T.C. Memo. 2005-111
UNITED STATES TAX COURT
C. WAYNE LEWIS, JR., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7211-04. Filed May 17, 2005.
C. Wayne Lewis, Jr., pro se.
Randolph J. Buchanan, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
FOLEY, Judge: By notices dated January 21, 2004, respondent
determined deficiencies in and additions to petitioner’s 1998,
2000, and 2001 Federal income taxes. The issues for decision are
whether petitioner received unreported income and is liable for
sections 6651(a)(1)1 and 6654(a) additions to tax.
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
(continued...)
- 2 -
FINDINGS OF FACT
In 1998, petitioner provided services to Highway Master
Corp. (HMC) and Saunders-Ream Advertising & Marketing (SRAM).
HMC and SRAM paid petitioner $3,920 and $3,140, respectively, and
issued him Forms 1099-MISC, Miscellaneous Income, reflecting such
compensation. In that same year, Salomon Smith Barney Inc. (SSB)
paid petitioner $235 of dividends and issued him a Form 1099-DIV,
Dividends and Distributions, reflecting such dividends.
In 2000, petitioner was employed by Vu Ryte, Inc. (VRI).
VRI paid petitioner $34,818 and issued him a Form W-2, Wage and
Tax Statement, reflecting this amount and $3,100 of Federal
income tax withheld.
In 2001, petitioner continued employment with VRI, received
a distribution from VRI’s retirement plan with Merrill Lynch
(ML), and was involved in real estate sales with Hexter-Fair
Title Co. (HFTC) and Community Title (CT). VRI paid petitioner
$36,332 and issued him a Form W-2 reflecting this amount and
$3,312 of Federal income tax withheld. HFTC and CT paid
petitioner $160,500 and $50,000, respectively, and issued him
Forms 1099-S, Proceeds From Real Estate Transactions, reflecting
such proceeds. ML distributed $6,174 to petitioner from his VRI
retirement plan and issued him a Form 1099-R, Distributions From
1
(...continued)
all Rule references are to the Tax Court Rules of Practice and
Procedure.
- 3 -
Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc., reflecting such distribution.
On January 21, 2004, respondent issued petitioner notices of
deficiency relating to 1998, 2000, and 2001. In the notices,
respondent determined that petitioner received unreported income,
did not file Federal income tax returns relating to those years,
and did not pay sufficient estimated taxes relating to 2001. On
April 30, 2004, petitioner filed his petition, and on June 15,
2004, respondent filed his answer.
Petitioner resided in Tyler, Texas, at the time he filed his
petition.
OPINION
Generally, a notice of deficiency is presumed correct, and
the taxpayer bears the burden of proving that the determination
is erroneous. Welch v. Helvering, 290 U.S. 111, 115 (1933). The
Court of Appeals for the Fifth Circuit, where an appeal would
lie, has recognized, however, that “a court need not give effect
to the presumption of correctness in a case involving unreported
income if the Commissioner cannot present some predicate evidence
supporting its determination.” Portillo v. Commissioner, 932
F.2d 1128, 1133 (5th Cir. 1991), affg. in part and revg. and
remanding in part T.C. Memo. 1990-68.
Petitioner raises numerous meritless contentions; concedes
that he provided services to HMC, SRAM, and VRI; and does not
- 4 -
dispute that he received the amounts reflected in the third-party
payment reports (e.g., Form W-2 and Form 1099-MISC). Thus,
respondent has sufficiently connected petitioner to the
underlying activities relating to the unreported income. Parker
v. Commissioner, 117 F.3d 785, 787 (5th Cir. 1997)(when the
taxpayer does not dispute the receipt of unreported income,
respondent “has no duty to investigate a third-party payment
report”). As a result, respondent’s determinations are presumed
correct, and petitioner bears the burden of proof. Petitioner,
however, failed to present any credible evidence to counter
respondent’s determinations.2 Accordingly, we sustain the
deficiencies as determined by respondent.
Respondent also determined additions to tax for failure to
file tax returns, pursuant to section 6651(a)(1), and pay
estimated income tax, pursuant to section 6654(a). Respondent,
pursuant to section 7491(c), has met his burden of production
relating to both additions to tax. He established that
petitioner failed to file his 1998, 2000, and 2001 tax returns
and pay his 2001 estimated taxes. Niedringhaus v. Commissioner,
99 T.C. 202, 220-223 (1992). Petitioner’s failure to file was
not due to reasonable cause, and he does not meet any of the
exceptions to section 6654(a). Accordingly, we sustain the
2
Sec. 7491(a) is inapplicable because petitioner failed to
introduce credible evidence within the meaning of sec.
7491(a)(1).
- 5 -
additions to tax as determined by respondent.
Contentions we have not addressed are irrelevant, moot, or
meritless.
To reflect the foregoing,
Decision will be entered
for respondent.