UNITED STATES TAX COURT
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T .C .
Memo .12009-106
i
UNITED STATES TAX COURT
BLAKE HYUN SEO, Petitioner v .
COMMISSIONER OF INTERNAL REVENUE, Responden t
Docket No .
21622-05 -
Blake Hyun Seo, pro s
Richard J .
Hassebrock
for respondent .
MEMORANDUM FINDINGS OF FACT AND OPINIO N
i
CHIECHI,
Judcte : Resp ndent determined the following defi-
ciencies in, and additions to, petitioner's Federal income tax
(tax) :
SEWVEH'i MAY 1 9
- 2 I
665 .1(a)(1 )1
Additions to Ta x
Sec . 6651 ( a)(2)
Year
Deficiency
2000
$251,430
$ 56,571 .75
2001
132,318
29,771 .55
2002
51 , 412
Sec .
11 , 567 .70
Sec . 6654(a )
*
$583 .1 4
5 , 287 .9 1
*
1 , 718 .0 5
*Amount to be determined at a later date pursuant to sec .
6651 ( a) (2) and (c) .
The issues remaining for decision are :2
t
(11) 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 th e
extent stated herein .
(2.;) Is petitioner entitled for each of his- taxable years
-,s
2000, 2101, and 2002 to deduct certain gambling losses? We hol d
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 .
'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 .
2The 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 petitioner'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 computational in that their resolution flows automatically from our
resolution of certain of the issues that we address herein .
(4) Is petitioner liable for each of his taxable years-', .
2001, . and 2002 for the addition to tax under section 6651(a)(l1) ?
We hold that he is .
-(5) Is petitioner liable for each of his taxable years 2000,
2001, and 2002 .for the add•tion to tax under section 6651(a)(2)? .
We hold that he is . .
(6) Is petitioner liable for leach of his taxable years 2000,
2001, and 2002 for the addition to .tax under section 6654(a)?t We
hold that he is .
FINDINGS OF FACT
Some of the facts have been stipulated and are so foun d
except as stated below . 3
Petitioner's address shown in the petition in this case wa s
in Ohio .
Bank Account s
During the years at issue, petitioner maintained in his ha m
or in the name' of an entity (discussed below) certain ban k
accounts over which he had control and/or signature authority.
. I
During 2000, petitioner maintained at Huntington Nationa l
Bank two checking accounts in his ; name (petitioner's checking
account No . 5210 and petit•oner s : checking account No .'4730) and
'In violation of Rule 143(b) ;-petitioner alleges on brief
I alleged facts) not stipulated by the
various facts (petitioner's
parties and not-otherwise (supported by the record in this case .
We shall not consider or rely on petitioner's alleged facts . I
- 4, 'a .savings account,(petitioner's_~savings account) in hisijname .
.During2001 and 2002, petitioner maintained petitioner's . checking
i
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) .
`„h During 2001, .petitioner maintained at Fifth Third Bank a
bank' account (petitioner's . Fifth Third Bank account) in"hi s
t name . 4
During 2002, petitioner maintained at Huntington Nationa l
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 Account s
During 2000, petitioner deposited .a total of $338,472 .32 6
4Theijrecord does not disclose .the type of account that
petitioner maintained at Fifth Third Bank in his name .
We"'shall refer to all of the above-described accounts ove r
which petitioner had control and/or signature authority ;~,(i .e .,
pet:itioher'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 Amnesi a
Lounge account)
as petitioner ' s bank accounts .
J
'The parties made mathematical errors in stipulating certai n
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 account s
(continued . . .
- 5 -
into petitioner's checking account No . 5210 . Included in that :
total amount were the following deposits that petitioner claim s
are not includible in his income :
Description and
Payor of Item Deposite d
Date of Deposit
1/7/00 Check for $25 issued by First . USA and
payable topetitione r
1/14/00 Check for $450 issued by Eric Chang (Mr .
Chang) and payable to petitione r
1/14/00
Check for $1,713 .83 issued by Countrywide
Home Loans , Inc . (Countrywide), and payable
to petitione r
1/18/00
Check for $83 .62 issued by Farmer s Insurance
Gro I up of Cos . (Farmers Insurance) an d
payable to'petitioner
1/18/0,0
Check for $72,084 .96 issued by Midland
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 Woo d
(Mr . Wood )
1/31/00
Check for $1,000 issued by CMACO
Investments, Inc . (CMACO Investments),
payable to Seo & Leonar d
2/14/0 0
2/15/00
and
Check for $25 issued by First USA and
payable to. petitione r
I
Check for $269 .86 issued by Farmers
Insurance and payable to Innova Funding ,
In
. (Innova Funding)
2/15/00
Check for $19 .21 issue d 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'petitione r
2/18/0 0
Check for $152 .66'issued by Farmers
Insurance and payable to petitioner
3/9/00
Check for $-151 .76 issued by Farmer s
Insurance and payable to petitione r
6 ( . . . continued
) during each of the years al issue' that are established by the y
record . See Cal-Maine Foods, Inc . v . Commissioner , 93 T .C . 181,
195 (1989) .
1
1
- 6 Description and
Payor of Item Deposite d
Date!1of Deposit
JNjlo ' • a
I
4/5/00
.Check for $70,000 issued by Clyde-Findla y
Area Credit Union (Clyde-Findlay) an d
payable to petitioner '
y
.
4/19/00
Check for $168 .95 issued by ABN-AMR O
Mortgage Group, Inc . (ABN-AMRO), and
payable to petitioner'
4/19/00
Check for $550 issued by Franklin County ,
Ohio (Franklin County), and payable t o
Seo Investment Group 3
4/27/00
Check for $14,000 issued by Mr . Wood and
Cynthia Wood (Ms . Wood) and payable t o
petitioner 4
'On Apr . 5, 2000,, petitioner deposited into petitioner's checking
accountNo . 5210 only $60,100 of the check for $70,000 issued by
Clyde-Findlay.
X'The check for $168 .95 issued by ABN-AMRO that petitioner depositedkeihtoipetitioner's checking account No . 5210 on Apr . 19,''x2000,
bears the following computer-generated notation : "FOR PAYMENT OF
ESCROW TO MORTGAGOR" .
3The'check for $550 issued by Franklin County that petitioner .
deposited1iinto petitioner's checking account No . 5210 on Apr . 19,
:2000, bears the following computer-generated notation : "WARRANT
NUMBER 2000144137" .
