T.C. Memo. 1997-398
UNITED STATES TAX COURT
DANIEL V. PRESNICK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14198-96. Filed September 2, 1997.
Daniel V. Presnick, pro se.
Robert E. Marum, for respondent.
MEMORANDUM OPINION
DINAN, Special Trial Judge: This case was heard pursuant
to the provisions of section 7443A(b)(3) and Rules 180, 181, and
182.1
1
Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the taxable years in
issue. All Rule references are to the Tax Court Rules of
Practice and Procedure.
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Respondent determined deficiencies in petitioner's Federal
income taxes and additions to tax for the years indicated:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654
1990 $2,699 $674.75 -
1991 1,420 355.00 $82.00
1992 1,822 455.50 79.00
1993 1,224 288.25 47.99
After concessions by the parties,2 the issues remaining for
decision are: (1) Whether petitioner had unreported nonemployee
compensation in amounts determined by respondent; (2) whether
petitioner is liable for the section 6651(a)(1) additions to tax;
(3) whether petitioner is liable for the section 6654(a)
additions to tax.
No stipulations of fact were filed in this case. Petitioner
resided in Orange, Connecticut, on the date the petition was
filed in this case.
Petitioner is a former member of the Connecticut State Bar,
having been disbarred in 1989. He worked as a property manager
for Florida Realty and Reconstruction, Inc. (Florida Realty)
during the taxable years in issue. He was responsible for
managing one rental property, located in Guilford, Connecticut,
which he described as a "giant house". Florida Realty is
2
Respondent concedes that petitioner's nonemployee
compensation for taxable year 1990 is only $5,637, approximately
half of the amount determined in the statutory notice of
deficiency. Petitioner concedes that he received and failed to
report interest income and dividend income in the amounts
determined by respondent.
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operated by petitioner's brother, who lives in Florida and did
not appear at trial.
Petitioner did not file a return for any of the taxable
years in issue.
On February 19, 1997, petitioner was served with a notice
setting his case for trial on May 12, 1997. Attached to the
notice of trial was the Court's standing pretrial order which
states in part:
ORDERED that all facts shall be stipulated to the
maximum extent possible. All documentary and written
evidence shall be marked and stipulated in accordance
with Rule 91(b), unless the evidence is to be used to
impeach the credibility of a witness. Objections may
be preserved in the stipulation. If a complete
stipulation of facts is not ready for submission at
trial, and if the Court determines that this is the
result of either party's failure to fully cooperate in
the preparation thereof, the Court may order sanctions
against the uncooperative party. Any documents or
materials which a party expects to utilize in the event
of trial (except for impeachment), but which are not
stipulated, shall be identified in writing and
exchanged by the parties at least 15 days before the
first day of the trial session. The Court may refuse
to receive in evidence any document or material not so
stipulated or exchanged, unless otherwise agreed by the
parties or allowed by the Court for good cause shown.
Petitioner did not exchange any of his documents at least 15
days before the first day of the trial session. Petitioner
appeared for trial with a box of unorganized documents which he
had first shared with respondent the morning of the trial.
The first issue for decision is whether petitioner had
unreported nonemployee compensation in the amounts determined by
respondent. Respondent's determinations in the statutory notice
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of deficiency are presumed to be correct, and petitioner bears
the burden of proving otherwise. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).
Section 61(a) defines gross income to mean all income from
whatever source derived including, but not limited to,
compensation for services, including fees, commissions, fringe
benefits, and similar items. Sec. 61(a)(1).
Petitioner contends that the amounts he received from
Florida Realty are not includable in his gross income because
such amounts were reimbursements for amounts that he paid to
maintain the Guilford rental property. Alternatively, he argues
that, if such amounts are includable in income, he should be
entitled to business expense deductions for the amounts that he
advanced on behalf of Florida Realty. Petitioner further claims
that he is entitled to business expense deductions for certain
amounts he paid to wind up his law practice, subsequent to his
disbarment.
Petitioner has failed to meet his burden of proof. Rule
142(a). He did not comply with the requirements of the standing
pretrial order. He has not shown good cause for his failure to
exchange his documents with respondent as required by the
pretrial order, and the Court did not receive them in evidence.
His testimony was disjointed, contradictory, and, at times,
incomprehensible.
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Petitioner did not call any witnesses, and relies solely
upon his own testimony in support of his position. It is well
established that, in the absence of corroborating evidence, we
are not required to accept the self-serving and unverified
testimony of taxpayers. Niedringhaus v. Commissioner, 99 T.C.
202, 212 (1992); Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).
Based on the limited record in this case, we find that
petitioner has not proved that he did not receive nonemployee
compensation in the amounts determined by respondent, apart from
the amount conceded by respondent for 1990. Further, he has not
proved that he is entitled to any deductions for advances on
behalf of Florida Realty or windup expenses for his law practice,
or the amounts thereof. Respondent's determinations on this
issue are therefore sustained.
The second issue for decision is whether petitioner is
liable for the section 6651(a)(1) additions to tax for 1990,
1991, 1992, and 1993.
Section 6651(a)(1) imposes an addition to tax for failure to
timely file a return, unless the taxpayer establishes: (1) The
failure did not result from "willful neglect," and (2) the
failure was "due to a reasonable cause". "Willful neglect" has
been interpreted to mean a conscious, intentional failure or
reckless indifference. United States v. Boyle, 469 U.S. 241,
245-246 (1985). "Reasonable cause" requires the taxpayer to
demonstrate that he exercised ordinary business care and prudence
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and was nonetheless unable to file a return within the prescribed
time. United States v. Boyle, supra at 246. The addition to tax
equals 5 percent of the tax required to be shown on the return
for the first month with an additional 5 percent for each
additional month or fraction of a month during which the failure
to file continues, not to exceed a maximum of 25 percent. Sec.
6651(a)(1).
Petitioner stated that he did not feel that he should be
called upon to pay a penalty because as far as he was concerned
his income was zero, aside from his interest and dividends.
Petitioner's belief that he did not owe any tax does not
constitute reasonable cause under section 6651(a)(1), especially
considering the fact that petitioner is a former attorney.
Krieger v. Commissioner, T.C. Memo. 1993-347, affd. without
published opinion 64 F.3d 657 (4th Cir. 1995). We find that
petitioner has failed to show that his failure to timely file his
returns was not due to willful neglect or that such failure was
due to reasonable cause. Therefore, we hold that petitioner is
liable for the section 6651(a)(1) additions to tax.
The third issue for decision is whether petitioner is liable
for the section 6654(a) additions to tax for failure to make
estimated income tax payments for 1991, 1992, and 1993.
Unless the taxpayer demonstrates that one of the statutory
exceptions applies, imposition of this addition to tax is
mandatory where prepayments of tax, either through withholding or
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by making estimated quarterly tax payments during the course of
the taxable year, do not equal the percentage of total liability
required under the statute. Sec. 6654(a); Niedringhaus v.
Commissioner, supra at 222; Grosshandler v. Commissioner, 75 T.C.
1, 20-21 (1980). Petitioner bears the burden of proving his
entitlement to any exception. Habersham-Bey v. Commissioner, 78
T.C. 304, 319-320 (1982).
Respondent's determination takes into account a small amount
of withholding for 1993. Petitioner did not make any estimated
tax payments for 1991, 1992, or 1993, nor has he shown that any
of the statutory exceptions are applicable in this case. We
therefore sustain respondent's determination on this issue.
To reflect the foregoing,
Decision will be entered
under Rule 155.