Hyun Seo v. Comm'r

T.C. Memo. 2009-106

UNITED STATES TAX COURT

BLAKE HYUN SEO, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 21622-05. Filed May 19, 2009.

Blake Hyun Seo, pro se.

Richard J. Hassebrock, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

CHIECHI, Judge: Respondent determined the following defi-

ciencies in, and additions to, petitioner’s Federal income tax

(tax):
 - 2 -

Additions to Tax
Year Deficiency Sec. 6651(a)(1)1 Sec. 6651(a)(2) Sec. 6654(a)
2000 $251,430 $56,571.75 * $583.14
2001 132,318 29,771.55 * 5,287.91
2002 51,412 11,567.70 * 1,718.05

*Amount to be determined at a later date pursuant to sec. 6651(a)(2)
and (c).

The issues remaining for decision are:2

(1) Does petitioner have for each of his taxable years 2000,

2001, and 2002 unreported income as determined by respondent

under the bank deposits method? We hold that he does to the

extent stated herein.

(2) Is petitioner entitled for each of his taxable years

2000, 2001, and 2002 to deduct certain gambling losses? We hold

that he is not.

(3) Does petitioner have unreported interest income for each

of his taxable years 2000 and 2001? We hold that he does.

1
All section references are to the Internal Revenue Code in
effect for the years at issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
2
The notice of deficiency involved in this case (notice)
pertains to petitioner’s taxable years 2000, 2001, 2002, and
2003. Petitioner did not properly place at issue any of the
determinations in that notice for his taxable year 2003.

In addition to the issues remaining for decision for peti-
tioner’s taxable years 2000, 2001, and 2002 that are listed below
in the text, there are other questions relating to certain
determinations in the notice for those years that are computa-
tional in that their resolution flows automatically from our
resolution of certain of the issues that we address herein.
 - 3 -

(4) Is petitioner liable for each of his taxable years 2000,

2001, and 2002 for the addition to tax under section 6651(a)(1)?

We hold that he is.

(5) Is petitioner liable for each of his taxable years 2000,

2001, and 2002 for the addition to tax under section 6651(a)(2)?

We hold that he is.

(6) Is petitioner liable for each of his taxable years 2000,

2001, and 2002 for the addition to tax under section 6654(a)? We

hold that he is.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found

except as stated below.3

Petitioner’s address shown in the petition in this case was

in Ohio.

Bank Accounts

During the years at issue, petitioner maintained in his name

or in the name of an entity (discussed below) certain bank

accounts over which he had control and/or signature authority.

During 2000, petitioner maintained at Huntington National

Bank two checking accounts in his name (petitioner’s checking

account No. 5210 and petitioner’s checking account No. 4730) and

3
In violation of Rule 143(b), petitioner alleges on brief
various facts (petitioner’s alleged facts) not stipulated by the
parties and not otherwise supported by the record in this case.
We shall not consider or rely on petitioner’s alleged facts.
 - 4 -

a savings account (petitioner’s savings account) in his name.

During 2001 and 2002, petitioner maintained petitioner’s checking

account No. 4730 and petitioner’s savings account.

During 2000, petitioner maintained at Fifth Third Bank a

checking account (Seo & Leonard account) in the name of Seo &

Leonard Co. (Seo & Leonard).

During 2001, petitioner maintained at Fifth Third Bank a

bank account (petitioner’s Fifth Third Bank account) in his

name.4

During 2002, petitioner maintained at Huntington National

Bank a money management account (Amnesia Lounge account) in the

name of Amnesia Lounge, LLC (Amnesia Lounge), an Ohio limited

liability company that petitioner formed on December 1, 2001.5

Certain Deposits Into Petitioner’s Bank Accounts

During 2000, petitioner deposited a total of $338,472.326

4
The record does not disclose the type of account that
petitioner maintained at Fifth Third Bank in his name.
5
We shall refer to all of the above-described accounts over
which petitioner had control and/or signature authority (i.e.,
petitioner’s checking account No. 5210, petitioner’s checking
account No. 4730, petitioner’s savings account, the Seo & Leonard
account, petitioner’s Fifth Third Bank account, and the Amnesia
Lounge account) as petitioner’s bank accounts.
6
The parties made mathematical errors in stipulating certain
of the total amounts of monthly deposits into petitioner’s bank
accounts during each of the years at issue. Those erroneous
stipulations are clearly contrary to the facts that we have found
are established by the record in this case. We have found the
correct total amounts deposited into petitioner’s bank accounts
(continued...)
 - 5 -

into petitioner’s checking account No. 5210. Included in that

total amount were the following deposits that petitioner claims

are not includible in his income:

Description and
Date of Deposit Payor of Item Deposited
1/7/00 Check for $25 issued by First USA and
payable to petitioner
1/14/00 Check for $450 issued by Eric Chang (Mr.
Chang) and payable to petitioner
1/14/00 Check for $1,713.83 issued by Countrywide
Home Loans, Inc. (Countrywide), and payable
to petitioner
1/18/00 Check for $83.62 issued by Farmers Insurance
Group of Cos. (Farmers Insurance) and
payable to petitioner
1/18/00 Check for $72,084.96 issued by Midland Title
Security, Inc. (Midland Title), and
payable to Stephen T. Hutchinson
1/25/00 Check for $30,000 issued by Beneficial
and payable to petitioner and Harry Wood
(Mr. Wood)
1/31/00 Check for $1,000 issued by CMACO
Investments, Inc. (CMACO Investments), and
payable to Seo & Leonard
2/14/00 Check for $25 issued by First USA and
payable to petitioner
2/15/00 Check for $269.86 issued by Farmers
Insurance and payable to Innova Funding,
Inc. (Innova Funding)
2/15/00 Check for $19.21 issued by The Dispatch
Printing Co. (Dispatch Printing) and
payable to petitioner
2/16/00 Check for $25,000 issued by Firelands
Federal Credit Union (Firelands) and
payable to petitioner
2/18/00 Check for $152.66 issued by Farmers
Insurance and payable to petitioner
3/9/00 Check for $151.76 issued by Farmers
Insurance and payable to petitioner

6
(...continued)
during each of the years at issue that are established by the
record. See Cal-Maine Foods, Inc. v. Commissioner, 93 T.C. 181,
195 (1989).
 - 6 -

Description and
Date of Deposit Payor of Item Deposited
4/5/00 Check for $70,000 issued by Clyde-Findlay
Area Credit Union (Clyde-Findlay) and
payable to petitioner1
4/19/00 Check for $168.95 issued by ABN-AMRO
Mortgage Group, Inc. (ABN-AMRO), and
payable to petitioner2
4/19/00 Check for $550 issued by Franklin County,
Ohio (Franklin County), and payable to
Seo Investment Group3
4/27/00 Check for $14,000 issued by Mr. Wood and
Cynthia Wood (Ms. Wood) and payable to
petitioner4
1
On Apr. 5, 2000, petitioner deposited into petitioner’s check-
ing account No. 5210 only $60,100 of the check for $70,000 issued by
Clyde-Findlay.
2
The check for $168.95 issued by ABN-AMRO that petitioner
deposited into petitioner’s checking account No. 5210 on Apr. 19,
2000, bears the following computer-generated notation: “FOR PAYMENT
OF ESCROW TO MORTGAGOR”.
3
The check for $550 issued by Franklin County that petitioner
deposited into petitioner’s checking account No. 5210 on Apr. 19,
2000, bears the following computer-generated notation: “WARRANT
NUMBER 2000144137”.
4
The check for $14,000 issued by Mr. Wood and Ms. Wood that
petitioner deposited into petitioner’s checking account No. 5210 on
Apr. 27, 2000, bears the following handwritten notation: “Loan on
Houses”.

During 2000, a total of $228,876.73 was deposited into the

Seo & Leonard account, all of which petitioner claims is not

includible in his income.