, : 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, 2.9000, bears the following handwritten . notation : "Loan on
i
.Houses"'
During 2000, a•total'of $228,876 .73 was deposited into th e
Sep & Leonard account, all of which petitioner claims is no t
includible in his income .
During .2000, petitioner deposited a total of $186,9'26 .97
into petitioner's checking . account No . 4730 . Included in tha t
total amount were the following deposits that petitioner claims
are' not includible in his income :
Description an d
Date
of
Deposit
Payor
of
Item
Deposited
6/19/00 Check for $10 issued by Farmers Insuranc e
and payable to petitione r
6/19/00
6/19/00
7/7/00
Check for $47 .70 issued by Farmers Insurance,
and payable to petitioner
II
Check for $214 .44 issued by Farmer s
Insurance and payable to petitioner
Check for $449 .44 issued by"Ricart and
payable to ; Leonard and Associate s
7/10/00 Check for $10 issued by Farmers Insurance ;
and payable to petitione r
7/10/00
Check for $19 .87 issued by Farmers Insurance .
and payable to petitione r
8/11/00
Check for $608 :16 issued by ABN-AMRO and
payable to petitioner )
8/25/00
Check for $450 .61 issued on behalf ofpetitioner~by the Direct Pay Service of
Huritington1 National Bank and payable to .
Standard Federal 2
9/7/00 Check for $25,000 issued by Firelands•and
payable to1petitione r
9/15/00 20 checks, each for $25, issued by First
USA and payable to petitione r
9/19/00 Three checks, each for $450 .61, issued bye
ABN-AMRO and payable to petitioner'
9/29/00 Check for $26 issued by Paul M . Herbert ,
Cilil Account, Clerk of the Court, Franklin
CoIinty :Municipal Court, and payable to
petitioner, .
10/18/00 'Check for $x599 .68 issued by Ricart and
payable to petitione r
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 an d
payable to petitioner'
11/7/00
Check for $15 .37 issued by First USA and
payable to petitione r
11/30/00 Check for $18,000 issued by, and payable
to petitione r
12/14/00 Check for $33,562 .'58 issued by old Republic
and payable to LA Constructio n
12/21/00 Check for 200"issued by Allen M . Lo (Mr .'k
Lo) and Erika E .K . Lo (Ms . Lo) and payable
to . etitioner 5
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,x,2000,
bears`th'e~lfollowing computer-generated notation : "FOR PAYMENT OF
ESCROW TO MORTGAGOR" .
?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 .
3The three checks, each for $450 .61, issued by ABN-AMRO that
!petitioner deposited into petitioner's checking account No . 4730 on
Sept . bear the following computer-generated notation : "FOR
MISAPPLICATION REVERSAL" .
4The check for $65 issued by Charter Bank that petitioner depositedPinto petitioner's checking account No . 4730 on Nov . 7, 2000,
bears the following computer-generated notation : "TAX FEE REFUND" .
5Thelocheck for $200 issued by Mr . Lo and Ms .•Lo that petitioner
I
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 claim s
are not includible in his income :
Description and
Dat :ei,of Deposit Payor of Item Deposite d
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 Farmer s
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 petitioner '
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 ban k
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 petitioner '
4/4/01
Check for $43 .31 issued by Farmers insurance,
and payable to petitioner
- 9
Description and
Date of Deposit Payor'of Item Deposite d
4/4/01 Che k for $500'issued by HER, Inc . ( HER),
and payable to petitione r
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 petitioner s
5/31/01 Chek for $13,000 issued by Mr . Chang and
payable to petitione r
6/1/01 - Check for $13,000 issued by Firelands and
payable to ;'petitione r
for $177 .47 issued by ABN-AMRO and
payable to petitioner '
6/6/01
Check
6/21/01
Check for $522 .11 issued by Farmers
Insurance and payable to petitioner
7/11/01
Check for $228 .61 issued by Farmer s
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
$5,90 0
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 . L o
and payable to petitioner'
12/5/01
Cash
of
$9,00 0
12/12/01
Cash
of
$ 9,'980
,12/13/01
Cash
of
$ 9,98 0
'The check for $1,592 .82 issued by M&I Bank that petitioner I
deposited into petitioner ' s ~hecking ~ account No . 4730 on Feb . 8, 2001,
bears the following computerigenerated notation : " OVERPAYMENT" .
2The 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" .
'The parties stipulated that the deposit of $15,295 .48 into
petitioner's checking account No . 4730 on Mar . 6 , 2001 ,, was a " TransThat stipulation is
fer from [ petitioner ' s checking ] Account 4730 " .
clearly contrary to the fact that we have found are established by
the record , and we shall disregard it . See Cal-Maine Foods , Inc . . v . .
The record establishes, and we
Commissioner , 93 T .C . 181, 195 ( 1989 ) .
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 •4The check for $482 .71 issued by Maguire and Schneider that
;petitioner deposited into petitioner's checking account No . 4730 o n
Mar . 19, 2001, bears the following handwritten notation : "Refund" .
5The 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" .
6The''check for $177 .47 issued by ABN-AMRO that petitioner deposited into petitioner's checking account No . 4730 on June 6, 2001,
ibearI the following computer-generated notation : "FOR PAYMENT OF
,ESCROW TO MORTGAGOR" .
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
Pavor of . Item Deposite d
1/31/02 Check for $317 .44 issued by Farmer s
Insurance and payable to petitioner
1/31/02 Check for $124 issued by Paul M . Herbert ,
Date of Deposit
Clerk of Court, Criminal/Bail Account,
Franklin County Municipal Court, and
payable to petitione r
3/28/02 Check for .$270 . .l3 issued by Farmers .
Insurance and payable to petitione r
4/9/02
x,12/10/02
Check
for. :$5 .42 issued by American Electri c
Power and payable to petitioner'
Check for $377 .11 issued by Farmer s
Insurance and payable to petitione r
12/27/02 Check for $100 issued by Mr . Lo and "Ms .
Lo and payable to petitioner 2
11,;,The check for $5 .42• issued by,,American Electric Power that
petitioner. deposited into petitioner's checking account No . 4730 on
9, 2002,, bears the following computer-generated notation
Apr
J
- 11}"REFUNDING FINAL BILL CREDIT BALANCE ON ACCOUNT" .
