T.C. Summary Opinion 2001-39
UNITED STATES TAX COURT
HARRISON DWIGHT FOOS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 845-00S. Filed March 26, 2001.
Harrison Dwight Foos, pro se.
Charles J. Graves, for respondent.
DINAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
effect for the years in issue.
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For the taxable years 1996 and 1997, respondent determined
deficiencies in petitioner’s Federal income taxes of $14,622 and
$13,122, additions to tax under section 6651(a)(1) of $3,655.50
and $3,280.50, and additions to tax under section 6654 of $685.08
and $702.05.
The issues for decision are, with respect to taxable years
1996 and 1997: (1) Whether petitioner received unreported income
in the amounts determined by respondent; (2) whether petitioner
is liable for section 6651(a)(1) additions to tax for failure to
file a return; and (3) whether petitioner is liable for section
6654(a) additions to tax for failure to pay estimated Federal
income tax.
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Inman, Kansas, on the date the petition was filed in this case.
During the years in issue, petitioner was doing business as Foos
Boiler Repair.
Petitioner did not file a Federal income tax return for
either of the years 1996 or 1997. Respondent issued petitioner a
statutory notice of deficiency for these years, calculating
petitioner’s tax liability (using the status of married filing
separate returns) as follows:
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1996 1997
Self-employment income $43,603 $43,603
Interest income 28 -0-
DOI income 6,343 -0-
Personal exemption (2,550) (2,650)
Itemized deductions (4,830) -0-
Standard deduction -0- (3,450)
Self-employment tax deduction (3,081) (3,081)
Taxable income 39,513 34,422
Income tax 8,461 6,961
Self-employment tax 6,161 6,161
Total tax 14,622 13,122
In his petition, the sole disagreement with the notice of
deficiency which petitioner set forth was in the form of the
following statements: “For the year 1996, I have no proof that I
owe $18,962.58 ($14,622.00 + $4,340.58 [interest plus additions
to tax])” and “For the year 1997, I have no proof that I owe
$17,104.55 ($13,122.00 + $3,982.55).”
At trial, petitioner filed several motions to dismiss, all
of which were denied. In addition, prior to trial petitioner
forwarded a letter dated August 12, 1998, to the Internal Revenue
Service which was titled “Notice of Arbitrary and Capricious
Acts, Abuse of Discretion, Criminal Trespass on Private Rights,
and Acts in excess of Statutory Jurisdiction and Authority
Limitations.” These motions and the above-mentioned letter
contain a “hodgepodge of unsupported assertions, irrelevant
platitudes, and legalistic gibberish” of a type often presented
to this Court and which we need not address in detail again here.
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Rogers v. Commissioner, T.C. Memo. 2001-20 (quoting Crain v.
Commissioner, 737 F.2d 1417, 1418 (5th Cir. 1984)).
The first issue for decision is whether petitioner received
unreported income in the amounts determined by respondent. Gross
income generally includes income from whatever source derived,
including interest, gross income derived from business, and
income from discharge of indebtedness (DOI). See sec. 61(a)(2),
(4), (12). In addition to the tax imposed on income under
section 1, self-employment income is subject to a self-employment
income tax under section 1401. Self-employment income is defined
generally as the gross income, less certain allowable deductions,
derived by an individual from any trade or business carried on by
such individual. See sec. 1402(a) and (b).
As noted above, petitioner made no specific assertions of
error in the petition in this case. Furthermore, petitioner did
not refute respondent’s calculation of his tax liability for 1996
and 1997--specifically, respondent’s determination that
petitioner had unreported income in the stated amounts. On the
contrary, petitioner stipulated and the evidence reflects the
fact that he received from various sources payments of
approximately $129,000 in 1996 and $107,000 in 1997. Petitioner
refused to stipulate that he additionally received approximately
$32,000 in 1996 and $17,000 in 1997, not because he denied
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receiving income but because he could not recall the exact
amounts he received from the additional sources.1
Because petitioner did not raise any of the items of
unreported income as an issue in this case, and because he
offered no evidence or arguments refuting respondent’s
determinations, we uphold respondent in this regard.
The second issue for decision is whether petitioner is
liable for the section 6651(a)(1) additions to tax for failure to
file a return for 1996 and 1997. Paragraph (1) of section
6651(a) imposes an addition to tax for failure to timely file a
return. A taxpayer may avoid the addition to tax if he
establishes that the failure to timely file is due to reasonable
cause and not due to willful neglect. “Reasonable cause”
requires the taxpayer to demonstrate that he exercised ordinary
business care and prudence and was nonetheless unable to file a
return within the prescribed time. See United States v. Boyle,
469 U.S. 241, 246 (1985). “Willful neglect” means a conscious,
intentional failure or reckless indifference. See id. at 245.
1
Although petitioner has not presented evidence of any
expenses incurred in his business, he received a favorable
allowance for expenses from respondent. Despite receipts of over
$100,000 in each of the years in issue, respondent determined
that petitioner had only $43,603 of self-employment income in
each year. Respondent states in his trial memorandum that, due
to an inability to establish amounts of expenses, respondent used
the average of petitioner’s self-employment income for taxable
years 1990 through 1995 as the amount of petitioner’s self-
employment income in each of 1996 and 1997.
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Petitioner admits that he did not file a Federal income tax
return for taxable years 1996 and 1997, and he does not argue,
and the record does not establish, that he acted with reasonable
cause and not with willful neglect. We hold that petitioner is
liable for the additions to tax under section 6651(a)(1).
The final issue for decision is whether petitioner is liable
for the section 6654(a) additions to tax for failure to make
estimated Federal income tax payments for 1996 and 1997. Unless
the taxpayer demonstrates that one of the statutory exceptions
applies, imposition of the section 6654(a) addition to tax is
mandatory where prepayments of tax, either through withholding or
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. See sec. 6654(a); Niedringhaus v.
Commissioner, 99 T.C. 202, 222 (1992).
No evidence in the record indicates petitioner made the
required amount of estimated tax payments for taxable years 1995
and 1996, and petitioner does not argue, and the record does not
indicate, that any of the statutory exceptions apply. We hold
that petitioner is liable for the additions to tax under section
6654(a).
Reviewed and adopted as the report of the Small Tax Case
Division.
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To reflect the foregoing,
Decision will be entered
for respondent.