAN KLEHS
Vice Chairman

ERNEST J. DRONENBURG, JR.
Member

JOHN CHIANG
Acting member

MARCY JO MANDEL
Appearing for Kathleen
Connell, State Controller
(per Government Code
Section 7.9)

JUDY NEWTON
Assistant Chief, Board
Proceedings Division

For Franchise Tax SHARON O'BRIEN
Board Staff: Staff Counsel

MARK MC EVILLY
Staff Counsel

For Appellant: THOMAS MURRELL THORNHILL, III
{should be: Appellant:} {should read: Thomas Murrell Thornhill III}
[End right-align.]

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[These lines are Right-aligned, but I cannot make my editor do that.] 450 N Street
Sacramento, California
August 27, 1998

MS. NEWTON: Item 11, Thomas Thornhill, ten minutes are allocated for the taxpayer and ten minutes for the Department [what "Department" is the F.T.B. part of?].

MS. O'BRIEN: This is an appeal of the federal change in 1996 to the appellant's 1993 tax year, the additional tax is $31. There are no penalties. The appellant is not contending a federal change, per se, is incorrect. He is arguing that he's not subject to tax because he claims he is not a resident of California and he did not earn any income which is subject to income tax.

He also argues that neither the Internal Revenue Service, the respondent nor the Board have jurisdiction to make any changes on the return. The Respondent is represented by Mark McEvilly, and the appellant, Thomas Thornhill, is representing himself. Mr. Thornhill, you have ten minutes to make your presentation.

MR. DRONENBURG: Good morning, sir.

MR. THORNHILL {should read: Mr. Thornhill}: Good morning, Mr. Dronenburg. Miss Mandel, who are you supposed to be?

MR. DRONENBURG: Miss Mandel is who she is supposed to be.

MS. MANDEL: I am representing the Controller

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on the Board this morning.

MR. THORNHILL: Would you enter a written copy of your letter of designation, please?

MS. MANDEL: It's on file with the --[the double dashes indicate an interruption]

MR. KLEHS: She has full voting rights here.

MR. THORNHILL: Of course.

MR. THORNHILL: I am Thomas Murrell Thornhill, III, exactly like this (indicating {should read: Thomas Murrell Thornhill III}). Anyone who can't read, let me know right now.
This is what my parents called me. This is what the Georgia State Department of Vital Records claims. I am not this dummy over here written exactly like this (indicating {should read: THOMAS M. THORNHILL, III}). This is the person the State of California claims that I am.
Moreover they have been sending letters to the dummy over here for months now, literally months. I have got tons of pieces of paper.
[I don't know what this section as reported is supposed to mean, either:]
If you guys have my exhibits for this morning, turn to page 2, you'll find the jury summons in substantially the same name.
On the jury summons they claim the right to attach this dummy, so I went and looked up the tax {should read: attachment} and it turns out that tax{should read: attachment} is [Exhibit] page 3, the tax {should read: attachment} puts [I don't know what this should read] a remedy for the collection of the order {should read creditor's} debt proceeded {should read: preceded} by a seizure of the property of the debtor.
Seems to me that the State of California really badly wants me to be this dummy.
I can guarantee you that I am not an attorney. For

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the Record. I am not an attorney. I am not an accountant. I am not the executor of the state {should read: estate} of this dummy, I am not the fiduciary For {should read: for} this dummy over here.
You people claim this dummy exists. So, Mr. McEvilly Over {should read: over} here is going to prove that.
And until he proves that, I don't want to hear from you people.

MR. DRONENBURG: You -- where do you work?

MR. THORNHILL: I don't at this point. If I were more physically able, I would be working. But at this point I am disabled.

MR. DRONENBURG: What about in 1993, did you work in the State of California at all.{should read: ?}
I'm trying to help you, so --

MR. THORNHILL: I think so.

MR. DRONENBURG: Okay.

MR. THORNHILL: I forgot my records on that one.

MR. DRONENBURG: Okay.