'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 Pavor of Item Deposite d
1/8/02 Check for $1,000 issued by petitioner and
pa~IIable toj Huntingto n
2/12/02
. Check for $2,100 issued by petitioner and '
payable to Amnesia Loung e
2/19/02 Check for $2,000 issued by petitioner an d
payable tolAmnesia Loung e
Certain Loans to Petitione r
On December 23, 1999, petitioner borrowed a total of $60,000
from Innova Funding as par 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 tha t
property, petitioner received cash of $13, .643 .06 . Midland Celti c
Title acted as the settlement agent for purposes of the refi nanc
ing agreement .
On October 31, 2000, petitioner borrowed $71,550 from Inno v
Funding .
On August 15, 2001, p
Chang .
titioner borrowed $10,000 from Mr . .
1
- 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 pertinen t
part :
THIS SECURITY AGREEMENT * * * is made * * * between Amnesia Lounge, LLC , an Ohio limited liability
company, (" Debtor" ) and Reyanh D . Phung (" Secured
Party") .
This Security Agreement is entered into with i
respect to a loan * * * made by Secured Party to the
sole member of Debtor which is evidenced by a .promissory 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
1I
fi
Taxable Years 2000, 2001, and 200 2
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, an d
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 year s
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 o n
behalf of respondent to Huntington National Bank and Fifth Thir d
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 statements, checks deposited into those accounts, and deposit slips .
f
f
Huntington National Bank and Fifth Third Bank providedt o
respondent's revenue agent the-summonsed bank account documens .
I
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 accoun t
any deposits-that were made .-during those years into petitioner's
bank accounts .' Respondent's revenue agent used the bank accoun t
documents to determine'whih deposits should be, and whic h
deposits should not be, included in petitioner's income for eac h
I
7In calculating petit oner's~income'under the bank deposits
method for each of his taxable . .years 2000, 2001, and 2002, I
respondent's revenue agent included only the-amounts that were
deposited into the bank accounts over which petitioner ha d
control and/or signature authority during each of the years a
. In the event that petitioner deposited only a portionjo
tisue f
a check into one of those accounts, respondent's revenue agent
included in petitioner's income only the portion deposited anddid 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 fo r
return for 2002) . Each of those substitutes for returns consisted ;pof the following documents : (1) IRC .Section 6020(b)
1
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,reispondent determined under the bank deposits method, 9
~(b) income of $40,300 that petitioner received from certain
casinos .,pand (c) "Interest Income" of $1,148, (2) a mortgag e
'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 ffrom 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 transfer . pi"
„9Respondent determined that $59,207 of the $685,341' .of
income,th.at respondent determined under the bank deposits method
for petitgioner's taxable year 2000 was ."Rents Received" .
- 15 interest deduction of $84, 1 76, and (3) total tax_of $251,430 .•
The 2000 substitute for re t urn 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 $469,18 ;7 consisting of (a) income of $468,404 2
that respondent determined under the bank deposits method10 an d
(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 $183,2
9 that respondent determined unde r th e
bank deposits method," (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 notic e
with respect to, inter al.ia, his taxable years 2000, 2001, and
2002 .1 2
In the notice, respondent determined for petitioner' . s
taxable year 2000 (1) tha t petitioner had . total unreported i n com
of $726,789 consisting of
a) income of $685,341 that responden t
"Respondent determined that x $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" .
"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" .
12See supra note 2 .
- 16 determined under the bank deposits method,l3 (b)incomeof 1$4.0,;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
ij
the bankiideposits,method for his taxable year 2000, respondent
did Jnot ''include the' deposits of (1)- the check for
$47,1,89 .6 6
issued by Leonard and Associates that petitioner deposited int o
petitioner's checking account No . 4730 on November 1, 2000,•and
(2) the check for $18,000 issued by,, and payable-to, petitione r
that, he deposited into that account on November 30 ,
, In:the notice, respondent determined for petitioner's
taxable year 2001 (1) that petitioner had total unreported income
li
of $469,187 consisting of (a) income of $468,04214 that respondent,' determined under the bank deposits method and (b) "Interest
Income of $1,145 and (2) that petitionerdsentitled 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
ofr$183`,279. that respondent .determined .under the bank deposits
method's and (2) that petitioner is entitled to deduct mortgage
interest of $27,587 . In determining petitioner's income unde r
13See supra note 9
"'See supra note 10 . ..
15See supra note 11 .
- 17 -
the bank deposits method for~his taxable year 2002,-responden t
did not include the deposits of (1) the check for
$1,000
issued
by petitioner that he depoited into
petitioner's Amnesia Loung
e
I
I
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 $2,00 0 issued by petitioner that h e
deposited into that accounti on February 19, 2002 .1 6
In the notice, respondent also determined that petitioner is
liable for each .of his tax~ble years 2000, 2001, and 2002 forth~
additions to tax under sections 6651(a)(1) and (2) and 665 .4(a) :
OPINION '
Petitioner bears the burden of proving error in the detemi 1
nations for each of his taxable years 2000, 2001, and 2002 tha t
16The parties stipulated that respondent determined in th
notice that the following Fhecks `represented taxable income, .to
the petitioner" : (1) The check for $1,000 issued by petitioner
that he deposited into petitioner's Amnesia Lounge account oni
Jan . 8, 2002, (2) the check for $2,100 issued by petitioner-that
he deposited into that account onIFeb . 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 . Commissioner , 93 T .C . at 195 . The record establishes, and we hav e
found, that respondent did not include in petitioner's income for
his taxable year 2002 ( 1) the check for $1,000 issued by petit
tioner that he deposited into pet itioner's Amnesia Lounge accoun t
on Jan . 8, 2002, (2) the check for $2,100 issued by petitione r
that he deposited into tha~ .~ account on Feb . ..12 , . 2 0 02 , and (3) j t h
check for $2,000 issued by petitioner that he deposited into that
account on Feb . 19, 2002 .
18 , ,remainfiat issue ." See Rule 142(a) ;-. Welch v . Helvering , 290 U .S .
"111,11115 ~L (1933) .
Before turning to the issues presented, we shall evaluat e
,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 . 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-
r sioner ,r87 T .C . 74, 77 (1986 )
'In support of respondent's position with respect to each o f
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 ,
n ,,the notice,
respondent determined that petitioner ha s
unreported income calculated under the bank deposits method fo r
;! ';1 ~17!Pet., tioner does not claim that the burden of proof shifts
,j
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 . R491(a) .
i
each of his taxable years 2000, 2001, and 2002 . 18 At trial
and/or on brief ,
petitioner disputed only certain of the deposit' s
that respondent determine d to be i ncome under that method .
