MEMORANDUM OPINION
HALPERN, Judge: By separate notices of deficiency, respondent determined deficiencies in, and additions to, petitioner's 1998 and 1999 Federal income taxes as follows:
Additions to Tax
Year 1 Deficiency
1998 $ 16,067 $ 3,550.25 $ 634.33
1999 3,299 824.75 159.66
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In an attachment to the notice of deficiency for 1998, respondent notes: "Since this report does not reflect your prepayment credits of $ 1,740.00, you may not owe the total amount shown on the enclosed report."
Respondent has also moved the Court to impose a penalty on petitioner on the grounds that petitioner's position in this case is frivolous and has been maintained primarily for delay. The deficiencies, the additions to tax, and the*223 motion remain in issue.
Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Background
For 1998, the principal adjustments giving rise to the deficiency result from respondent's inclusion in petitioner's gross income of $ 15,873 of capital gain, $ 6,034 of wages received from Oxnard Building Materials, $ 33,850 and $ 1,900 of nonemployee compensation received from Holoworld, Inc., and Flannery, Inc., respectively, $ 67 of interest received from Washington Mutual Bank, FA, $ 241 of dividends received from assorted payers, and the addition of self-employment tax of $ 5,051. For 1999, the principal adjustments giving rise to the deficiency result from respondent's inclusion in petitioner's gross income of $ 27,795 of capital gain and $ 317 of interest received from Washington Mutual Bank, FA. For both years, respondent describes the
Petitioner filed a petition in which he assigned error to respondent's determinations of deficiencies of $ 16,067 and $ 3,299 for 1998 and 1999, respectively (the deficiencies), claiming: "I do not owe that to the IRS. The IRS numbers are phony." The petition does not set forth any facts on which petitioner bases his assignment of error. Because of irregularities in the petition, and because he had failed to pay the required filing fee, petitioner was ordered to file a proper petition and pay the required fee. Subsequently, petitioner paid the fee and filed an amended petition, in which he set forth his prayer for relief as follows: "The Court decide that the IRS numbers are wrong, because they are. I don't know where their numbers come from." Like the petition, the amended petition does not set forth any facts on which petitioner bases his assignment of error. In neither the petition nor the amended petition (without distinction, the petition) does petitioner assign error to respondent's determinations of the additions to tax for 1998 and 1999 (the additions to tax) other than any assignment that can be implied from his objections to respondent's*225 "numbers".
Petitioner did not appear in person for the trial of this case, but he was represented by counsel, who neither called any witnesses nor otherwise offered admissible evidence on petitioner's behalf. Instead, petitioner's counsel filed petitioner's memorandum on burden of proof, setting forth petitioner's argument that, since this case involves unreported income, respondent bears the burden of proving receipt of that income. Beyond that, petitioner's counsel did object to exhibits offered by respondent, which objections, for the most part, were overruled. At the conclusion of the trial, the Court discussed with petitioner's counsel the issues that needed to be decided in this case. In response to the Court's question as to whether it would be fair to say that, if the Court were to conclude that respondent had shown sources for the alleged items of unreported income, the Court should sustain the determinations of deficiencies and additions to tax, petitioner's counsel agreed that would be a logical conclusion.
*226 Discussion
I. Deficiencies in TaxWhile petitioner has assigned error to respondent's determinations of the deficiencies, he does not aver any facts supporting his assignment, nor does he argue that respondent made any mistake of law in determining the deficiencies. Petitioner has ignored the merits of the case in favor of a defense based on his supposition that it is respondent's burden to prove that petitioner had unreported income. Petitioner is wrong in that supposition. In pertinent part,
Nevertheless, the venue for appeal of this case is uncertain. The petition shows petitioner's mailing*227 address as being in Albuquerque, New Mexico. Petitioner would not, however, stipulate that he resided there, agreeing only that, "at the time he filed the petition, he was located or could be found [there]." The address to which the notices of deficiency are addressed is in California, which may be the State of petitioner's legal residence. The place of petitioner's legal residence is important for determining the venue for appeal of a decision of the Tax Court.
That does not conclude the matter of the deficiencies, however, since in his posttrial memorandum, respondent states that documents subpoenaed for purposes of the trial show that petitioner wrote checks in 1998 totaling $ 25,000 that would give him bases to be applied against amounts realized in 1999 on the liquidation of certain investment accounts. Respondent concedes that, as a consequence of that application of basis, respondent must reduce his adjustment on account of capital gain income for 1999 by an equal amount. Respondent asks*231 us to sustain his determination of a deficiency for 1999, nevertheless, on the ground that copies of petitioner's bank records obtained by subpoena from petitioner's bank, Bank of America NA, show deposits in 1999 of $ 31,007.15 and $ 3,084.51, from Icon Trading, Inc., and with respect to petitioner's golf instruction business, Count Yogi Co., respectively. Respondent did not take those deposits into account in his adjustments to petitioner's income for 1999. Respondent correctly argues that, nevertheless, bank deposits are prima facie evidence of income.
Respondent did not err in determining the deficiencies.
II. Additions to Tax A. IntroductionIn pertinent part,
We can discern from the petition no assignment of error*234 with respect to the additions to tax other than with respect to their calculation should we determine deficiencies different from those respondent determined. Moreover, at the conclusion of the trial, petitioner's counsel as much as conceded that, if the Court were to conclude that respondent had shown sources for the alleged items of unreported income, the Court should sustain the determinations of deficiencies and additions to tax. We could, therefore, without further discussion, sustain the additions to tax. Respondent, however, has introduced evidence sufficient to show that it is appropriate to impose both the
1.