During 2000, petitioner deposited a total of $186,926.97

into petitioner’s checking account No. 4730. Included in that

total amount were the following deposits that petitioner claims

are not includible in his income:
 - 7 -

Description and
Date of Deposit Payor of Item Deposited
6/19/00 Check for $10 issued by Farmers Insurance
and payable to petitioner
6/19/00 Check for $47.70 issued by Farmers Insurance
and payable to petitioner
6/19/00 Check for $214.44 issued by Farmers
Insurance and payable to petitioner
7/7/00 Check for $449.44 issued by Ricart and
payable to Leonard and Associates
7/10/00 Check for $10 issued by Farmers Insurance
and payable to petitioner
7/10/00 Check for $19.87 issued by Farmers Insurance
and payable to petitioner
8/11/00 Check for $608.16 issued by ABN-AMRO and
payable to petitioner1
8/25/00 Check for $450.61 issued on behalf of
petitioner by the Direct Pay Service of
Huntington National Bank and payable to
Standard Federal2
9/7/00 Check for $25,000 issued by Firelands and
payable to petitioner
9/15/00 20 checks, each for $25, issued by First
USA and payable to petitioner
9/19/00 Three checks, each for $450.61, issued by
ABN-AMRO and payable to petitioner3
9/29/00 Check for $26 issued by Paul M. Herbert,
Civil Account, Clerk of the Court, Franklin
County Municipal Court, and payable to
petitioner
10/18/00 Check for $599.68 issued by Ricart and
payable to petitioner
11/1/00 Check for $47,189.66 issued by Leonard and
Associates and payable to petitioner
11/7/00 Check for $65 issued by Charter Bank and
payable to petitioner4
11/7/00 Check for $15.37 issued by First USA and
payable to petitioner
11/30/00 Check for $18,000 issued by, and payable
to, petitioner
12/14/00 Check for $33,562.58 issued by Old Republic
and payable to LA Construction
12/21/00 Check for $200 issued by Allen M. Lo (Mr.
Lo) and Erika E.K. Lo (Ms. Lo) and payable
to petitioner5
12/26/00 Check for $4,100 issued by Leonard and
Associates and payable to petitioner
 - 8 -

1
The check for $608.16 issued by ABN-AMRO that petitioner
deposited into petitioner’s checking account No. 4730 on Aug. 11,
2000, bears the following computer-generated notation: “FOR PAYMENT
OF ESCROW TO MORTGAGOR”.
2
The funds that Direct Bill Pay Service of Huntington National
Bank used to issue the check for $450.61 that petitioner deposited
into petitioner’s checking account No. 4730 on Aug. 25, 2000, were
obtained from that account on May 1, 2000.
3
The three checks, each for $450.61, issued by ABN-AMRO that
petitioner deposited into petitioner’s checking account No. 4730 on
Sept. 19, 2000, bear the following computer-generated notation: “FOR
MISAPPLICATION REVERSAL”.
4
The check for $65 issued by Charter Bank that petitioner
deposited into petitioner’s checking account No. 4730 on Nov. 7,
2000, bears the following computer-generated notation: “TAX FEE
REFUND”.
5
The check for $200 issued by Mr. Lo and Ms. Lo that petitioner
deposited into petitioner’s checking account No. 4730 on Dec. 21,
2000, bears the following handwritten notation: “Christmas 2000”.

During 2001, petitioner deposited a total of $462,873.14

into petitioner’s checking account No. 4730. Included in that

total amount were the following deposits that petitioner claims

are not includible in his income:

Description and
Date of Deposit Payor of Item Deposited
1/26/01 Check for $4,150 issued by Farmers
Insurance and payable to petitioner, AMRO
Mortgage Group, and Leonard and Associates
2/7/01 Check for $3,056.17 issued by Farmers
Insurance and payable to petitioner and
Franklin Art Glass Studios, Inc.
2/8/01 Check for $1,592.82 issued by M&I Bank and
payable to petitioner1
3/2/01 Check for $155.42 issued by the City of
Columbus and payable to petitioner2
3/6/01 Transfer of $15,295.48 from a bank
account not disclosed by the record3
3/6/01 Check for $500 issued by Farmers
Insurance and payable to petitioner
3/19/01 Check for $482.71 issued by Maguire and
Schneider and payable to petitioner4
4/4/01 Check for $43.31 issued by Farmers Insurance
and payable to petitioner
 - 9 -

Description and
Date of Deposit Payor of Item Deposited
4/4/01 Check for $500 issued by HER, Inc. (HER),
and payable to petitioner
4/5/01 Check for $2 issued by Old Republic and
payable to petitioner
5/1/01 Check for $741 issued by ABN-AMRO and
payable to petitioner5
5/31/01 Check for $13,000 issued by Mr. Chang and
payable to petitioner
6/1/01 Check for $13,000 issued by Firelands and
payable to petitioner
6/6/01 Check for $177.47 issued by ABN-AMRO and
payable to petitioner6
6/21/01 Check for $522.11 issued by Farmers
Insurance and payable to petitioner
7/11/01 Check for $228.61 issued by Farmers
Insurance and payable to petitioner
7/27/01 Check for $2,000 issued by Mr. Chang and
payable to petitioner
8/15/01 Cash of $5,000
8/15/01 Check for $5,000 issued by Bank One, on
behalf of Mr. Chang, and payable to
petitioner
9/4/01 Check for $31.02 issued by United Guaranty
and payable to ABN-AMRO or petitioner
9/27/01 Check for $100 issued by Mr. Lo and Ms. Lo
and payable to petitioner7
12/5/01 Cash of $9,000
12/12/01 Cash of $9,980
12/13/01 Cash of $9,980
1
The check for $1,592.82 issued by M&I Bank that petitioner
deposited into petitioner’s checking account No. 4730 on Feb. 8,
2001, bears the following computer-generated notation: “OVERPAY-
MENT”.
2
The check for $155.42 issued by the City of Columbus that
petitioner deposited into petitioner’s checking account No. 4730 on
Mar. 2, 2001, bears the following computer-generated notation:
“WARRANT TO THE CITY TREASURER”.
3
The parties stipulated that the deposit of $15,295.48 into
petitioner’s checking account No. 4730 on Mar. 6, 2001, was a “Trans-
fer from [petitioner’s checking] Account 4730”. That stipulation is
clearly contrary to the facts that we have found are established by
the record, and we shall disregard it. See Cal-Maine Foods, Inc. v.
Commissioner, 93 T.C. 181, 195 (1989). The record establishes, and
we have found, that on Mar. 6, 2001, there was a transfer of
$15,295.48 into petitioner’s checking account No. 4730, and not a
transfer of that amount from that account.
 - 10 -
4
The check for $482.71 issued by Maguire and Schneider that
petitioner deposited into petitioner’s checking account No. 4730 on
Mar. 19, 2001, bears the following handwritten notation: “Refund”.
5
The check for $741 issued by ABN-AMRO that petitioner deposited
into petitioner’s checking account No. 4730 on May 1, 2001, bears the
following computer-generated notation: “FOR PAYMENT OF MISCELLANEOUS
ESCROW”.
6
The check for $177.47 issued by ABN-AMRO that petitioner
deposited into petitioner’s checking account No. 4730 on June 6,
2001, bears the following computer-generated notation: “FOR PAYMENT
OF ESCROW TO MORTGAGOR”.
7
The check for $100 issued by Mr. Lo and Ms. Lo that petitioner
deposited into petitioner’s checking account No. 4730 on Sept. 27,
2001, bears the following handwritten notation: “B-day!”

During 2001, petitioner deposited a total of $8,868.51 into

petitioner’s Fifth Third Bank account, none of which petitioner

claims is excludable from his income.

During 2002, petitioner deposited a total of $163,688.31

into petitioner’s checking account No. 4730. Included in that

total amount were the following deposits that petitioner claims

are not includible in his income:

Description and
Date of Deposit Payor of Item Deposited
1/31/02 Check for $317.44 issued by Farmers
Insurance and payable to petitioner
1/31/02 Check for $124 issued by Paul M. Herbert,
Clerk of Court, Criminal/Bail Account,
Franklin County Municipal Court, and
payable to petitioner
3/28/02 Check for $270.13 issued by Farmers
Insurance and payable to petitioner
4/9/02 Check for $5.42 issued by American Electric
Power and payable to petitioner1
12/10/02 Check for $377.11 issued by Farmers
Insurance and payable to petitioner
12/27/02 Check for $100 issued by Mr. Lo and Ms.
Lo and payable to petitioner2
1
The check for $5.42 issued by American Electric Power that
petitioner deposited into petitioner’s checking account No. 4730 on
Apr. 9, 2002, bears the following computer-generated notation:
 - 11 -

“REFUNDING FINAL BILL CREDIT BALANCE ON ACCOUNT”.
2
The check for $100 issued by Mr. Lo and Ms. Lo that petitioner
deposited into petitioner’s checking account No. 4730 on Dec. 27,
2002, bears the following handwritten notation: “X-mas!”

During 2002, petitioner deposited a total of $28,685 into

petitioner’s Amnesia Lounge account. Included in that total

amount were the following deposits that petitioner claims are not

includible in his income:

Description and
Date of Deposit Payor of Item Deposited
1/8/02 Check for $1,000 issued by petitioner and
payable to Huntington
2/12/02 Check for $2,100 issued by petitioner and
payable to Amnesia Lounge
2/19/02 Check for $2,000 issued by petitioner and
payable to Amnesia Lounge

Certain Loans to Petitioner

On December 23, 1999, petitioner borrowed a total of $60,000

from Innova Funding as part of an agreement to refinance certain

real property (refinancing agreement) that petitioner owned in

Ohio. After using most of the proceeds of that loan to pay

certain of his obligations relating to the refinancing of that

property, petitioner received cash of $13,643.06. Midland Celtic

Title acted as the settlement agent for purposes of the refinanc-

ing agreement.

On October 31, 2000, petitioner borrowed $71,550 from Innova

Funding.

On August 15, 2001, petitioner borrowed $10,000 from Mr.

Chang.
 - 12 -

On December 26, 2001, petitioner borrowed $50,000 from

Reyanh D. Phung (Reyanh Phung). On a date not disclosed by the

record in December 2001, Amnesia Lounge and Reyanh Phung entered

into a security agreement (Amnesia Lounge security agreement)

with respect to that loan. That agreement provided in pertinent

part:

THIS SECURITY AGREEMENT * * * is made * * * be-
tween Amnesia Lounge, LLC, an Ohio limited liability
company, (“Debtor”) and Reyanh D. Phung (“Secured
Party”).