We turn first to what we understand to be petitioner' s
position that all of the deposits ! during 2000 into the Se o
Leonard account over which petitioner had control and/or signature authority are not includibl e 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 establishin g that the deposits during 2000 totali n
$228,876 .73 into the Seo & Leonard account over which he ha d
control and/or signature authority are not includible in his :
income for that year .
We turn now to petitioner's position that certain deposit s
into petitioner ' s bank accounts during each of the years at issu e
for each of those years beca. 1use
are not includible in his income
1
withdrawal from, or a check drawn ; on, one of petitioner's ban k
i
r
accounts , ( 2) a personal loan to petitioner or the repayment . o
personal loan that he had made t o another person , ( 3) a refund o f
petitioner ' s moneys held
"See supra note
an es crow account, (4)'a refund of
i
ii
- 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 ;itha t
petitioner received from a home equity line of credit, or (11) a
check1jj,payable to another person and drawn on the same account
into,which it was deposited .
p
Withdrawals, From, and Checks Drawn
On, Petitioner's Bank Account s
It is petitioner's position that respondent erroneously
included in petitioner's income certain withdrawals from, and
checksldrawn on, petitioner's bank accounts . On the record
before us, we reject that argument . That is because responden t
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 o f
withdrawals from, and checks drawn on, those accounts .
Alleged Personal Loan s
1
It is petitioner's position that the following deposits are
not includible in his income because those deposits represented
14 li
1.
personal loans to him or the repayment of personal loans that he
had made to others :
- 21
Date o f
Deposit
Account Int o Which ;
Deposit Wa s Mad e
1/14/00
Petitioner' s
account No .
1/25/00
Petitioner' s checkin g
account No . 521 0
2/16/00
Petitioner' s checkin g
account No . 521 0
4/5/00 .
checkin g
21 0
Petitioner' s checkin g
account No .- 521 0
Item Deposited
Check for $450 issued by
Mr . Chang and payable to
petitione r
Check for $30,000 issued
by Benef ici'al and payable "i t
petitioner and Mr . Wood
Check for $2'5,000 (issue d
by Firelands and payable :"to
petitione r
Check for $70,000 issue d
by Clyde-Findlay and payableto petitione r
4/27/00
Petitioner' s checkin g
account No . 521 0
Check for $ 14,000 issued }
by Mr . Wood and Ms . Wood 'andl
payable to petitioner
s
9/7/00
Petitioner' s checkin g
account No . 1473 0
Check for $ 25,000 issue d
by Firelands and payable't o
petitioner
11/1/00
Petitioner' s checkin g
account No . 173 0
Check for $ 47,189 .66 issued
by Leonard and Associatesi
and payable to petitioners
12/26/00
Petitioner' s checkin g
account No .- 73 0
Check for $ 4,100 issued by . i
Leonard and Associates and
payable to petitioner
5/31/01
Petitioner's ;checkin g
account No . '473 0
Check for $13,'000 issue d
by Mr . Chang and payable to
petitioner .
_
', 1
6/1/01
Petitioner's ( checkin g
account No . 473 0
Check for $13,000 issued
by Firelands and payable .
petitione r
7/27/01
Petitioner's checkin g
account No . 473 0
Check for $2,000 issued by
Mr . Chang and payable to
petitione r
8/15/01
Petitioner's checkin g
account No . 473 0
Cash of $5,00 0
8/15/01
-
Petitioner's checkin g
account No . 4730 ,
Check for $5,000 issued by,
Bank One, on behalf of Mr ;
Chang, and payable t o
petitione r
12/5/01
Petitioner's checkin
g
account No . 47 .3 0
'Cash of
$9,00 0
12/12/01
Petitioner's
account No .
checkin g
473 0
Cash of
$9,98 0
12/13/01
Petitioner's checkin g
account No . 4730
Cash of
$9,980
9
- 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 chec k
for $70,000 issued by Clyde-Findlay, the check for . $4,100 issued
byjLeorard 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 no t
.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 burde n
,of establishing that the deposits of those checks are not
includible in his income for the respective . taxable years at
issue F,during•which he made those deposits .
1:We turn now to the check for $14,000 issued by Mr . Wood an d
Ms . Wood . The only evidence that petitioner, presented to establish that the deposit of'the $14,000 check in question is no t
includible in his, .income is a copy of that check and his own
testimony on which we are unwilling to rely . The check for
$14,000li~!,ssued by Mr . Wood and Ms . Wood bears the following
handwritten notation : "Loan on Houses" . The record does no t
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 o f
the check for $14,000 issued by Mr . Wood and Ms . Wood is no t
includible in his income for his taxable year 2000 .
- 23 ;We turn now to theche ck for $25,000 issued by-Firelands . .
It was not . until petitioner
filed his opening brief that h e
alleges that the deposit of that check is not includible in his'+,l
income because that check r epresented the proceeds of a certain .
car loan . The only evidenc e that, petitioner presented to estab- i
E
lish that allegation on bri ef~ is a` copy of the $25,000 check i n
I
question . On the record be fore us', we find that petitioner ha s
failed to carry his burden of establishing that the deposit!of
the check for $25,000 issue d by Firelands-is not includible ii i,
his income for this taxabl e year 2000 .
We turn now to the the ck for $47,189 . 66 issued by Leonar d
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 responden t
did not include in petitioner's income for his taxable year 2 .00 0
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 BankrOne 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,
101)
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
$5,0.00,Bank One check is not includible in his income because
that ., :cl eck represented a personal loan-from Mr . Chang to petitioner . On the record before us, we find that the two deposits
that' petitioner made on August 15, 2001, of the $5,000 Bank On e
check and $5,000 cash represented the proceeds of the-$l0,000
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
'$9,9.80 (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 the y
represented loans from Reyanh Phung to petitioner . In support o f
that' allegation on brief, petitioner relies on the Amnesia Loung e
secu:rityi~agreement that pertained to the $50,000 that petitione r
from Reyanh Phung . There . is no evidence-in the record
19 The' parties stipulated that respondent included in petitioner'sWincome for each of the years at issue all of the depositsintollpetitioner'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°,ifor his taxable year 2001 the deposit of $5,000 cash on
Aug . 15,!-2001 .
- 25 I establishing that petitione ;r's three 2001 cash deposits at issu e
represented part of the proceeds-0 f that'loan .
