                       T.C. Summary Opinion 2009-68



                          UNITED STATES TAX COURT



                       LES HICKS, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 7577-08S.               Filed May 7, 2009.



        Les Hicks, pro se.

        James E. Archie, for respondent.



        LARO, Judge:    This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.1      Pursuant to section 7463(b), the

decision to be entered is not reviewable by any other court, and

this opinion shall not be treated as precedent for any other

case.


        1
      Unless otherwise indicated, section references are to the
applicable versions of the Internal Revenue Code, and Rule
references are to the Tax Court Rules of Practice and Procedure.
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       Petitioner petitioned the Court to redetermine respondent’s

determination of a $14,534 deficiency in petitioner’s 2005

Federal income tax and a $2,907 accuracy-related penalty under

section 6662(a) and (b)(2) for a substantial understatement of

income tax.    We first decide whether petitioner’s gross income

includes his distributive share of the income of Personal Home

Healthcare Agency, L.L.C., d.b.a. Crown Health Services (PHHA).

We hold it does.      We decide second whether petitioner is liable

for the accuracy-related penalty.     We hold he is.

                               Background

I.    Preliminaries

       The parties submitted this case to the Court fully

stipulated pursuant to Rule 122.     The stipulated facts and

accompanying exhibits are incorporated herein by this reference.

Petitioner resided in Texas when his petition was filed.

II.    PHHA

       PHHA is a Texas limited liability company.      PHHA reports its

operations for Federal income tax purposes as if it were a

partnership and on the basis of a calendar year.        Petitioner

owned a 10-percent interest in PHHA.        An unrelated individual

owned the remaining 90-percent interest.

       PHHA issued petitioner a Schedule K-1, Partner’s Share of

Income, Deductions, Credits, etc., for 2005.        The Schedule K-1

reported that petitioner’s share of PHHA’s ordinary business

income for 2005 was $54,819.     Petitioner did not receive any

actual distributions from PHHA during 2005.
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III.    2005 Tax Return

       Petitioner filed a Form 1040, U.S. Individual Income Tax

Return, for 2005 using the filing status of “Single”.     Petitioner

did not report on that return, or otherwise include in his gross

income for 2005, any of the $54,819 PHHA reported to him.

IV.    Respondent’s Determination

       Respondent determined in the notice of deficiency that

petitioner’s gross income for 2005 included the $54,819 and

increased petitioner’s gross income accordingly.     That increase

also caused a $7,061 computational increase to petitioner’s gross

income with respect to Social Security benefits that he received.

Respondent also determined in the notice of deficiency that

petitioner was liable for an accuracy-related penalty for a

substantial understatement of income tax.

                              Discussion

I.    Income Tax Deficiency

       A.   Burden of Proof

       Taxpayers generally bear the burden of proving that the

Commissioner’s determinations set forth in a notice of deficiency

are incorrect.     See Rule 142(a)(1); Welch v. Helvering, 290 U.S.
111, 115 (1933).     In certain cases, however, section 7491(a)

shifts the burden of proof to the Commissioner.     We need not

decide which party in this case bears the burden of proof as to

the income tax deficiency because we decide that issue without

regard to burden of proof.
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      B.   Distributive Share of PHHA Income

      Petitioner argues that the $54,819 is not taxable to him in

2005 because he did not receive any actual distributions from

PHHA during that year.    We disagree with petitioner’s argument

that the $54,819 is not taxable to him in 2005.      A partner such

as petitioner must take into account his distributive share of

each item of partnership income even if no partnership income is

actually distributed to him during the year to which the

distributive share relates.    See sec. 702(a); United States v.

Basye, 410 U.S. 441, 454 (1973); Vecchio v. Commissioner,

103 T.C. 170, 185 (1994); sec. 1.702-1(a), Income Tax Regs.

We sustain respondent’s determination as to the income tax

deficiency.

II.   Accuracy-Related Penalty

      Respondent determined that petitioner is liable for an

accuracy-related penalty under section 6662(a) and (b)(2) for a

substantial understatement of income tax.      Section 6662(a) and

(b)(2) imposes a 20-percent accuracy-related penalty for any

portion of an underpayment that is attributable to a substantial

understatement of income tax.    An understatement is the excess of

the amount of tax required to be shown on the return for the

taxable year over the amount of tax imposed that is shown on the

return, reduced by any rebate.    See sec. 6662(d)(2)(A).    An

understatement is substantial if it exceeds the greater of 10

percent of the tax required to be shown on the return for the
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taxable year or, in the case of an individual, $5,000.     See sec.

6662(d)(1)(A).

       The Commissioner bears a burden of production with respect

to the applicability of an accuracy-related penalty.     See sec.

7491(c).    That burden requires that the Commissioner produce

sufficient evidence that it is appropriate to impose an

accuracy-related penalty.    Once he has met his burden, the burden

of proof is upon the taxpayer to prove that the accuracy-related

penalty does not apply because of reasonable cause, substantial

authority, or the like.    See secs. 6662(d)(2)(B), 6664(c)(1);

Higbee v. Commissioner, 116 T.C. 438, 449 (2001).

       We discern from the record that petitioner’s understatement

exceeds the greater of $5,000 or 10 percent of the amount

required to be shown on the return.     Thus, we conclude that

respondent has met his burden of production.     Petitioner makes

neither an argument nor an assertion that he is not liable for

the accuracy-related penalty.    We also do not find any facts that

would lead us to conclude that petitioner is not so liable.      We

sustain respondent’s determination as to the accuracy-related

penalty.

III.    Conclusion
       We have considered all of petitioner’s contentions and

allegations, and we conclude that those contentions and

allegations not discussed herein are without merit or irrelevant.
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To reflect the foregoing,


                                         Decision will be entered

                                    for respondent.