MR. THORNHILL: Basically what happened, in 1993 is that I got an inheritance. I got an inheritance out of the blue.
What happened with the inheritance is that the wife of my great uncle, I believe, died. And at that point {the}{should be deleted} it triggered something having to do with a trust I did not know existed.
It blipped my income way up, supposedly.
I have been looked {should be: looking} for this for months and

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months and months. I looked for it while I was dealing with the feds and I've been looking for it ever since. I finally found it last week.
According to Title 26, Section 2631, which is your Exhibit 10A, there is a generation skipping transfer exemption credit, I guess, of a million dollars which attached to that account, not by anything I did but under Title 26, Section 2632 it attached at the death of my great aunt-in-law.
Which means that in '93, it attached, I didn't did {should read: do} anything to do it, they didn't do anything to do it as far as I can tell.
So, about two years later the feds come along and go, "Oh, well, we've changed your return on your 1040. We have ascribed to you about $5800 worth of income from somewhere."
It had something to do with the trust because I don't know. So, they ascribed to me like $5800 worth of income from the blue. They said, "Oh, hello, we want money." So they ascribed 200 something dollars worth of taxes to this income.
As far as I can tell, whatever they ascribed as income was part of the trust. On paper it's a bookkeeping entry of some sort that says that it was increase of principal or something like that.
So, I went and looked some more. And {should read: in} something called CCH Federal Gift and Estates Taxes, or close to that, and paragraph 12675 it says, "Once the

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GST tax exemption is applied to a transfer of property and the property or a portion of it is designated as exempt, then all subsequent appreciation on the property or that portion of it is also exempt from tax."
So, as far as I can tell, the initial IRS claim is erroneous simply because it's based on property that, as far as I can tell, was exempt to start with, and, consequently, the Franchise Tax Board, since they decided to piggyback on top of the federal claim, is also invalid.
I figure you guys made a major mistake. So, I figure you should fix it.

MR. KLEHS: Let's hear from the Franchise Tax Board.
Could you tell us what the source of this income was?

MR. MC EVILLY: Well, appellant filed a timely return for the appeal year involved. It indicated taxable income of $1238.
Respondent, Franchise Tax Board, received a purported adjustment by the IRS of $5862 in Appellant's taxable income.
My understanding is it was from self -- it was designated as self-employment income.
That's the extent to what we know.

MR. KLEHS: There was no inheritance?

MR. MC EVILLY: This is -- no, not to my knowledge.

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MR. KLEHS: What --

MR. MC EVILLY: Nothing from the IRS has indicated anything involving any inheritance.

MR. KLEHS: What do the federal assessments say. {should read: ?}
What kind of self-employment income was this?

MR. MC EVILLY: It's not identified.

MR. THORNHILL: I sure didn't get it.

MR. KLEHS: What's been the file or the income in recent years?

MR. MC EVILLY: It's -- all I can say is my recollection is minimal.

MR. KLEHS: Has he always filed on time?

MR. MC EVILLY: That I -- I can't recall.
I do know that appellant maintains a license, I believe it is as a guard, licensed by the Consumers Affairs Department in the State of California.
I would only be guessing that self-employment income might be involved with the license, but that's only a guess.

ME. KLEHS: Okay, so, Mr. Thornhill, I guess you heard him say this income -- according to his records, there was not an inheritance, it was some type of self-employment income, perhaps you can just -- are you aware of that? Can you describe it or --

MR. THORNHILL: My position is I haven't been self-employed for years and years and years and years. I've always worked for somebody. And I got paid for it

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when I worked.
The State, for some reason, can not hear that. They apparently feel they can benefit by my being self-employed. I don't know whether this means that this dummy is hiring me or whether I'm hiring the dummy, but either way, I'm getting really tired of it.

MR. DRONENBURG: Mr. Thornhill, the IRS will sometimes categorize things in broad statements because they haven't got the right box.

MR. THORNHILL: No kidding.

MR. DRONENBURG: No, I'm not kidding.

MR. THORNHILL: It's not sarcasm, but I'm aware.

MR. DRONENBURG: I am trying --

MR. THORNHILL: It's two and a half years with the IRS and they can't hear either.

MR. DRONENBURG: Okay, did they ever say that they thought this --did you ever get anything --excuse me--in writing from the IRS that tells you that this was generating a GST income?

MR. THORNHILL: What did you say?

MR. DRONENBURG: Did you get any correspondence from the IRS about the 1993 year that told you what the source of this income was?

MR. THORNHILL: One day I got a letter, like '95, I think, and it said, "Hello, we have changed your return."

MR. DRONENBURG: Right.

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MR. THORNHILL: "We want money."