.-On the record Ii
before us, we find that petitioner has failed to carry his burde n
of establishing that those three 2001 cash-deposits are no t
includible in his .income for his taxable year 2001 .
Alleged Refunds of Moneys Held in Escrow
I
-
It is petitioner's'pos ition that the following deposits 'a'r e
not includible in his income because those deposits represen t
refunds of petitioner's moneys held in escro w
Date of Account Into Which
Deposit Deposit Was Made
Item Deposite d
1/14/00 Petitioner's checkin g
account No . 521 0
Check for $1,713 .83 issued by
Countrywide and payable to
petitioner - 'i
Petitioner's .lhecking
account No . 5210-
Check for $1,000 issued by
CMACO Investments and payable
to Seo & Leonar d
Petitioner's checking
account No . 521 0
Check for $168 .95 issued by
ABN-AMRO and payable to
petitione r
8/11/00 Petitioner's checking
account No . 473 0
Check for $608 .16 issued by ;
ABN-AMRO and payable to
petitione r
9/19/00
Petitioner's checking
account No . 4 73 0
Three checks, each for
$450 .61, issued by ABN-AMRO
and payable to petitione r
2/8/01
Petitioner's checking
account No . 473 0
Check for $1,592 .82 issued by
M&I Bank and payable to'
petitione r
5/1/01
Petitioner's checking
account No . 473 0
Check for $741 issued by
ABN-AMRO and payable to
petitione r
6/6/0 1
Petitioner's
account No .
checking
473 0
Check for $177 .47 issued by i
ABN-AMRO and payable to*
petitione r
9/4/01
Petitioner's
account No .
checking
4730
'Check for $31 .02 issued by '
United Guaranty and payable)
to ABN-AMRO or petitioner "I
26 We turn first to the check for $1,713 .83 issued by Countrywide .
,jThe only evidence that petitioner presented, to establis h
that the deposit of that check is not includible in his income i s
la copy of that check and his own testimony on which we are
unwilling to rely . On the record before us, we find that petitionerhas 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 i n
;escrow ., The only evidence that petitioner
presented to establis h
,thatt allegation on brief is copies of the check for $1,000 issued
C
4
by :CMACOJIInvestments and the check for $31 .02 issued by Unite d
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 tha t
the deposits of those latter two checks are not includible in his
li
income because those checks represented refunds of petitioner' s
li
- 27`moneys held in escrow, it was not until petitioner filed his,
opening brief that he advances that claim with respect to th e
remaining check . Each of t hose three checks in question i s
payable to petitioner and bears the following computer-generate d
notation : "FOR PAYMENT OFIESCROW .TOMORTGAGOR" . We believe-that
ABN-AMRO generated that notation,ithat 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 d
petitioner's income for the respective taxable years during whic h
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 establish that the deposits of those checks are not includible in 1is
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-11
tion : "FOR MISAPPLICATION REVERSAL" . There is no reliabl e
evidence in the record explaining,what that notation means .
the record before us, we find that petitioner has failed to . carr y
his burden of establishing that the three checks, each fo r
i
28 1$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 h e
I
alleges that the deposit of that check is not includible in his
income :because that check-represented a refund of his money hel d
n,escrow . The only evidence that petitioner presented' .t o
establish .that allegation on brief is a copy of that check . Th e
$1,592 .!182 , check in question bears the following computer-generated notation : "OVERPAYMENT" . There is no evidence in,th e
record . explaining what .that notation means .20
On the record
before us, we find that petitioner has failed to carry his burde n
f,;establishing that the deposit of the check for $1,592 .8 2
issuedjby, 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 cop y
ofl!th'at check and-his own testimony on which we are unwilling to
rely., . The $741 check in question bears the following computergenerated notation : "FOR, PAYMENT OF MISCELLANEOUS ESCROW" .
201f 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 tha t
notation means .21
On the record before us, we find that peti-
tioner has failed to carry his burden of establishing that thet
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 Money s
It is petitioner's pos ition that the following deposits ar e
not includible in his income because those deposits represented,&
refunds of certain moneys that petitioner had paid to others :
Date of Account .Intb Which
Deposit Deposit Was Made
Item Deposited
1/18/00 Petitioner's checkin g
account No . 521 0
Check for $83 .62 issued b y
Farmers Insurance and payable
to petitioner I
2/15/00 Petitioner's checking
account No . 521 0
Check for $269 .86 issued by
Farmers Insurance and payabl e
2/15/00 Petitioner's checking
account No . 521 0
to Innova Funding
Check for $19 .21 issued by
I
Dispatch Printing and payable
to petitioner .
2/18/00 Petitioner's checking
account No . 521 0
Check for $152 .66 issued by
Farmers Insurance and payable
to petitione r
3/9/00 Petitioner's checking
account No . 521 0
Check for $151 .76 issued by
Farmers Insurance and payabl e
4/19/00 Petitioner's checking
account No . 521 0
Check for $550 issued by
Franklin County and payable
to Sect Investment Group
6/19/00 Petitioner's checking
account No . 4730
Check for $10 issued by
Farmers Insurance and payable
to petitioner
t
to petitione r
21If 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 constitutes income to petitioner
- 30 -
i
Date of Account,Into Which
Deposit Deposit Was Made
6/19/00
Petitioner's checking
account No . 473 0
6/19/00 Petitioner's checkin g
account No . 4730
Item Deposited
Check for $47 .70 issued b y
Farmers Insurance and payable
to petitione r
Check for $214 .44,issued by
Farmers Insurance and payable
to petitione r
7/7/00 Petitioner's checking
account No . 473 0
Check for $449 .44 issued by
Ricart and payable to Leonard
and . Associate s
7/10/0 0
Petitioner's . checking
account No . 4730
7/10/00
Petitioner's checking
account No . 4730
Check for $10 issued b y
Farmers Insurance and payabl e
to petitione r
Check for $19 .87 issued b y
Farmers Insurance and payabl e
to petitione r
9/29/00 Petitioner's checking
account No . 473 0
Check for $26 issued by
Paul M . Herbert, Civil
Account, Clerk of the Court,
Franklin County MunicipalCourt, ,and payable to
petitione r
10/18/00
Check for $599 .68 issued by
Ricart and payable to
petitione r
, .i
Petitioner's checking
account No . 473 0
11/ 7 /00 Petitioner's checkin g
account No . .473 0
Check for $65 issued by
Charter,Bank and payable to
petitione r
3/2/01 Petitioner's checkin g
Check for $155 .42_issued by
the City of Columbus and
payable to petitione r
account No . 473 0
3/6'/01
Petitioner's checking
account No . 473 0
3/19/01 Petitioner's checkin g
a!