This Security Agreement is entered into with
respect to a loan * * * made by Secured Party to the
sole member of Debtor which is evidenced by a promis-
sory note * * * of December 26, 2001 in the principal
amount of Fifty Thousand and 00/100 Dollars
($50,000.00).

Respondent’s Examination of Petitioner’s
Taxable Years 2000, 2001, and 2002

Petitioner did not file a tax return, and did not pay any

tax, for any of his taxable years 2000, 2001, and 2002.

Respondent assigned a revenue agent (respondent’s revenue

agent) to examine petitioner’s taxable years 2000, 2001, and

2002. During his examination of petitioner’s taxable years 2000,

2001, and 2002, respondent’s revenue agent sent a letter to

petitioner in which respondent’s revenue agent indicated that

petitioner must file a tax return for each of his taxable years

2000, 2001, and 2002 or provide respondent’s revenue agent with

an explanation of why he was not required to file a tax return
 - 13 -

for each of those years. Petitioner did not respond to that

letter.

Because petitioner failed to cooperate with respondent’s

revenue agent, respondent’s revenue agent issued summonses on

behalf of respondent to Huntington National Bank and Fifth Third

Bank in order to obtain certain documents (bank account docu-

ments) relating to any bank accounts over which petitioner had

control or signature authority, including copies of bank state-

ments, checks deposited into those accounts, and deposit slips.

Huntington National Bank and Fifth Third Bank provided to

respondent’s revenue agent the summonsed bank account documents.

Respondent’s revenue agent analyzed those documents in order to

reconstruct petitioner’s income for each of his taxable years

2000, 2001, and 2002 under the bank deposits method. In conduct-

ing that analysis, respondent’s revenue agent took into account

any deposits that were made during those years into petitioner’s

bank accounts.7 Respondent’s revenue agent used the bank account

documents to determine which deposits should be, and which

deposits should not be, included in petitioner’s income for each

7
In calculating petitioner’s income under the bank deposits
method for each of his taxable years 2000, 2001, and 2002,
respondent’s revenue agent included only the amounts that were
deposited into the bank accounts over which petitioner had
control and/or signature authority during each of the years at
issue. In the event that petitioner deposited only a portion of
a check into one of those accounts, respondent’s revenue agent
included in petitioner’s income only the portion deposited and
did not include in petitioner’s income the portion not deposited.
 - 14 -

of petitioner’s taxable years 2000, 2001, and 2002.8

Respondent prepared a substitute for return for each of

petitioner’s taxable years 2000 (substitute for return for 2000),

2001 (substitute for return for 2001), and 2002 (substitute for

return for 2002). Each of those substitutes for returns con-

sisted of the following documents: (1) IRC Section 6020(b)

Certification (section 6020(b) certification), (2) a transcript

of petitioner’s account for the taxable year for which respondent

prepared the substitute for return, (3) Form 4549, Income Tax

Examination Changes, and (4) Form 886-A, Explanation of Items.

Each section 6020(b) certification certified that the pages

attached thereto constituted a valid substitute for return under

section 6020(b).

The substitute for return for 2000 showed, inter alia,

(1) total income of $726,789 consisting of (a) income of $685,341

that respondent determined under the bank deposits method,9

(b) income of $40,300 that petitioner received from certain

casinos, and (c) “Interest Income” of $1,148, (2) a mortgage

8
For example, respondent’s revenue agent used the bank
account documents to determine whether a deposit into one of
petitioner’s bank accounts during the years at issue was a
transfer from another one of those accounts. In reconstructing
petitioner’s income for each of those years, respondent’s revenue
agent excluded any deposit that he determined was such a trans-
fer.
9
Respondent determined that $59,207 of the $685,341 of
income that respondent determined under the bank deposits method
for petitioner’s taxable year 2000 was “Rents Received”.
 - 15 -

interest deduction of $84,176, and (3) total tax of $251,430.

The 2000 substitute for return also showed that petitioner’s

total tax for his taxable year 1999 was $9,825.

The substitute for return for 2001 showed, inter alia,

(1) total income of $469,187 consisting of (a) income of $468,042

that respondent determined under the bank deposits method10 and

(b) “Interest Income” of $1,145, (2) a mortgage interest deduc-

tion of $109,489, and (3) total tax of $132,318.

The substitute for return for 2002 showed, inter alia,

(1) total income of $183,279 that respondent determined under the

bank deposits method,11 (2) a mortgage interest deduction of

$27,587, and (3) total tax of $51,412.

Notice of Deficiency

On August 16, 2005, respondent issued to petitioner a notice

with respect to, inter alia, his taxable years 2000, 2001, and

2002.12

In the notice, respondent determined for petitioner’s

taxable year 2000 (1) that petitioner had total unreported income

of $726,789 consisting of (a) income of $685,341 that respondent

10
Respondent determined that $67,740 of the $468,042 of
income that respondent determined under the bank deposits method
for petitioner’s taxable year 2001 was “Rents Received”.
11
Respondent determined that $22,437 of the $183,279 that
respondent determined under the bank deposits method for peti-
tioner’s taxable year 2002 was “Rents Received”.
12
See supra note 2.
 - 16 -

determined under the bank deposits method,13 (b) income of

$40,300 from “gambling winnings”, and (c) “Interest Income” of

$1,148 and (2) that petitioner is entitled to deduct mortgage

interest of $84,176. In determining petitioner’s income under

the bank deposits method for his taxable year 2000, respondent

did not include the deposits of (1) the check for $47,189.66

issued by Leonard and Associates that petitioner deposited into

petitioner’s checking account No. 4730 on November 1, 2000, and

(2) the check for $18,000 issued by, and payable to, petitioner

that he deposited into that account on November 30, 2000.

In the notice, respondent determined for petitioner’s

taxable year 2001 (1) that petitioner had total unreported income

of $469,187 consisting of (a) income of $468,04214 that respon-

dent determined under the bank deposits method and (b) “Interest

Income” of $1,145 and (2) that petitioner is entitled to deduct

mortgage interest of $109,489.

In the notice, respondent determined for petitioner’s

taxable year 2002 (1) that petitioner had total unreported income

of $183,279 that respondent determined under the bank deposits

method15 and (2) that petitioner is entitled to deduct mortgage

interest of $27,587. In determining petitioner’s income under

13
See supra note 9.
14
See supra note 10.
15
See supra note 11.
 - 17 -

the bank deposits method for his taxable year 2002, respondent

did not include the deposits of (1) the check for $1,000 issued

by petitioner that he deposited into petitioner’s Amnesia Lounge

account on January 8, 2002, (2) the check for $2,100 issued by

petitioner that he deposited into that account on February 12,

2002, and (3) the check for $2,000 issued by petitioner that he

deposited into that account on February 19, 2002.16

In the notice, respondent also determined that petitioner is

liable for each of his taxable years 2000, 2001, and 2002 for the

additions to tax under sections 6651(a)(1) and (2) and 6654(a).

OPINION

Petitioner bears the burden of proving error in the determi-

nations for each of his taxable years 2000, 2001, and 2002 that

16
The parties stipulated that respondent determined in the
notice that the following checks “represented taxable income to
the petitioner”: (1) The check for $1,000 issued by petitioner
that he deposited into petitioner’s Amnesia Lounge account on
Jan. 8, 2002, (2) the check for $2,100 issued by petitioner that
he deposited into that account on Feb. 12, 2002, and (3) the
check for $2,000 issued by petitioner that he deposited into that
account on Feb. 19, 2002. That stipulation is clearly contrary
to the facts that we have found are established by the record,
and we shall disregard it. See Cal-Maine Foods, Inc. v. Commis-
sioner, 93 T.C. at 195. The record establishes, and we have
found, that respondent did not include in petitioner’s income for
his taxable year 2002 (1) the check for $1,000 issued by peti-
tioner that he deposited into petitioner’s Amnesia Lounge account
on Jan. 8, 2002, (2) the check for $2,100 issued by petitioner
that he deposited into that account on Feb. 12, 2002, and (3) the
check for $2,000 issued by petitioner that he deposited into that
account on Feb. 19, 2002.
 - 18 -

remain at issue.17 See Rule 142(a); Welch v. Helvering, 290 U.S.

111, 115 (1933).

Before turning to the issues presented, we shall evaluate

certain of the evidence on which the parties rely. In support of

his position with respect to each of the issues presented,

petitioner relies primarily on his own testimony. We found that

testimony to be in certain material respects general, vague,

conclusory, uncorroborated, questionable, and/or self-serving.

We are not required to, and we shall not, rely on petitioner’s

testimony in order to establish his respective positions with

respect to the issues presented. See, e.g., Tokarski v. Commis-

sioner, 87 T.C. 74, 77 (1986).

In support of respondent’s position with respect to each of

the issues presented, respondent relies on, inter alia, the

testimony of respondent’s revenue agent. We found respondent’s

revenue agent to be credible.