MR. DRONENBURG: Okay.

MR. THORNHILL: So, my first response was fine, identify who "we" is, send me a copy of whatever it is that you changed.

MR. DRONENBURG: Okay.

MR. THORNHILL: Tell me where "We's" statement under penalty of perjury is, for the simple fact that as far as I know, I submitted a valid return.
I put my name on it. I stood for it. And they said, "Oh, no, surely it's wrong."

MR. DRONENBURG: Did they respond to your request?

MR. THORNHILL: After about 18 months I actually got a copy of what they had changed.

MR. DRONENBURG: Okay, what did they label this {should read:$} 5300?

MR. THORNHILL: I don't remember.

MR DRONENBURG: Do you have a copy of that letter?

MR. THORNHILL: Somewhere, {should read: .} I have a copy, a stack from the IRS like this (indicating {should read: 6-7 inches}) literally, and another stack about like this (indicating {should read: 2-3 inches}) which is my returns to it.

MR. DRONENBURG: Okay.

MR. KLEHS: Mr. McEvilly, one question, is it possible to make sure that this individual's name is on your records as Thomas Murrell Thornhill, III n{should read: Thomas Murrell Thornhill III}, instead

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of just Thomas M. Thornhill, III. {should read: THOMAS M. THORNHILL, III ?}
Is that a correction that can be made?

MR. MC EVILLY: Mr. Klehs, this is a position that has been propagated through the Tax Court. It's basically a tax protestor-type argument and --

MR. KLEHS: I understand the argument, I am just asking you is there some way you could key into a computer a correction to it?

MR. MC EVILLY: Small letters as opposed to caps on the computer, my understanding is -- I have never seen it done.

MR. KLEHS: Here's what I -- I'm sure you've never seen it done, I'm sure you've never seen anyone type any name on the computer there, but there are also people, you know, from the '70s and probably the '80s and '90s who have dashes in their names, Joe Blow-Jones or something because of these modern marriages, so I assume you have your computer set up for that and it would seem that [text missing?].

MR. MC EVILLY: Correct.

MR. KLEHS: If this individual would like his name corrected, it would be a small thing to do to make him happy.

MR. MC EVILLY: Well --.

MR. KLEHS: Could you please check?

MR. THORNHILL: It's kind of irrelevant.

MR. MC EVILLY: I will check that.

MR. KLEHS: It seems like a simple thing to do

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to make someone happy.

MR. MC EVILLY: I will check on that.

MR. KLEHS: All right, is there a motion to take it under submission?

MR. DRONENBURG: I move we take it under submission.

MR. THORNHILL: I make a motion that you dismiss the whole darn thing and cancel this damn debt.

MR. DRONENBURG: We may get there.
Okay, so what we're going to do right now is take a motion by Mr. Dronenburg {should read: .} I'll second the motion to take it under submission [He is attempting to Second his own Motion].
Then at some point later on today we'll have discussion on your case and we may make a motion to grant it, we just don't know yet.

MR. THORNHILL: One further thing before you close, Exhibit H-15, you guys just got it, this is your legal notice that as far as I'm concerned anything having to do with this dummy from any of these people, for any of your delegates or employees or anything else, send it to Social Security {should read: SOCIAL SECURITY}. I am tired of doing Social Security's job for them.
They created this entity, whatever it is, they decided that the entity would exist in a commercial venue of some sort. Send the stuff to them. I'm not qualified to represent whoever this entity is. I'm not identical with this entity. I'm tired of it.

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MR. KLEHS: Without objection, unanimous roll call [no evidence thereof in the record] on the motion. Thank you very much for coming today.

MR. DRONENBURG: Thank you, Thomas Murrell Thornhill {should read: Thomas Murrell Thornhill III}.

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State of California )

)ss.

County of Sacramento )

I, JULI PRICE JACKSON , Hearing Reporter for the California State Board of Equalization, certify that on August 27, 1998 I recorded in shorthand, to the best of my ability, the proceedings in the above-entitled hearing; that I transcribed the shorthand writing into typewriting; and that the preceding pages 1 through 14 constitute a complete and accurate transcription of the shorthand writing.

Dated: March 28, 1999

[These lines are Right-aligned, but I cannot get my editor to do that.] ___________________

JULI PRICE JACKSON

CSR 5214

--oOo--

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