account No . 473 0
4/4/01 Petitioner's checkin g
account No . 473 0
Check for $500 issued by
Farmers Insurance and payable
to petitione r
Check for $482 .71 issued by
Maguire and Schneider and
payable to petitione r
Check for $43 .31 issued by
Farmers Insurance and payable
to petitione r
Petitioner's checking
account No . 473 0
Check for $500 issuedby
Petitioner's checking
account No .~4730
Check for $522 .11 issued by
Farmers Insurance and
payable to petitioner
HER and payable to petitioner
- 31i Date of Account Into Which
Deposit Deposit Was Made
7/11/01 Petitioner' s checking .'
account No . 4730
k
1/31/02 Petitioner's checking
account,No . 473 0
Item Deposited
Check for $228 .61 issued b y
I'
Farmers Insurance and payable', m
to petitione r
Check for $317 .44 issued by 1,
Farmers Insurance and payabl e
to petitione r
1/31/02 Petitioner's 6heckin4
account No . 473 0
Check for $124 issued by
.Paul M . Herbert, Clerk o f
Court, Criminal/Bail Account,
Franklin County Municipal
Court, and payable to
petitione r
3/28/02 Petitioner's checking
account No . 473 0
Check for $270 .13 issued by
Farmers . Insurance and payabl e
4/9/02 Petitioner's checking
account No . 473 0
Check for $5 .42 issued by
American Electric Power andpayable to petitione r
12/10/02 Petitioner' .s _checking,
account No . 4730
Check for $377 .11 issued by ::
to petitione r
We turn first to the
Farmers . Insurance and payable :
to petitioner ~, d
6 checks issuedby Farmers Insurance . a
(16 Farmers Insurance checks) . . It is petitioner's position tha t
the deposits .of the 16 checks in question are not includible in'
his income because those checks represented refunds of insuranc e
premiums that he had overpaid . Petitioner testified with re s p ect
. checks, except (1) the che~ki
to all of the 16 Farmers Insurance
I
for $83 .62 that he deposited into petitioner' s checking_accouit '
No . 5210 on January 18, 2000, (2)ithe check for $269 .86 that'Ye ,
deposited into that account on Fe8ruary,15, 2000, (3) the check ]
for $152 .66 that he deposited .int that account on Februaryal 8
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 th e
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 petitioner presented to establish that the deposits of the 12 of the
l6Farmers 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 hi s
burden'of establishing that the deposits of the 16 Farmers
Insurance checks are not . includible in his income for the respectine 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 includibl e
income because that check represented a refund of mone y
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 .211issued by Dispatch Printing i s
not includible in his income for his taxable year 2000 .
We turn now to the chuIcks for $449 .44 and $599 .68 issuedlby
Ricart (Ricart checks) . Ii was not until petitioner filed his
fl
opening brief that he alleges that the deposits of those checks
are not includible in his income because those checks represete
refunds of deposits that were made with respect to certain ca r
leases . The only evidence that petitioner presented to establis h
that allegation on brief i
copies of the Ricart checks . On th e
record before us, we find that petitioner has failed to carry .lhis
burden of establishing that the respective deposits of the Rican
checks are not includible in his income for his taxable yea r
2000 .
We turn now to the check .for $65 issued by Charter Bank .1 It,
: a I
was not until petitioner filed his opening brief that he alleges
that the deposit of the $65 check in question is not includibl e
in .his income because that check represented a "tax fee refund . "
The $65 check in question bears the following computer-generate d
notation : "TAX FEE REFUND( . We believe that Charter Bank
I
generated that notation and that that check represented a refun d
to petitioner of a certain tax fee . On the record before us ,
find that the check for $6p, issued by Charter Bank is no t
includible in petitioner'slinc.ome for his taxable year 2000 .
I
we
i
- 3'4 - V
We turn now to the check for $155 .42 issued by the City o f
Collumbus'. It was not until petitioner filed his opening brie f
thatthe alleges that the deposit of that check is not includibl e
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 notation "WARRANT TO THE CITY .TREASURER" . We believe that the City
ofiColumbus generated . that notation and that that checkr'repre-
f ir e
sented=,la refund to petitioner of moneys that he had paid with
respecct to a "WARRANT TO THE CITY TREASURER" of Columbus, Ohio .
On ;the,relcord .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 :'i1was ..,!~;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 i n
question bears the following computer-generated notation :
"WARRANT NUMBER 2000144137" . We believe that Franklin` Count y
generated .that .,notation and that that check represented ;i.a refund
E
i!
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 $5 50 issued by Franklin County is-'not t
includible in petitioner's=incomefor his taxable year 2000 . .
We turn now to the check for~$26 issued by the Frankli n
County Municipal Court, . It was not until-petitioner filed his,
I
opening brief that he alleges that .the deposit of that check"iis
not includible
in .his income because that check represente d
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'Paur l
M . Herbert, Civil Account,
Clerk of the Court, Franklin County
Municipal Court . There is no evidence in .the record . -explaini I g
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 th e
Franklin County Municipal court is not includible in his incom e
for his taxable year 2000 .
We turn now to the check for $500 issued by HER ., 'It,was , no t
until petitioner filed his opening brief that he alleges that t h
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 esablish!,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 establishing 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
kSchneider . 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
attorneys fees . The only evidence that petitioner presented t o
establish that allegation on brief is a copy of the $482 .71 check
in question . That check bears the following handwritten nota;tion :, " Refund" .
notation ,
The record does not disclose .who wrote that
when it was written, and what,it means .
On the recor d
befo.re ;;tus, we find that petitioner has failed to carry his burden
of establishing that the check for $482 .71 issued by Maguire an d
Schneider is not includible in his income for his taxable year
1200
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 $12 4
,check inIquestion reflects that that check was issued by Paul M .
I
- 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 hi s
'f
F
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 fo r $5 .42'issued by American
Electric Power . It is pettioner';s position that the deposit- o f
that check is not includible' in his income because . that check,
represented a refund of a certainlcredit due .to him . The check
for $5 .42 issued,by American Electric Power bears the following
computer-generated notation : "REFUNDING FINAL BILL CREDI T
BALANCE ON ACCOUNT We b lieve that American Electric Powe`r'
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, w~ find that the check for $5 .42 issued
by American Electric Power is not . includible in petitioner' s
income for his taxable year 2002 . 1
Alleged Gift s
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 Mad e
Item Deposite d
12/21/00 Petitioner's checking Check for $200 issued b y
account No . 4730 Mr . Lo and Ms . Lo and payable
to petitione r
9/27/01 Petitioner's checking Check for $100 issuedb y
account No .
