                  T.C. Memo. 2007-332



                UNITED STATES TAX COURT



           CHARLES MANDEVILLE, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 6366-05.             Filed November 5, 2007.


     P failed to file Federal income tax returns for
1998, 2000, 2001, 2002, and 2003. R determined
deficiencies and additions to tax pursuant to secs.
6651(a)(1) and 6654(a), I.R.C.

     Held: P is liable for the deficiencies determined
by R and additions to tax pursuant to secs. 6651(a)(1)
and 6654(a), I.R.C.


Charles Mandeville, pro se.

Douglas S. Polsky, for respondent.
                              - 2 -

             MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge: This case is before the Court on a petition

for judicial review of five separate notices of deficiency in

which respondent determined the following deficiencies and

additions to tax with respect to petitioner’s Federal income

taxes for the taxable years and in the amounts as follows:1

                                           Additions to Tax
     Year        Deficiency           Sec. 6651(a)(1)   Sec. 6654(a)

     1998            $874              $156.50
     2000           4,715               491
     2001          12,991             3,247.75             $519.15
     2002           9,313               202.75
     2003          11,679               655.25

     The issues for decision are:

     (1) Whether petitioner was required to file Federal income

tax returns and is liable for income tax deficiencies in

petitioner’s 1998, 2000, 2001, 2002, and 2003 taxable years;

     (2)whether petitioner was required to report $3,839.23 in

net short-term capital gain on the sale of stock in taxable year

2003;

     (3) whether petitioner can claim a dependency exemption for

his wife for the 2000, 2002, and 2003 taxable years;

     (4) whether petitioner is entitled to an education credit

under section 25A for the 2001 and 2002 taxable years or a


     1
       The actual amount of the deficiencies remaining unpaid for
all the taxable years at issue except 2001 is significantly less
because a portion of the tax due had been withheld.
                               - 3 -

tuition and fees deduction under section 222 for the 2002 taxable

year;2

     (5) whether petitioner may deduct moving expenses for the

2001 and 2002 taxable years;

     (6) whether petitioner is liable for additions to tax under

section 6651(a)(1) in the amounts specified above for the 5

taxable years at issue;

     (7)   whether petitioner is liable for an addition to tax

under section 6654(a) in the amount of $519.15 for the 2001

taxable year because he failed to pay estimated income tax; and

     (8) whether petitioner is liable for a penalty under section

6673(a)(1).

                          FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts and accompanying exhibits are hereby incorporated by

reference into our findings.   Some of the facts have been deemed

established pursuant to Rule 90(c) and the Court’s order under

Rule 91(f) dated November 28, 2006.    At the time he filed his

petition, petitioner resided in Albuquerque, New Mexico.




     2
       Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended and in effect for
the taxable years at issue. The Rule references are to the Tax
Court Rules of Practice and Procedure.
                               - 4 -

     Petitioner concedes that he failed to file Federal income

tax returns for the 1998, 2000, 2001, 2002, and 2003 taxable

years.

     In 1998, petitioner was employed by Scientemps, Inc., Intor,

Inc., and the New Mexico Institute of Mining Technology, and

received wages totaling $8,130, $1,901, and $2,760, respectively.

The New Mexico Institute of Mining Technology withheld $248 in

Federal income tax.

     In 2000, petitioner was employed by Sinaf Products, Inc.,

and Intel Corporation and received wages totaling $903 and

$35,343, respectively.   Sinaf Products, Inc., and Intel

Corporation withheld $7 and $2,744 in Federal income tax,

respectively.

     In 2001, petitioner was employed by Intel Corporation and

received $68,066 in wages.   The record in this case does not

reflect any withholding of Federal Income tax from petitioner’s

wages by Intel Corporation during 2001.   That year, petitioner

also received $2 in ordinary dividends from UBS Painewebber, Inc.

     In 2002, petitioner was employed by Intel Corporation and

received $55,718 in wages; Intel withheld $8,502 in Federal

income tax.   That year, petitioner also received $22 in ordinary

dividends from UBS Painewebber, Inc.

     In 2003, petitioner was employed by Intel Corporation and

received $56,834 in wages.   From that amount, Intel Corporation
                               - 5 -

withheld $9,058 in Federal income tax.   That year, petitioner

also sold stock in Intel Corporation for $10,416.85 in gross

proceeds.   His basis in the stock sold was $6,577.62, resulting

in a net short-term capital gain of $3,839.23.   Petitioner also

received $36.88 in ordinary dividends from UBS Painewebber, Inc.

      Petitioner had single filing status for the 1998 taxable

year and married filing separate status for the 2000-2003 taxable

years.   Sometime in 2001 or 2002, petitioner and his wife moved

from New Mexico to Oregon and then back to New Mexico.

     Respondent issued the aforementioned notices of deficiency.

Petitioner then filed a timely petition with this Court.   A trial

was held on November 28, 2006, in Albuquerque, New Mexico.