Unreported Income Under the Bank Deposits Method

In the notice, respondent determined that petitioner has

unreported income calculated under the bank deposits method for

17
Petitioner does not claim that the burden of proof shifts
to respondent under sec. 7491(a). In any event, petitioner has
failed to establish that he satisfies the requirements of sec.
7491(a)(1) and (2). On the record before us, we find that the
burden of proof does not shift to respondent under sec. 7491(a).
 - 19 -

each of his taxable years 2000, 2001, and 2002.18 At trial

and/or on brief, petitioner disputed only certain of the deposits

that respondent determined to be income under that method.

We turn first to what we understand to be petitioner’s

position that all of the deposits during 2000 into the Seo &

Leonard account over which petitioner had control and/or signa-

ture authority are not includible in his income because those

deposits belonged to his brother-in-law, and not to him. The

only evidence that petitioner presented to establish that posi-

tion was his own testimony on which we are unwilling to rely. On

the record before us, we find that petitioner has failed to carry

his burden of establishing that the deposits during 2000 totaling

$228,876.73 into the Seo & Leonard account over which he had

control and/or signature authority are not includible in his

income for that year.

We turn now to petitioner’s position that certain deposits

into petitioner’s bank accounts during each of the years at issue

are not includible in his income for each of those years because

each of those deposits constituted one of the following: (1) A

withdrawal from, or a check drawn on, one of petitioner’s bank

accounts, (2) a personal loan to petitioner or the repayment of a

personal loan that he had made to another person, (3) a refund of

petitioner’s moneys held in an escrow account, (4) a refund of

18
See supra note 7.
 - 20 -

other moneys of petitioner, (5) a gift to petitioner, (6) a cash

advance to petitioner from a credit card company, (7) proceeds

that petitioner received with respect to an insurance claim,

(8) proceeds that petitioner received from the refinancing of

certain real property, (9) a transfer from one of petitioner’s

bank accounts to another of his accounts, (10) proceeds that

petitioner received from a home equity line of credit, or (11) a

check payable to another person and drawn on the same account

into which it was deposited.

Withdrawals From, and Checks Drawn
On, Petitioner’s Bank Accounts

It is petitioner’s position that respondent erroneously

included in petitioner’s income certain withdrawals from, and

checks drawn on, petitioner’s bank accounts. On the record

before us, we reject that argument. That is because respondent

calculated petitioner’s income under the bank deposits method for

each of the years at issue solely on the basis of deposits into

the accounts over which petitioner had control and/or signature

authority during each of those years, and not on the basis of

withdrawals from, and checks drawn on, those accounts.

Alleged Personal Loans

It is petitioner’s position that the following deposits are

not includible in his income because those deposits represented

personal loans to him or the repayment of personal loans that he

had made to others:
 - 21 -

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
1/14/00 Petitioner’s checking Check for $450 issued by
account No. 5210 Mr. Chang and payable to
petitioner
1/25/00 Petitioner’s checking Check for $30,000 issued
account No. 5210 by Beneficial and payable to
petitioner and Mr. Wood
2/16/00 Petitioner’s checking Check for $25,000 issued
account No. 5210 by Firelands and payable to
petitioner
4/5/00 Petitioner’s checking Check for $70,000 issued
account No. 5210 by Clyde-Findlay and payable
to petitioner
4/27/00 Petitioner’s checking Check for $14,000 issued
account No. 5210 by Mr. Wood and Ms. Wood and
payable to petitioner
9/7/00 Petitioner’s checking Check for $25,000 issued
account No. 4730 by Firelands and payable to
petitioner
11/1/00 Petitioner’s checking Check for $47,189.66 issued
account No. 4730 by Leonard and Associates
and payable to petitioner
12/26/00 Petitioner’s checking Check for $4,100 issued by
account No. 4730 Leonard and Associates and
payable to petitioner
5/31/01 Petitioner’s checking Check for $13,000 issued
account No. 4730 by Mr. Chang and payable to
petitioner
6/1/01 Petitioner’s checking Check for $13,000 issued
account No. 4730 by Firelands and payable to
petitioner
7/27/01 Petitioner’s checking Check for $2,000 issued by
account No. 4730 Mr. Chang and payable to
petitioner
8/15/01 Petitioner’s checking Cash of $5,000
account No. 4730
8/15/01 Petitioner’s checking Check for $5,000 issued by
account No. 4730 Bank One, on behalf of Mr.
Chang, and payable to
petitioner
12/5/01 Petitioner’s checking Cash of $9,000
account No. 4730
12/12/01 Petitioner’s checking Cash of $9,980
account No. 4730
12/13/01 Petitioner’s checking Cash of $9,980
account No. 4730
 - 22 -

We turn first to the check for $30,000 issued by Beneficial,

the checks for $25,000 and $13,000 issued by Firelands, the check

for $70,000 issued by Clyde-Findlay, the check for $4,100 issued

by Leonard and Associates, and the checks for $450, $13,000, and

$2,000 issued by Mr. Chang. The only evidence that petitioner

presented to establish that the deposits of those checks are not

includible in his income is copies of those checks and his own

testimony on which we are unwilling to rely. On the record

before us, we find that petitioner has failed to carry his burden

of establishing that the deposits of those checks are not

includible in his income for the respective taxable years at

issue during which he made those deposits.

We turn now to the check for $14,000 issued by Mr. Wood and

Ms. Wood. The only evidence that petitioner presented to estab-

lish that the deposit of the $14,000 check in question is not

includible in his income is a copy of that check and his own

testimony on which we are unwilling to rely. The check for

$14,000 issued by Mr. Wood and Ms. Wood bears the following

handwritten notation: “Loan on Houses”. The record does not

disclose who wrote that notation, when it was written, and what

it means. On the record before us, we find that petitioner has

failed to carry his burden of establishing that the deposit of

the check for $14,000 issued by Mr. Wood and Ms. Wood is not

includible in his income for his taxable year 2000.
 - 23 -

We turn now to the check for $25,000 issued by Firelands.

It was not until petitioner filed his opening brief that he

alleges that the deposit of that check is not includible in his

income because that check represented the proceeds of a certain

car loan. The only evidence that petitioner presented to estab-

lish that allegation on brief is a copy of the $25,000 check in

question. On the record before us, we find that petitioner has

failed to carry his burden of establishing that the deposit of

the check for $25,000 issued by Firelands is not includible in

his income for his taxable year 2000.

We turn now to the check for $47,189.66 issued by Leonard

and Associates that petitioner deposited into petitioner’s

checking account No. 4730 on November 1, 2000. Petitioner

maintains that respondent erroneously included that deposit in

his income. Petitioner is wrong. We have found that respondent

did not include in petitioner’s income for his taxable year 2000

the deposit of the check for $47,189.66 issued by Leonard and

Associates.

We turn now to the check for $5,000 issued by Bank One on

behalf of Mr. Chang ($5,000 Bank One check). Although petitioner

did not place at issue at trial, and does not place at issue on

brief, the deposit of $5,000 cash that he made into petitioner’s

checking No. account 4730 on the same day (i.e., August 15, 2001)

on which he deposited the $5,000 Bank One check, we shall also
 - 24 -

consider that cash deposit.19 We have found that on August 15,

2001, the date on which petitioner deposited both the $5,000 Bank

One check and $5,000 cash, petitioner borrowed $10,000 from Mr.

Chang. It is petitioner’s position that the deposit of the

$5,000 Bank One check is not includible in his income because

that check represented a personal loan from Mr. Chang to peti-

tioner. On the record before us, we find that the two deposits

that petitioner made on August 15, 2001, of the $5,000 Bank One

check and $5,000 cash represented the proceeds of the $10,000

loan that Mr. Chang made to him on that date. On that record, we

further find that those two deposits are not includible in

petitioner’s income for his taxable year 2001.

We turn now to the cash deposits of $9,000, $9,980, and

$9,980 (petitioner’s three 2001 cash deposits at issue). It was

not until petitioner filed his opening brief that he alleges that

those cash deposits are not includible in his income because they

represented loans from Reyanh Phung to petitioner. In support of

that allegation on brief, petitioner relies on the Amnesia Lounge

security agreement that pertained to the $50,000 that petitioner

borrowed from Reyanh Phung. There is no evidence in the record

19
The parties stipulated that respondent included in peti-
tioner’s income for each of the years at issue all of the depos-
its into petitioner’s bank accounts during each of those years,
except certain deposits that the parties stipulated. The parties
did not stipulate that respondent did not include in petitioner’s
income for his taxable year 2001 the deposit of $5,000 cash on
Aug. 15, 2001.
 - 25 -

establishing that petitioner’s three 2001 cash deposits at issue

represented part of the proceeds of that loan. On the record

before us, we find that petitioner has failed to carry his burden

of establishing that those three 2001 cash deposits are not

includible in his income for his taxable year 2001.