4730
Mr . Lo and Ms . Lo and payable
to petitione r
12/27 /02 Petitioner's checking Check for $100 issued b y
account No . 4730 Mr . Lo and Ms . Lo and payable
to petitione r
it was not until petitioner filed his opening brief that h e
alleges that the deposits of the checks in question issued, by Mr .
Lo„and Ms . Lo are not includible in his income because thos e
checks .rdpresented 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
Mri Lo and Ms . Lo that petitioner deposited on Decemberjh2l, 2000,
bears,the handwritten notation "Christmas 2000" ; the check fo r
.$100,ii .ris'sued 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
Msa 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 Compan y
It is petitioner's position that the following deposits are .
not includible in his incone because they represented cash
advances to him from a company (namely, First USA) that issued a '
credit card to him :
Date o f
Deposit
Account Int o Which '
Deposit wa s mad e
1/ .7/00
Petitioner's Fhecking
account No .
2/14/00
Petitioner's checking
account No .
9/15/00
521 0
Petitioner's checking
account No .
11/7/00
521 0
473 0
Item Deposited
Check for $25 issued b y
First USA and payable to
petitione r
Check for $25 issued by
First USA and payable to
petitione r
20 checks, each for $25,
issued by First USA and
payable to petitione r
Check for $15 .37 issued b y
Petitioner's .checking
.4730
First
USA and payable to
account No
petitione r
We note initially that the
record does not establish that durin g
the years at issue petitioner had',a credit card that First US A
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 deposited into petitioner's checking account No . 5210 on January 7k,
2000, and (2) the check for $15 .37 that he deposited into petitioner's checking account No . 4730 on November 7, 2000 . It wasL`
not until petitioner filed his opening brief that he alleges- tha
the deposits of those two checks are not includible in histincom e
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 whic h
hea,did,,not testify are-not includible in his income is copies of
~, ig
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 whic h
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 Clai m
I' is petitioner's position that the following deposits are
not includible in his income because those checks represente d
proceeds that he received as a result of certain insurance claims
,that-he had filed with . respect to certain property :
Date of Account Into Whic h
Deposit Deposit Was Made
Item
Deposited
1/26J .01 Petitioner's checking Check for $4,150 issued by
account No . 4730 Farmers Insurance and payabl e
to petitioner, AMRO Mortgage
Group, and Leonard and
Associate s
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 establis h
that~'the deposits of the checks for $4,150 and $3,056 .17 issue d
by , ;Farmers Insurance are not includible in his income is copies
- 41
of those checks and his own testimony on which we are unwillin g
to rely . On the .record be f ore us, we find that petitioner has:
failed to carry his burden of establishing that the deposits o f
the checks for $ 4,150 and $3 , 056 .17 issued by Farmers Insuranc e
are not includible in his income for his taxable year 2001 .
Alleged Proceeds From the
Refinancing of Certain Real Propert y
It is petitioner's position that the following deposits are
not includible in his income because those deposits represente d
proceeds that,he receive d
rom the refinancing of certain rea l
property that he owned :
Date of Account Into Which
Deposit Deposit Was Made
1/18/00 Petitioner's checking
account No . 5210
1
'
I
Check for $72,084 .96 issued by ;
Item Deposited
Midland Title and payable't o
Stephen T . Hutchinson
12/14/00 Petitioner's 'checking
account No . 1I473 0
4/5/01 Petitioner's checking
account No . 473 0
I
Check for $33,562 .58 issued by
Old Republic and payable toI
LA Constructio n
Check for $2 issued by Old
Republic and payable to
petitione r
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 testimonyy
on which we are unwilling to rely . Petitioner also appears t o
rely on a certain settlement statement (property settlemen t
statement) . We have found based on that settlement statement ]
that (1) on December 23, 1999, petitioner borrowed a total of
- 42 1 $60,000 from Innova Funding as part of an agreement to refinance
certain real property that he owned in-Ohio ; (2) after using mos t
f' the !proceeds ,of that loan to pay certain of his obligation s
1.relating,to the refinancing of that property petitioner received
cash of $13,643 .06 ; and (3) Midland Celtic Title acted as . th e
I
IE
settlement agent for purposes of the refinancing agreement .
a 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 o f
'certa'in property 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 $72,084 .96 issued by
Midland Title is not includible in his income for his taxabl e
year
20r, 00.y .
nl
9 .
i
l
W e turn now to the check for $33,562 .58 issued by Old
We
Republic . In support of his position that the deposit of th e
$33,562 1 .58 check in question is not includible in his incom e
because that check represented proceeds from the refinancing of
certain real property that he owned, petitioner relies on a copy
of„that'Icheck and his own testimony on which we are unwilling to
rely . Petitioner also appears to rely on a document relating to
. i4 ..
i~
Gill
~G
a
Y.
a certain mortgage (mortgage document) . Consistent with tha t
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 establishes that the check for $33,562 .158 issued by Old Republi c
represented proceeds from the refinancing of certain real property 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 Ol d
Republic is not includibl e in hi s income for his taxable yea r
2000 .
We turn finally to t h
check for $_2 issued by Old Republic .
The only evidence that petitioner presented to establish that the
ii
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 ow n
testimony on which we are unwilling to rely . On the record µk'
before us ,
we find that petitioner has failed to carry his burde
of establishing that the deposit of the check for $2 issued by
Old Republic is not includible i n his income for his taxable-ye a
20,01 .
Alleged Transfers Between Petitioner's Bank Accounts
It is petitioner's po ition that the following
deposit s a re
not includible in his income because those deposits represente d
transfers from one of petitioner's bank accounts to another on e
of petitioner's accounts :
- 44 Date Of Account Into Whic h
Deposit Deposit Was Made
Item Deposite d
3/6/0 1
Petitioner's checking Transfer of $15,295 .48 from a
account No . 4730 bank account not disclosed b y
!T ai , the recor d
11/8/ .02 Petitioner' s Amnesia
Check for $1,000 issued by
Lounge account petitioner-and payable to
Huntingto n
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 petitioner'sl'checking account No . 4730 from an account not disclose d
by the record . It was not until petitioner filed his opening
brief that he alleges that that transfer is not includible in hi s
income because that deposit represented a transfer from one of
his bank accounts to another one of his bank accounts . Th e
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 established by the record .22 We do not understand, and the recor d
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 . O n
22Seetable 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 hi~s l
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 deposited into petitioner' s Amnesia Lounge account on January 8 and
February 12 and 19,-2002 Petitioner maintains that responden t
erroneously included thos e deposits in his income . Petitioner is
I
wrong . We have found that respondent did-not include in peti tioner's income for his taxable year 2002 the deposits of the y
Amnesia Lounge checks .
