T.C. Memo. 1997-209
UNITED STATES TAX COURT
TODD A. CLARK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 323-96. Filed May 5, 1997.
Robert J. Gumser, for petitioner.
Roberta D. Repasy, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: Todd A. Clark petitioned the Court to
redetermine respondent's determination with respect to his 1991
and 1993 taxable years. Respondent determined the following
deficiencies in Federal income taxes and additions thereto:
Additions to Tax
Sec. Sec.
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Year Deficiency 6651(a)(1) 6654
1991 $11,214 $2,804 $645
1993 1,156 289 ---
We must decide the following issues:
1. Whether petitioner's 1991 gross income includes the
$38,390 amount reported to him on a 1991 Form 1099, Wage and Tax
Statement. We hold it includes only 50 percent of this amount.
2. Whether petitioner's 1993 gross income includes the
$7,365 amount reported to him on a 1993 Form 1099. We hold it
does not.
3. Whether petitioner is liable for the additions to tax
determined by respondent. We hold he is to the extent described
herein.
Section references are to the Internal Revenue Code in
effect for the years in issue. Rule references are to the Tax
Court Rules of Practice and Procedure. Dollar amounts are
rounded to the nearest dollar.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and the exhibits submitted therewith are
incorporated herein by this reference. Petitioner resided in
Escondido, California, when he petitioned the Court.
During 1991, petitioner worked as an independent contractor
washing the windows of model homes in the vicinity of San Diego,
California. Petitioner received assignments on a monthly basis
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from a general contractor, Model Maintenance, Inc. (Company), and
the Company paid petitioner for the jobs once a month.
Petitioner worked with another individual, Duram McManus, and
petitioner paid Mr. McManus 50 percent of the amount shown on
each check that he received from the Company for the jobs.
During 1991, petitioner received $38,390 from the Company,
inclusive of the amount that he paid to Mr. McManus. The Company
issued petitioner a 1991 Form 1099 showing this amount.
During 1993, petitioner performed no work for the Company.
Mr. McManus performed all of the work, and he received 100
percent of the amounts shown on the checks from the Company for
that year. The Company issued checks payable only to petitioner.
The checks were endorsed on the back as "Pay to the order of
Durham McManus", who ultimately cashed them. During 1993,
petitioner received $7,365 from the Company, inclusive of the
amount paid to Mr. McManus. The Company issued petitioner a 1993
Form 1099 showing this amount.
Petitioner did not file a 1991 or 1993 Federal income tax
return. Petitioner did not make any estimated payments for
either year.
OPINION
Petitioner must prove that respondent's determinations set
forth in the notice of deficiency are incorrect. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Petitioner relies
mainly on his testimony to disprove respondent's determinations.
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We find his testimony unimpeached and persuasive. Petitioner
testified that he received the amount shown on the 1991 Form
1099, but that he paid 50 percent of this amount to Mr. McManus.
We believe this testimony. We hold that petitioner's 1991 gross
income includes only 50 percent ($19,195) of the amount shown on
the 1991 Form 1099.
With respect to 1993, we hold that petitioner's gross income
includes none of the amount shown on the 1993 Form 1099. We find
that Mr. McManus performed all of the services that generated
this income, and that he ultimately received all of the proceeds
reflected on the 1993 Form 1099 which was issued to petitioner.
Although the checks were payable only to petitioner, the checks
were endorsed on the back as "Pay to the order of Durham
McManus", who ultimately cashed them. We hold for petitioner
with respect to 1993. Our holding on this issue means naturally
that petitioner also is not liable for the addition to tax
determined by respondent for that year.
Turning to the additions to petitioner's 1991 tax,
respondent determined that petitioner failed to file a 1991 tax
return, and that he failed to make any estimated payments for
that year. Accordingly, respondent determined, petitioner was
liable for the related additions to tax. Petitioner contends
that he did not file a 1991 return because he did not have the
money to pay any tax that would have been due with that return.
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Petitioner makes no contention with respect to the addition to
tax under section 6654.
We hold for respondent as to both additions. In order to
avoid the addition to tax under section 6651(a)(1), petitioner
must prove that his failure to file was: (1) Due to reasonable
cause and (2) not due to willful neglect. Sec. 6651(a); Rule
142(a); United States v. Boyle, 469 U.S. 241, 245 (1985); see
United States v. Nordbrock, 38 F.3d 440 (9th Cir. 1994).
Petitioner has failed to prove that his failure to file was due
to reasonable cause and not due to willful neglect.
The addition to tax under section 6654 is mandatory unless
petitioner proves that he has met one of the exceptions contained
in section 6654. Recklitis v. Commissioner, 91 T.C. 874, 913
(1988). Petitioner has failed to show that any of the statutory
exceptions apply.
To reflect the foregoing and to make certain computational
adjustments,
Decision will be entered
under Rule 155.