Alleged Refunds of Moneys Held in Escrow

It is petitioner’s position that the following deposits are

not includible in his income because those deposits represented

refunds of petitioner’s moneys held in escrow:

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
1/14/00 Petitioner’s checking Check for $1,713.83 issued by
account No. 5210 Countrywide and payable to
petitioner
1/31/00 Petitioner’s checking Check for $1,000 issued by
account No. 5210 CMACO Investments and payable
to Seo & Leonard
4/19/00 Petitioner’s checking Check for $168.95 issued by
account No. 5210 ABN-AMRO and payable to
petitioner
8/11/00 Petitioner’s checking Check for $608.16 issued by
account No. 4730 ABN-AMRO and payable to
petitioner
9/19/00 Petitioner’s checking Three checks, each for
account No. 4730 $450.61, issued by ABN-AMRO
and payable to petitioner
2/8/01 Petitioner’s checking Check for $1,592.82 issued by
account No. 4730 M&I Bank and payable to
petitioner
5/1/01 Petitioner’s checking Check for $741 issued by
account No. 4730 ABN-AMRO and payable to
petitioner
6/6/01 Petitioner’s checking Check for $177.47 issued by
account No. 4730 ABN-AMRO and payable to
petitioner
9/4/01 Petitioner’s checking Check for $31.02 issued by
account No. 4730 United Guaranty and payable
to ABN-AMRO or petitioner
 - 26 -

We turn first to the check for $1,713.83 issued by Country-

wide. The only evidence that petitioner presented to establish

that the deposit of that check is not includible in his income is

a copy of that check and his own testimony on which we are

unwilling to rely. On the record before us, we find that peti-

tioner has failed to carry his burden of establishing that the

deposit of the check for $1,713.83 issued by Countrywide is not

includible in his income for his taxable year 2000.

We turn now to the check for $1,000 issued by CMACO Invest-

ments and the check for $31.02 issued by United Guaranty. It was

not until petitioner filed his opening brief that he alleges that

the deposits of those checks are not includible in his income

because those checks represented refunds of his moneys held in

escrow. The only evidence that petitioner presented to establish

that allegation on brief is copies of the check for $1,000 issued

by CMACO Investments and the check for $31.02 issued by United

Guaranty. On the record before us, we find that petitioner has

failed to carry his burden of establishing that the deposits of

those checks are not includible in his income for the respective

taxable years at issue during which he made those deposits.

We turn now to the checks for $168.95, $608.16, and $177.47

issued by ABN-AMRO. Although petitioner claimed at trial that

the deposits of those latter two checks are not includible in his

income because those checks represented refunds of petitioner’s
 - 27 -

moneys held in escrow, it was not until petitioner filed his

opening brief that he advances that claim with respect to the

remaining check. Each of those three checks in question is

payable to petitioner and bears the following computer-generated

notation: “FOR PAYMENT OF ESCROW TO MORTGAGOR”. We believe that

ABN-AMRO generated that notation, that those checks represented

payments of escrowed moneys to the mortgagor, and that petitioner

was the mortgagor to which that notation referred. On the record

before us, we find that the deposits of the checks for $168.95,

$608.16, and $177.47 issued by ABN-AMRO are not includible in

petitioner’s income for the respective taxable years during which

he made those deposits.

We turn now to the three checks, each for $450.61, issued by

ABN-AMRO. The only evidence that petitioner presented to estab-

lish that the deposits of those checks are not includible in his

income is copies of those checks and his own testimony on which

we are unwilling to rely. The three checks, each for $450.61,

issued by ABN-AMRO bear the following computer-generated nota-

tion: “FOR MISAPPLICATION REVERSAL”. There is no reliable

evidence in the record explaining what that notation means. On

the record before us, we find that petitioner has failed to carry

his burden of establishing that the three checks, each for
 - 28 -

$450.61, issued by ABN-AMRO are not includible in his income for

his taxable year 2000.

We turn now to the check for $1,592.82 issued by M&I Bank.

It was not until petitioner filed his opening brief that he

alleges that the deposit of that check is not includible in his

income because that check represented a refund of his money held

in escrow. The only evidence that petitioner presented to

establish that allegation on brief is a copy of that check. The

$1,592.82 check in question bears the following computer-gener-

ated notation: “OVERPAYMENT”. There is no evidence in the

record explaining what that notation means.20 On the record

before us, we find that petitioner has failed to carry his burden

of establishing that the deposit of the check for $1,592.82

issued by M&I Bank is not includible in his income for his

taxable year 2001.

We turn now to the check for $741 issued by ABN-AMRO. The

only evidence that petitioner presented to establish that the

deposit of that check is not includible in his income is a copy

of that check and his own testimony on which we are unwilling to

rely. The $741 check in question bears the following computer-

generated notation: “FOR PAYMENT OF MISCELLANEOUS ESCROW”.

20
If the notation “OVERPAYMENT” means that M&I Bank was
refunding an overpayment of mortgage interest that petitioner had
deducted for a prior taxable year, a question arises as to
whether that refund constitutes income to petitioner.
 - 29 -

There is no reliable evidence in the record explaining what that

notation means.21 On the record before us, we find that peti-

tioner has failed to carry his burden of establishing that the

deposit of the check for $741 issued by ABN-AMRO is not

includible in his income for his taxable year 2001.

Alleged Refunds of Certain Other Moneys

It is petitioner’s position that the following deposits are

not includible in his income because those deposits represented

refunds of certain moneys that petitioner had paid to others:

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
1/18/00 Petitioner’s checking Check for $83.62 issued by
account No. 5210 Farmers Insurance and payable
to petitioner
2/15/00 Petitioner’s checking Check for $269.86 issued by
account No. 5210 Farmers Insurance and payable
to Innova Funding
2/15/00 Petitioner’s checking Check for $19.21 issued by
account No. 5210 Dispatch Printing and payable
to petitioner
2/18/00 Petitioner’s checking Check for $152.66 issued by
account No. 5210 Farmers Insurance and payable
to petitioner
3/9/00 Petitioner’s checking Check for $151.76 issued by
account No. 5210 Farmers Insurance and payable
to petitioner
4/19/00 Petitioner’s checking Check for $550 issued by
account No. 5210 Franklin County and payable
to Seo Investment Group
6/19/00 Petitioner’s checking Check for $10 issued by
account No. 4730 Farmers Insurance and payable
to petitioner

21
If the notation “FOR PAYMENT OF MISCELLANEOUS ESCROW”
means that ABN-AMRO was making a payment of escrowed moneys to
petitioner to which he was entitled as the seller of certain
property, a question arises as to whether that payment consti-
tutes income to petitioner.
 - 30 -

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
6/19/00 Petitioner’s checking Check for $47.70 issued by
account No. 4730 Farmers Insurance and payable
to petitioner
6/19/00 Petitioner’s checking Check for $214.44 issued by
account No. 4730 Farmers Insurance and payable
to petitioner
7/7/00 Petitioner’s checking Check for $449.44 issued by
account No. 4730 Ricart and payable to Leonard
and Associates
7/10/00 Petitioner’s checking Check for $10 issued by
account No. 4730 Farmers Insurance and payable
to petitioner
7/10/00 Petitioner’s checking Check for $19.87 issued by
account No. 4730 Farmers Insurance and payable
to petitioner
9/29/00 Petitioner’s checking Check for $26 issued by
account No. 4730 Paul M. Herbert, Civil
Account, Clerk of the Court,
Franklin County Municipal
Court, and payable to
petitioner
10/18/00 Petitioner’s checking Check for $599.68 issued by
account No. 4730 Ricart and payable to
petitioner
11/7/00 Petitioner’s checking Check for $65 issued by
account No. 4730 Charter Bank and payable to
petitioner
3/2/01 Petitioner’s checking Check for $155.42 issued by
account No. 4730 the City of Columbus and
payable to petitioner
3/6/01 Petitioner’s checking Check for $500 issued by
account No. 4730 Farmers Insurance and payable
to petitioner
3/19/01 Petitioner’s checking Check for $482.71 issued by
account No. 4730 Maguire and Schneider and
payable to petitioner
4/4/01 Petitioner’s checking Check for $43.31 issued by
account No. 4730 Farmers Insurance and payable
to petitioner
4/4/01 Petitioner’s checking Check for $500 issued by
account No. 4730 HER and payable to petitioner
6/21/01 Petitioner’s checking Check for $522.11 issued by
account No. 4730 Farmers Insurance and
payable to petitioner
 - 31 -

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
7/11/01 Petitioner’s checking Check for $228.61 issued by
account No. 4730 Farmers Insurance and payable
to petitioner
1/31/02 Petitioner’s checking Check for $317.44 issued by
account No. 4730 Farmers Insurance and payable
to petitioner
1/31/02 Petitioner’s checking Check for $124 issued by
account No. 4730 Paul M. Herbert, Clerk of
Court, Criminal/Bail Account,
Franklin County Municipal
Court, and payable to
petitioner
3/28/02 Petitioner’s checking Check for $270.13 issued by
account No. 4730 Farmers Insurance and payable
to petitioner
4/9/02 Petitioner’s checking Check for $5.42 issued by
account No. 4730 American Electric Power and
payable to petitioner
12/10/02 Petitioner’s checking Check for $377.11 issued by
account No. 4730 Farmers Insurance and payable
to petitioner

We turn first to the 16 checks issued by Farmers Insurance

(16 Farmers Insurance checks). It is petitioner’s position that

the deposits of the 16 checks in question are not includible in

his income because those checks represented refunds of insurance

premiums that he had overpaid. Petitioner testified with respect

to all of the 16 Farmers Insurance checks, except (1) the check

for $83.62 that he deposited into petitioner’s checking account

No. 5210 on January 18, 2000, (2) the check for $269.86 that he

deposited into that account on February 15, 2000, (3) the check

for $152.66 that he deposited into that account on February 18,

2000, and (4) the check for $151.76 that he deposited into that

account on March 9, 2000. It was not until petitioner filed his
 - 32 -

opening brief that he alleges that the deposits of those four

checks are not includible in his income because those checks

represented refunds of insurance premiums that he had overpaid.