Alleged Proceeds From a Home Equity Line of Credi t
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 .
4
- 46 Alleged Check Drawn on Petitioner's Accoun t
is petitioner's position .that the check for $450 .6 1
issued on behalf of petitioner by the Direct Pay .Service of
,Huntington National Bank (Direct Pay Service check) that h e
idepdsited into petitioner's checking account No . 4730 on Augus t
25,,12000, 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
pPay Service of Huntington National Bank used to issue the chec k
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 disclos e
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 no t
includible in . petitioner's income . On the record before us, we
find that petitioner has failed to carry . his burden of establishing that the Direct Pay,Service check is not includible in his
income .,fdr his taxable year 2000 .
,
2 3If 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 Losse s
As we understand it, i t is petitioner's position that h e
incurred-certain gambling losses for each of his taxable yearsi
2000, 2001, and 2002 and that therefore he is not liable .for!th e
deficiency that respondent determined for each of those years .
Petitioner is entitled for each of the years at issue t o
deduct gambling losses only to the extent of his gambling win- i
f
p
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 re c o rd
before us, we find that petitioner has failed to carry his burde n
of establishing that he incurred any gambling losses during any
of the taxable years at issue that would result in his not bein g
liable for the respective deficiencies that respondent determine d
l
for those years .
d1
Unreported Interest Incom e
.Petitioner-argues for the first time on brief that he is no t
'liable for tax on the interest inome that respondent determined
for each of his taxable years 2000 and 2001 . Petitioner makes n
I
,i
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 liabl e
for tax on the interest income that respondent determined fo r
each of his taxable years 2000 and 2001 .
- 48 Additions to Ta x
It is respondent's position that petitioner .is liable for
eachlH, ;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 t o
file timely a return .24 Section 6651(a)(2) imposes an addition
to taxl'Ifor failure to pay timely the . amount shown-as tax in a
return .25 The respective additions to tax under sectio n
6651 :,,(a)`1(1) and (2) do-not apply if the respective failures t o
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 tha t
24The 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
neitihere, 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) .
,;.25The 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'.dur~ing which the failure to pay the amount shown as tax in
the return continues, not to exceed 25 .percent in . the aggregate .
26For 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 th e
(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 respec t
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) ;
Commissioner , 116 T .C . 438,
Higbee v .
446-447 (2001) . To satisfy respori-
dent's burden of production, respondent must come forward wi
t "suf ic ent evidence indicating that it is ap ropriate 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 returnLwa
filed, 90 percent of the tax for such year, or (2) if the individual filed a return for the preceding taxable year, 100 percent
of the tax shown in such return . Sec . 6654(d)(1)(B) . .
27Sec . 6654(e) provides that no addition to tax shall be i
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 ii
less than $1,000, sec . 6654(e)(1)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 . 66541(e)(2) ; (3) the'Secretary of th
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 withhrespec t
to the additions to tax under sections 6651(a)(1) .and (2) an d
6654(a)' that respondent determined for each of petitioner' s
'taxable years 2000, 2001, and 2002-, respondent "need not introduce evidence regarding . reasonable cause * * * or .similar provisions
1 .,* * * the taxpayer bears the burden of proof with regard
'to those1issues ."
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~iof his taxable years 2000, 2001, and 2002 . On th e
record before us, we find that respondent has carried respondent's burden of production under section 7491(c) with 'r'espect t o
the addition to tax under section 66'51(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 determined for each of his taxable years 2000, 2001, and 2002 is that
he is 'not liable for that addition to tax because'he "incurre d
losses in those years" . We have sustained virtually al l
respondent's determinations in the notice . As a result, petitioner does not have'a loss for any of his taxable'years 2000,
200 .1, 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 taxa ble years-2000, 2001, and 2002 for the
addition to tax under secti on 6651(a)(1) .
We turn now to the addition to tax under section 6651 .(a)(12) ;fi
that respondent determined for eac,h,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 ,' 12 0
T .C . 163, 170 (2003) . For purposes of section 6651(a)(2) ,
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 filie ' 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 . 4he respective substitutes for returns '
that respondent prepared under section 6020(b)'for the years a t
issue showed (1) . for 2000
otal tax of $251,430, (2) for 2001,
total tax of $132,318, and
(3) for 2002, total tax of $51,412 :,
have found that petitioner failed!to .pay timely the tax showneach of those substitutes for returns . On the record before :-u.s ;
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) thatjrespondent determined for eac h
of petitioner's : taxable years 2000, 2001, and 2002 .
Petitioner advances the same argument on brief with respec t
to the addition to tax under
section
6651(a)(2) that he advance s
I
1
1
- -52
-
wth~r•espect .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
toltax under section 6651( a)(•2) because he "incurred losses
in
~
11
,
those years" .
As discussed above, we ,have sustained virtually
all of se'spondent's .determinations in-the notice . As al!'result ,
petitioner,,does not have a loss for any of his taxable years
2000 ; 2001, and 2002 .• On the record before us, we find tha t
petijtidner has failed to carry .,his burden . of establishing that h e
,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
.,re'spondent determined for each of petitioner's taxable years
~I
l
i
20001, 2001, and 2002 . We have found (1) that the substitute fo r
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, an d
(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 o f
petitioner's taxable years 2000, 2001, and 2002 .
iu
-
53 1 -
Petitioner does not argue, and the record does not estab' "
lish, that he qualifies under any~of the exceptions listed i n
section 6654(e) . On the record before .us, we find that petitioner 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 o f
the parties that are not discussed herein, and we find them to b e
without merit, irrelevant, and/or'moot .2 8
To reflect the foregoing and the concessions of responder
I
Decision will be entered under
Rule 155 .
28We note that one of petitioner's arguments on brief ap-44
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 allow d
those amounts of mortgage interest deductions for those respec
tive taxable years .
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