Respondent's evidence shows that petitioner did not file a Federal income tax return for either 1998 or 1999, and we so find. Respondent's evidence also shows that, for each of those years, petitioner had sufficient income (above the exemption amount) that he was required to file a return, and we so find. 4 Petitioner's only defense to the
2.
Respondent's evidence shows the following, which we find accordingly: Petitioner filed a Federal income tax return for 1997 showing a liability of $ 3,803; he made no return for 1998; his tax liability for 1998 is*236 $ 16,067; he made two payments of estimated tax for 1998, one on June 4, 1998, and the other on September 24, 1998, each in the amount of $ 870; $ 126 was withheld from his wages in 1998. Since 90 percent of petitioner's tax liability for 1998 ($ 14,460) is greater than his reported tax liability for 1997 ($ 3,803), which is $ 1,937 greater than the sum of his estimated tax payments and withholding for 1998 ($ 1,866), respondent has shown that it is appropriate to determine a
*237 With respect to 1999, respondent's evidence also shows the following, which we find accordingly: Petitioner filed no return for 1998; his tax liability for 1999 is $ 3,299; he made no payments of estimated tax for 1999; he had no withholdings in 1999. Where, as here, no return is filed for the immediately preceding taxable year, the estimated tax payment is computed as 90 percent of the taxpayer's tax for the year at issue. Since 90 percent of petitioner's tax liability for 1999 is $ 2,969, and petitioner had no estimated tax payments or withholding for 1999, respondent has shown that it is appropriate to determine a
Respondent asks that we impose a penalty on petitioner pursuant to
Petitioner's intention to institute and maintain this proceeding for delay is also indicated by his failure to file a pretrial memorandum, as required by the Court's pretrial order. Moreover, at the trial, the Court ordered petitioner to file a memorandum in support of his objections to two of respondent's exhibits, but petitioner failed to do so.
In sum, petitioner failed to file Federal income tax returns for the years at issue and offered no credible justification for that failure. He instituted a proceeding in this Court without assigning any specific errors to respondent's determinations. He failed to cooperate with respondent*240 in preparing this case for trial, and essentially failed to produce any evidence whatsoever to justify his blanket rejection of respondent's deficiency determinations. We interpret those actions as evidence of his intent to delay this proceeding; he has also advanced frivolous arguments. He has caused both the Court and respondent to expend valuable time and resources to respond to his groundless filings and other actions, and to conduct a trial at which he failed to present any evidence whatsoever to prove that respondent's deficiency determinations were in error. We will grant respondent's motion for sanctions, and we will require petitioner to pay a penalty to the United States of $ 2,500.
IV. ConclusionTo reflect the foregoing,
An appropriate order will be issued, and decision will be entered under
Footnotes
1. The Court reserved its ruling on petitioner's objections to two exhibits offered by respondent, Exs. 13-R and 19-R, andordered petitioner to file a memorandum in support of his objections within 10 days of the end of the trial. Petitioner failed to file the ordered memorandum, and the Court interprets that failure as petitioner's concession that his objections are without merit. We shall issue an appropriate order. ↩
2. Although
Weimerskirch v. Commissioner, 596 F.2d 358">596 F.2d 358 (9th Cir. 1979), revg.67 T.C. 672">67 T.C. 672 (1977), dealt specifically with illegal unreported income, it is now well established that the Court of Appeals for the Ninth Circuit applies the Weimerskirch rule in all cases of unreported income where the taxpayer challenges the Commissioner's determination on the merits. E.g.,Edwards v. Commissioner, 680 F.2d 1268">680 F.2d 1268 , 1270 (9th Cir. 1982) (in that case, involving unreported income from an income-generating auto repair business owned by the taxpayer, the court stated:"We note, however, that the Commissioner's assertion of deficiencies are presumptively correct once some substantive evidence is introduced demonstrating that the taxpayer received unreported income.Weimerskirch v. Commissioner, 596 F.2d 358">596 F.2d 358 , 360 (9th Cir. 1979).");Petzoldt v. Commissioner, 92 T.C. 661">92 T.C. 661 , 689↩ (1989) ("the Ninth Circuit requires that respondent come forward with substantive evidence establishing a 'minimal evidentiary foundation' in all cases involving the receipt of unreported income to preserve the statutory notice's presumption of correctness."). Although appeal of this case may lie to a Court of Appeals other than the Court of Appeals for the Ninth Circuit, Weimerskirch imposes as high a hurdle as respondent may face.3. Though respondent has provided verification of some of the items of income reported in those information returns, respondent had no obligation to do so, since petitioner has asserted no reasonable dispute with respect to those items nor has petitioner fully cooperated with respondent. See
sec. 6201(d)↩ (describing the Secretary's burden to produce reasonable and probative information in addition to the information reported in the information returns when the taxpayer asserts a reasonable dispute with that information and has cooperated with the Secretary).4.
Sec. 6012(a) requires every individual having gross income exceeding a certain minimum amount to file an income tax return. Petitioner's gross income exceeded the exemption amounts of $ 2,700 and $ 2,750 for 1998 and 1999, respectively. Seesec. 151(d) ;Rev. Proc. 97-57 , sec. 3.08,2 C.B. 584">1997-2 C.B. 584 , 586;Rev. Proc. 98-61 , sec. 3.08,2 C.B. 811">1998-2 C.B. 811↩ , 815.5. We question whether, in computing petitioner's
sec. 6654 addition to tax for 1998, respondent determined that addition to tax on the proper basis. From the notice of deficiency, it appears to the Court that respondent ignored the computation for the previous year's tax liability, which was the lesser of the two computations. However, petitioner has not challenged that computation, nor has respondent justified it. We assume that, in theRule 155↩ computation, the parties will compute the correct amount of the addition to tax.