The only evidence that petitioner presented to establish that the

deposits of the four of the 16 Farmers Insurance checks with

respect to which he did not testify are not includible in his

income is copies of those checks. The only evidence that peti-

tioner presented to establish that the deposits of the 12 of the

16 Farmers Insurance checks with respect to which he testified

are not includible in his income is copies of those checks and

his own testimony on which we are unwilling to rely. On the

record before us, we find that petitioner has failed to carry his

burden of establishing that the deposits of the 16 Farmers

Insurance checks are not includible in his income for the respec-

tive taxable years at issue during which he made those deposits.

We turn now to the check for $19.21 issued by Dispatch

Printing. It was not until petitioner filed his opening brief

that he alleges that the deposit of that check is not includible

in his income because that check represented a refund of money

that he prepaid for a certain delivery. The only evidence that

petitioner presented to establish that allegation on brief is a

copy of the $19.21 check in question. On the record before us,

we find that petitioner has failed to carry his burden of estab-
 - 33 -

lishing that the check for $19.21 issued by Dispatch Printing is

not includible in his income for his taxable year 2000.

We turn now to the checks for $449.44 and $599.68 issued by

Ricart (Ricart checks). It was not until petitioner filed his

opening brief that he alleges that the deposits of those checks

are not includible in his income because those checks represented

refunds of deposits that were made with respect to certain car

leases. The only evidence that petitioner presented to establish

that allegation on brief is copies of the Ricart checks. On the

record before us, we find that petitioner has failed to carry his

burden of establishing that the respective deposits of the Ricart

checks are not includible in his income for his taxable year

2000.

We turn now to the check for $65 issued by Charter Bank. It

was not until petitioner filed his opening brief that he alleges

that the deposit of the $65 check in question is not includible

in his income because that check represented a “tax fee refund.”

The $65 check in question bears the following computer-generated

notation: “TAX FEE REFUND”. We believe that Charter Bank

generated that notation and that that check represented a refund

to petitioner of a certain tax fee. On the record before us, we

find that the check for $65 issued by Charter Bank is not

includible in petitioner’s income for his taxable year 2000.
 - 34 -

We turn now to the check for $155.42 issued by the City of

Columbus. It was not until petitioner filed his opening brief

that he alleges that the deposit of that check is not includible

in his income because that check represented a refund of money

that he had paid with respect to a certain warrant. The $155.42

check in question bears the following computer-generated nota-

tion: “WARRANT TO THE CITY TREASURER”. We believe that the City

of Columbus generated that notation and that that check repre-

sented a refund to petitioner of moneys that he had paid with

respect to a “WARRANT TO THE CITY TREASURER” of Columbus, Ohio.

On the record before us, we find that the deposit of the check

for $155.42 issued by the City of Columbus is not includible in

petitioner’s income for his taxable year 2001.

We turn now to the check for $550 issued by Franklin County.

It was not until petitioner filed his opening brief that he

alleges that the deposit of that check is not includible in his

income because that check represented a refund of money that he

had advanced with respect to a certain bond. The $550 check in

question bears the following computer-generated notation:

“WARRANT NUMBER 2000144137”. We believe that Franklin County

generated that notation and that that check represented a refund

to petitioner of moneys that he had paid with respect to a

certain warrant. On the record before us, we find that the
 - 35 -

deposit of the check for $550 issued by Franklin County is not

includible in petitioner’s income for his taxable year 2000.

We turn now to the check for $26 issued by the Franklin

County Municipal Court. It was not until petitioner filed his

opening brief that he alleges that the deposit of that check is

not includible in his income because that check represented a

refund of money that he had paid with respect to a certain bond.

The only evidence that petitioner presented to establish that

allegation on brief is a copy of the $26 check in question. The

$26 check in question reflects that that check was issued by Paul

M. Herbert, Civil Account, Clerk of the Court, Franklin County

Municipal Court. There is no evidence in the record explaining

why that check was issued to petitioner. On the record before

us, we find that petitioner has failed to carry his burden of

establishing that the deposit of the check for $26 issued by the

Franklin County Municipal Court is not includible in his income

for his taxable year 2000.

We turn now to the check for $500 issued by HER. It was not

until petitioner filed his opening brief that he alleges that the

deposit of that check is not includible in his income because

that check represented a refund of a deposit that he made with

respect to a certain real estate offer. The only evidence that

petitioner presented to establish that allegation on brief is a

copy of the $500 check in question. On the record before us, we
 - 36 -

find that petitioner has failed to carry his burden of establish-

ing that the check for $500 issued by HER is not includible in

his income for his taxable year 2001.

We turn now to the check for $482.71 issued by Maguire and

Schneider. It was not until petitioner filed his opening brief

that he alleges that the deposit of that check is not includible

in his income because that check represented a refund of certain

attorney’s fees. The only evidence that petitioner presented to

establish that allegation on brief is a copy of the $482.71 check

in question. That check bears the following handwritten nota-

tion: “Refund”. The record does not disclose who wrote that

notation, when it was written, and what it means. On the record

before us, we find that petitioner has failed to carry his burden

of establishing that the check for $482.71 issued by Maguire and

Schneider is not includible in his income for his taxable year

2001.

We turn now to the check for $124 issued by the Franklin

County Municipal Court. It is petitioner’s position that the

deposit of that check is not includible in his income because

that check represented a refund of money that he had paid with

respect to a certain bond. The only evidence that petitioner

presented to establish that position is a copy of that check and

his own testimony on which we are unwilling to rely. The $124

check in question reflects that that check was issued by Paul M.
 - 37 -

Herbert, Clerk of Court, Criminal/Bail Account, Franklin County

Municipal Court. There is no reliable evidence in the record

explaining why that check was issued to petitioner. On the

record before us, we find that petitioner has failed to carry his

burden of establishing that the deposit of the check for $124

issued by the Franklin County Municipal Court is not includible

in his income for his taxable year 2002.

We turn now to the check for $5.42 issued by American

Electric Power. It is petitioner’s position that the deposit of

that check is not includible in his income because that check

represented a refund of a certain credit due to him. The check

for $5.42 issued by American Electric Power bears the following

computer-generated notation: “REFUNDING FINAL BILL CREDIT

BALANCE ON ACCOUNT”. We believe that American Electric Power

generated that notation and that that check represented a refund

of a credit that was due to petitioner from that utility company.

On the record before us, we find that the check for $5.42 issued

by American Electric Power is not includible in petitioner’s

income for his taxable year 2002.

Alleged Gifts

It is petitioner’s position that the following deposits are

not includible in his income because those deposits represented

certain gifts to him:
 - 38 -

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
12/21/00 Petitioner’s checking Check for $200 issued by
account No. 4730 Mr. Lo and Ms. Lo and payable
to petitioner
9/27/01 Petitioner’s checking Check for $100 issued by
account No. 4730 Mr. Lo and Ms. Lo and payable
to petitioner
12/27/02 Petitioner’s checking Check for $100 issued by
account No. 4730 Mr. Lo and Ms. Lo and payable
to petitioner

It was not until petitioner filed his opening brief that he

alleges that the deposits of the checks in question issued by Mr.

Lo and Ms. Lo are not includible in his income because those

checks represented Christmas or birthday gifts to him. The only

evidence that petitioner presented to establish that allegation

on brief is copies of those checks. The check for $200 issued by

Mr. Lo and Ms. Lo that petitioner deposited on December 21, 2000,

bears the handwritten notation “Christmas 2000”; the check for

$100 issued by Mr. Lo and Ms. Lo that petitioner deposited on

September 27, 2001, bears the handwritten notation “B-day!”; and

the check for $100 issued by Mr. Lo and Ms. Lo that petitioner

deposited on December 27, 2002, bears the handwritten notation

“X-mas!” The record does not disclose who wrote those notations

and when they were written. On the record before us, we find

that petitioner has failed to carry his burden of establishing

that the deposits of the checks in question issued by Mr. Lo and

Ms. Lo are not includible in his income for the taxable years at

issue during which he made those deposits.
 - 39 -

Alleged Cash Advances From Credit Card Company

It is petitioner’s position that the following deposits are

not includible in his income because they represented cash

advances to him from a company (namely, First USA) that issued a

credit card to him:

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
1/7/00 Petitioner’s checking Check for $25 issued by
account No. 5210 First USA and payable to
petitioner
2/14/00 Petitioner’s checking Check for $25 issued by
account No. 5210 First USA and payable to
petitioner
9/15/00 Petitioner’s checking 20 checks, each for $25,
account No. 4730 issued by First USA and
payable to petitioner
11/7/00 Petitioner’s checking Check for $15.37 issued by
account No. 4730 First USA and payable to
petitioner

We note initially that the record does not establish that during

the years at issue petitioner had a credit card that First USA

had issued to him.

Petitioner testified with respect to all of the checks

issued by First USA, except (1) the check for $25 that he depos-

ited into petitioner’s checking account No. 5210 on January 7,

2000, and (2) the check for $15.37 that he deposited into peti-

tioner’s checking account No. 4730 on November 7, 2000. It was

not until petitioner filed his opening brief that he alleges that

the deposits of those two checks are not includible in his income

because they represented cash advances from First USA to him.

The only evidence that petitioner presented to establish that the
 - 40 -

deposits of the checks issued by First USA with respect to which

he did not testify are not includible in his income is copies of

those checks. The only evidence that petitioner presented to

establish that the deposits of the checks issued by First USA

with respect to which he testified are not includible in his

income is copies of those checks and his own testimony on which

we are unwilling to rely. On the record before us, we find that

petitioner has failed to carry his burden of establishing that

the deposits of the checks issued by First USA are not includible

in his income for his taxable year 2000.

Alleged Proceeds From an Insurance Claim

It is petitioner’s position that the following deposits are

not includible in his income because those checks represented

proceeds that he received as a result of certain insurance claims

that he had filed with respect to certain property:

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
1/26/01 Petitioner’s checking Check for $4,150 issued by
account No. 4730 Farmers Insurance and payable
to petitioner, AMRO Mortgage
Group, and Leonard and
Associates
2/7/01 Petitioner’s checking Check for $3,056.17 issued by
account No. 4730 Farmers Insurance and payable
to petitioner and Franklin
Art Glass Studios, Inc.

The only evidence that petitioner presented to establish

that the deposits of the checks for $4,150 and $3,056.17 issued

by Farmers Insurance are not includible in his income is copies
 - 41 -

of those checks and his own testimony on which we are unwilling

to rely. On the record before us, we find that petitioner has

failed to carry his burden of establishing that the deposits of

the checks for $4,150 and $3,056.17 issued by Farmers Insurance

are not includible in his income for his taxable year 2001.

Alleged Proceeds From the
Refinancing of Certain Real Property

It is petitioner’s position that the following deposits are

not includible in his income because those deposits represented

proceeds that he received from the refinancing of certain real

property that he owned:

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
1/18/00 Petitioner’s checking Check for $72,084.96 issued by
account No. 5210 Midland Title and payable to
Stephen T. Hutchinson
12/14/00 Petitioner’s checking Check for $33,562.58 issued by
account No. 4730 Old Republic and payable to
LA Construction
4/5/01 Petitioner’s checking Check for $2 issued by Old
account No. 4730 Republic and payable to
petitioner

We turn first to the check for $72,084.96 issued by Midland

Title. In support of his position that the deposit of the

$72,084.96 check in question is not includible in his income,

petitioner relies on a copy of that check and his own testimony

on which we are unwilling to rely. Petitioner also appears to

rely on a certain settlement statement (property settlement

statement). We have found based on that settlement statement

that (1) on December 23, 1999, petitioner borrowed a total of
 - 42 -

$60,000 from Innova Funding as part of an agreement to refinance

certain real property that he owned in Ohio; (2) after using most

of the proceeds of that loan to pay certain of his obligations

relating to the refinancing of that property petitioner received

cash of $13,643.06; and (3) Midland Celtic Title acted as the

settlement agent for purposes of the refinancing agreement.

Neither the property settlement statement nor any other evidence

in the record establishes that the check for $72,084.96 issued by

Midland Title represented proceeds from the refinancing of

certain property that petitioner owned. On the record before us,

we find that petitioner has failed to carry his burden of estab-

lishing that the deposit of the check for $72,084.96 issued by

Midland Title is not includible in his income for his taxable

year 2000.

We turn now to the check for $33,562.58 issued by Old

Republic. In support of his position that the deposit of the

$33,562.58 check in question is not includible in his income

because that check represented proceeds from the refinancing of

certain real property that he owned, petitioner relies on a copy

of that check and his own testimony on which we are unwilling to

rely. Petitioner also appears to rely on a document relating to

a certain mortgage (mortgage document). Consistent with that

document, the parties stipulated that on October 31, 2000,

petitioner borrowed $71,550 from Innova Funding. Neither the
 - 43 -

mortgage document nor any other evidence in the record estab-

lishes that the check for $33,562.58 issued by Old Republic

represented proceeds from the refinancing of certain real prop-

erty that petitioner owned. On the record before us, we find

that petitioner has failed to carry his burden of establishing

that the deposit of the check for $33,562.58 issued by Old

Republic is not includible in his income for his taxable year

2000.

We turn finally to the check for $2 issued by Old Republic.

The only evidence that petitioner presented to establish that the

deposit of that check is not includible in his income because

that check represented proceeds from the refinancing of certain

real property that he owned is a copy of that check and his own

testimony on which we are unwilling to rely. On the record

before us, we find that petitioner has failed to carry his burden

of establishing that the deposit of the check for $2 issued by

Old Republic is not includible in his income for his taxable year

2001.

Alleged Transfers Between Petitioner’s Bank Accounts

It is petitioner’s position that the following deposits are

not includible in his income because those deposits represented

transfers from one of petitioner’s bank accounts to another one

of petitioner’s accounts:
 - 44 -

Date of Account Into Which
Deposit Deposit Was Made Item Deposited
3/6/01 Petitioner’s checking Transfer of $15,295.48 from a
account No. 4730 bank account not disclosed by
the record
1/8/02 Petitioner’s Amnesia Check for $1,000 issued by
Lounge account petitioner and payable to
Huntington
2/12/02 Petitioner’s Amnesia Check for $2,100 issued by
Lounge account petitioner and payable to
Amnesia Lounge
2/19/02 Petitioner’s Amnesia Check for $2,000 issued by
Lounge account petitioner and payable to
Amnesia Lounge

We turn first to the transfer of $15,295.48 into peti-

tioner’s checking account No. 4730 from an account not disclosed

by the record. It was not until petitioner filed his opening

brief that he alleges that that transfer is not includible in his

income because that deposit represented a transfer from one of

his bank accounts to another one of his bank accounts. The

parties stipulated that the $15,295.48 deposit in question was a

“Transfer from Account 4730”. We have rejected that stipulation

as clearly contrary to the facts that we have found are estab-

lished by the record.22 We do not understand, and the record

does not disclose, how a transfer of $15,295.48 into petitioner’s

checking account No. 4730 could be a transfer from that account.

On the record before us, we find that petitioner has failed to

carry his burden of establishing that the account from which the

transfer of $15,295.48 was made was an account of petitioner. On

22
See table note 3, supra p. 9.
 - 45 -

that record, we further find that petitioner has failed to carry

his burden of establishing that the transfer of $15,295.48 into

petitioner’s checking account No. 4730 is not includible in his

income for his taxable year 2001.

We turn now to the checks issued by petitioner and payable

to Amnesia Lounge (Amnesia Lounge checks) that petitioner depos-

ited into petitioner’s Amnesia Lounge account on January 8 and

February 12 and 19, 2002. Petitioner maintains that respondent

erroneously included those deposits in his income. Petitioner is

wrong. We have found that respondent did not include in peti-

tioner’s income for his taxable year 2002 the deposits of the

Amnesia Lounge checks.

Alleged Proceeds From a Home Equity Line of Credit

It is petitioner’s position that respondent erroneously

included in petitioner’s income the deposit of the check for

$18,000 issued by, and payable to, petitioner that he deposited

into petitioner’s checking account No. 4730 on November 30, 2000.

Petitioner is wrong. We have found that respondent did not

include in petitioner’s income for his taxable year 2000 the

deposit of the check for $18,000 issued by, and payable to,

petitioner.
 - 46 -

Alleged Check Drawn on Petitioner’s Account

It is petitioner’s position that the check for $450.61

issued on behalf of petitioner by the Direct Pay Service of

Huntington National Bank (Direct Pay Service check) that he

deposited into petitioner’s checking account No. 4730 on August

25, 2000, is not includible in his income. That is because,

according to petitioner, that check was drawn on his own bank

account. The record establishes that the funds that Direct Bill

Pay Service of Huntington National Bank used to issue the check

for $450.61 that petitioner deposited into petitioner’s checking

account No. 4730 on August 25, 2000, were obtained from that

account on May 1, 2000. The record, however, does not disclose

why Standard Federal, the payee of the Direct Pay Service check,

did not cash that check and why petitioner deposited that check

into petitioner’s checking account No. 4730, the account on which

it was drawn.23 Thus, we are unable to conclude on the record

before us that the deposit of the Direct Pay Service check is not

includible in petitioner’s income. On the record before us, we

find that petitioner has failed to carry his burden of establish-

ing that the Direct Pay Service check is not includible in his

income for his taxable year 2000.

23
If Standard Federal was required to pay certain income to
petitioner and if, instead of paying him that income, it returned
the Direct Pay Service check to him, a question arises as to
whether that check constitutes income to petitioner.
 - 47 -

Alleged Gambling Losses

As we understand it, it is petitioner’s position that he

incurred certain gambling losses for each of his taxable years

2000, 2001, and 2002 and that therefore he is not liable for the

deficiency that respondent determined for each of those years.

Petitioner is entitled for each of the years at issue to

deduct gambling losses only to the extent of his gambling win-

nings for each of those years. See sec. 165(d). In the notice,

respondent determined that petitioner has income from gambling

winnings only for petitioner’s taxable year 2000. On the record

before us, we find that petitioner has failed to carry his burden

of establishing that he incurred any gambling losses during any

of the taxable years at issue that would result in his not being

liable for the respective deficiencies that respondent determined

for those years.

Unreported Interest Income

Petitioner argues for the first time on brief that he is not

liable for tax on the interest income that respondent determined

for each of his taxable years 2000 and 2001. Petitioner makes no

argument, and offered no evidence at trial, in support of that

position. On the record before us, we find that petitioner has

failed to carry his burden of establishing that he is not liable

for tax on the interest income that respondent determined for

each of his taxable years 2000 and 2001.
 - 48 -

Additions to Tax

It is respondent’s position that petitioner is liable for

each of his taxable years 2000, 2001, and 2002 for additions to

tax under sections 6651(a)(1) and (2) and 6654(a).

Section 6651(a)(1) imposes an addition to tax for failure to

file timely a return.24 Section 6651(a)(2) imposes an addition

to tax for failure to pay timely the amount shown as tax in a

return.25 The respective additions to tax under section

6651(a)(1) and (2) do not apply if the respective failures to

file timely and to pay timely are due to reasonable cause, and

not willful neglect. Sec. 6651(a)(1) and (2). Section 6654(a)

imposes an addition to tax in the case of an underpayment of

estimated tax by an individual.26 The addition to tax under that

24
The addition to tax imposed under sec. 6651(a)(1) is equal
to 5 percent of the amount of tax required to be shown in the
return, with an additional 5 percent to be added for each month
or partial month during which the failure to file timely a return
continues, not to exceed 25 percent in the aggregate. As perti-
nent here, the addition to tax imposed under sec. 6651(a)(1) is
reduced by the amount of the addition to tax imposed under sec.
6651(a)(2) for each month or partial month to which additions to
tax under sec. 6651(a)(1) and (2) apply. See sec. 6651(c).
25
The addition to tax imposed under sec. 6651(a)(2) is equal
to 0.5 percent of the amount shown as tax in the return, with an
additional 0.5 percent to be added for each month or partial
month during which the failure to pay the amount shown as tax in
the return continues, not to exceed 25 percent in the aggregate.
26
For purposes of sec. 6654(a), it is necessary to determine
whether there is an underpayment of a required installment of
estimated tax. See sec. 6654(a) and (b). In this connection,
the amount of any required installment is 25 percent of the
(continued...)
 - 49 -

section is mandatory unless petitioner qualifies under one of the

exceptions in section 6654(e).27

Respondent must carry the burden of production with respect

to the additions to tax under sections 6651(a)(1) and (2) and

6654(a) that respondent determined for each of petitioner’s

taxable years 2000, 2001, and 2002. Sec. 7491(c); Higbee v.

Commissioner, 116 T.C. 438, 446-447 (2001). To satisfy respon-

dent’s burden of production, respondent must come forward with

“sufficient evidence indicating that it is appropriate to impose”

the additions to tax. Higbee v. Commissioner, supra at 446.

26
(...continued)
required annual payment. Sec. 6654(d)(1)(A). The required
annual payment is equal to the lesser of (1) 90 percent of the
tax shown in the return for the taxable year or, if no return was
filed, 90 percent of the tax for such year, or (2) if the indi-
vidual filed a return for the preceding taxable year, 100 percent
of the tax shown in such return. Sec. 6654(d)(1)(B).
27
Sec. 6654(e) provides that no addition to tax shall be
imposed under sec. 6654(a) for any taxable year if (1) the tax
shown in the return for such taxable year (or, if no return is
filed, the tax), reduced by the credit allowable under sec. 31 is
less than $1,000, sec. 6654(e)(1); (2) the preceding taxable year
was a taxable year of 12 months, the individual did not have any
liability for such preceding taxable year, and the individual was
a citizen or resident of the United States throughout such
preceding taxable year, sec. 6654(e)(2); (3) the Secretary of the
Treasury determines that by reason of casualty, disaster, or
other unusual circumstances the imposition of such addition to
tax would be against equity and good conscience, sec.
6654(e)(3)(A); or (4) the Secretary determines that during the
taxable year for which the estimated payments are required or in
the taxable year preceding such taxable year, the taxpayer
retired after having attained the age of 62 or became disabled
and the underpayment of any estimated tax was due to reasonable
cause and not willful neglect, sec. 6654(e)(3)(B).
 - 50 -

Although respondent bears the burden of production with respect

to the additions to tax under sections 6651(a)(1) and (2) and

6654(a) that respondent determined for each of petitioner’s

taxable years 2000, 2001, and 2002, respondent “need not intro-

duce evidence regarding reasonable cause * * * or similar provi-

sions. * * * the taxpayer bears the burden of proof with regard

to those issues.” Id. at 446.

We turn first to the addition to tax under section

6651(a)(1). We have found that petitioner did not file a return

for each of his taxable years 2000, 2001, and 2002. On the

record before us, we find that respondent has carried respon-

dent’s burden of production under section 7491(c) with respect to

the addition to tax under section 6651(a)(1) that respondent

determined for each of those years.

Petitioner’s only argument on brief with respect to the

addition to tax under section 6651(a)(1) that respondent deter-

mined for each of his taxable years 2000, 2001, and 2002 is that

he is not liable for that addition to tax because he “incurred

losses in those years”. We have sustained virtually all of

respondent’s determinations in the notice. As a result, peti-

tioner does not have a loss for any of his taxable years 2000,

2001, and 2002. On the record before us, we find that petitioner

has failed to carry his burden of establishing that he is not
 - 51 -

liable for each of his taxable years 2000, 2001, and 2002 for the

addition to tax under section 6651(a)(1).

We turn now to the addition to tax under section 6651(a)(2)

that respondent determined for each of petitioner’s taxable years

2000, 2001, and 2002. That section applies only in the case of

an amount of tax shown in a return. Cabirac v. Commissioner, 120

T.C. 163, 170 (2003). For purposes of section 6651(a)(2), a

return prepared by the Commissioner under section 6020(b) is

treated as the return filed by the taxpayer. Sec. 6651(g)(2);

Cabirac v. Commissioner, supra at 170. Petitioner did not file a

return for each of his taxable years 2000, 2001, and 2002.

Respondent prepared a substitute for return under section 6020(b)

for each of those years. The respective substitutes for returns

that respondent prepared under section 6020(b) for the years at

issue showed (1) for 2000 total tax of $251,430, (2) for 2001

total tax of $132,318, and (3) for 2002 total tax of $51,412. We

have found that petitioner failed to pay timely the tax shown in

each of those substitutes for returns. On the record before us,

we find that respondent has carried respondent’s burden of

production under section 7491(c) with respect to the addition to

tax under section 6651(a)(2) that respondent determined for each

of petitioner’s taxable years 2000, 2001, and 2002.

Petitioner advances the same argument on brief with respect

to the addition to tax under section 6651(a)(2) that he advances
 - 52 -

with respect to the addition to tax under section 6651(a)(1).

That is to say, according to petitioner, he is not liable for

each of his taxable years 2000, 2001, and 2002 for the addition

to tax under section 6651(a)(2) because he “incurred losses in

those years”. As discussed above, we have sustained virtually

all of respondent’s determinations in the notice. As a result,

petitioner does not have a loss for any of his taxable years

2000, 2001, and 2002. On the record before us, we find that

petitioner has failed to carry his burden of establishing that he

is not liable for each of his taxable years 2000, 2001, and 2002

for the addition to tax under section 6651(a)(2).

We turn finally to the addition to tax under section 6654(a)

that respondent determined for each of petitioner’s taxable years

2000, 2001, and 2002. We have found (1) that the substitute for

return for 2000 showed that petitioner’s total tax for his

taxable year 1999 was $9,825, (2) that petitioner did not file a

return for each of his taxable years 2000, 2001, and 2002, and

(3) that petitioner did not make any estimated tax payments for

his taxable years 2000, 2001, and 2002. On the record before us,

we find that respondent has carried respondent’s burden of

production under section 7491(c) with respect to the addition to

tax under section 6654(a) that respondent determined for each of

petitioner’s taxable years 2000, 2001, and 2002.
 - 53 -

Petitioner does not argue, and the record does not estab-

lish, that he qualifies under any of the exceptions listed in

section 6654(e). On the record before us, we find that peti-

tioner is liable for the addition to tax under section 6654(a)

that respondent determined for each of his taxable years 2000,

2001, and 2002.

We have considered all of the contentions and arguments of

the parties that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.28

To reflect the foregoing and the concessions of respondent,

Decision will be entered under

Rule 155.

28
We note that one of petitioner’s arguments on brief ap-
pears to be that he is entitled to deduct for his respective
taxable years 2000, 2001, and 2002 mortgage interest of $84,176,
$109,489, and $27,587. However, in the notice respondent allowed
those amounts of mortgage interest deductions for those respec-
tive taxable years.