                               OPINION

I.   Parties’ Contentions

     Petitioner asserts that the burden of proving that he had

unreported income tax is on respondent and that respondent has

failed to meet that burden in this case.   According to

petitioner, he is entitled to dependency exemptions for his wife

for the 2000, 2002, and 2003 taxable years, education credits or

a deduction for tuition and fees for the 2001 and 2002 taxable

years, and a moving expense deduction for the 2001 and 2002

taxable years.   Petitioner also asserts that respondent has not

met the burden of production regarding the additions to tax under

sections 6651(a)(1) and 6654(a).
                               - 6 -

     Respondent argues that petitioner was required to file

Federal income tax returns for the 5 taxable years at issue and

that petitioner is liable for deficiencies for each of those

years.   Respondent asserts that petitioner was required to report

the short-term capital gain from his sale of Intel Corporation

stock in 2003.   Respondent next claims that petitioner is not

entitled to dependency exemptions for his wife for the 2000,

2002, and 2003 taxable years because petitioner has provided no

evidence that his wife was dependent on him.   With respect to

education credits or a deduction for tuition and fees,

respondent’s position is that petitioner has failed to

substantiate that any qualified tuition and related expenses were

paid by him.   Regarding the claimed moving expense deduction,

respondent concedes that petitioner and his wife moved from

Oregon to New Mexico but argues that it is not clear when the

move occurred and that only petitioner’s self-serving testimony

supports petitioner’s assertion that the move was work related.

     Turning to additions to tax, respondent contends that

petitioner is liable for additions to tax under section

6651(a)(1) for the 5 taxable years at issue because there is no

dispute that petitioner failed to file Federal income tax returns

for those years and petitioner has failed to demonstrate

reasonable cause for such action.   Respondent also contends that
                                - 7 -

petitioner is liable for an addition to tax under section 6654(a)

for failing to pay estimated tax in 2001.

      At the conclusion of the trial, respondent filed a motion

for sanctions pursuant to section 6673.    In his brief, respondent

reiterates his position that petitioner’s positions are frivolous

and groundless and that the Court should impose sanctions.

II.   Filing Requirement/Deficiencies

      The law imposes a Federal tax on the taxable income of every

individual.   Sec. 1.   Gross income for the purpose of calculating

taxable income is defined as “all income from whatever source

derived”.   Sec. 61(a).   Section 6012(a) requires a taxpayer to

file a tax return in each taxable year in which that taxpayer’s

gross income exceeds a certain threshold amount.3   In this case,

petitioner's gross income exceeded the filing threshold for each

of the 5 taxable years at issue.4   As a result, petitioner was

required to file a Federal income tax return for each of the 5

taxable years at issue.    Petitioner’s arguments to the contrary

are incomprehensible and frivolous.



      3
        That threshold amount is generally equal to the sum of
the exemption amount and the applicable standard deduction. Sec.
6012(a)(1)(A).
      4
       Petitioner had single filing status for the 1998 taxable
year and married filing separate status for the 2000-2003 taxable
years. Thus, the relevant threshold amounts in this case are
$6,950, $2,800, $2,900, $3,000, and $3,050, respectively.
                                      - 8 -

       With respect to the deficiencies determined by respondent,

the Court notes that, as a general rule, the Commissioner’s

determination of a taxpayer’s liability for an income tax

deficiency is presumed correct, and the taxpayer bears the burden

of proving that the determination is improper.         See Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933).         Thus, petitioner

is incorrect that respondent bears the burden of proving the

existence of income tax deficiencies.5         Moreover, petitioner has

failed to demonstrate that any of the determined deficiencies are

improper.

III.       Dependency Exemptions

       Tax exemptions and deductions are a matter of legislative

grace.       See Indep. Co-op Milk Producers Association v.

Commissioner, 76 T.C. 1001, 1014 (1981) (“Whether * * *

categorized as exclusions or deductions * * * it is axiomatic

that such provisions are a matter of legislative grace and must

be strictly construed.”).          The taxpayer bears the burden of

proving entitlement to any claimed exemptions or deductions; the


       5
       In light of the fact that this case involves unreported
income, to the extent that respondent may bear some burden to
show a minimal evidentiary foundation for the asserted
deficiencies, respondent has done so because petitioner has
stipulated the amounts of unreported salary and dividend income
for the taxable years at issue. See Senter v. Commissioner, T.C.
Memo. 1995-311. Although petitioner did not stipulate the amount
of unreported income (short-term capital gain) resulting from his
sale of Intel Corporation stock in 2003, that amount is evidenced
by third-party records submitted by respondent as an exhibit in
this case.
                               - 9 -

taxpayer’s burden includes the burden of substantiation.

Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975), affd. per

curiam 540 F.2d 821 (5th Cir. 1976).   Although section 7491(a)

may shift the burden of proof to the Commissioner in specified

circumstances, petitioner has not established that he meets the

requisites under section 7491(a)(1) and (2) for such a shift.

     Section 151(b) provides a taxpayer with an exemption for a

spouse if the taxpayer and the spouse do not file a joint return,

and the spouse had no gross income and is not dependent on

another taxpayer during the calendar year in which the taxpayer's

tax year began.   In this case, petitioner asserts that he is

entitled to an exemption for his wife for the 2000, 2002, and

2003 taxable years because there is no evidence that his wife had

gross income or was someone else’s dependent for any of those

years.   Petitioner’s position distorts the relevant burdens of

proof and substantiation.   As noted, because the relevant burdens

of proof and substantiation are on petitioner, no evidence on the

relevant issues means that petitioner loses, not that he wins.

Because there is no evidence regarding petitioner’s wife’s

dependency and income in 2000, 2002, and 2003, petitioner has not

shown entitlement to a dependency exemption for his wife in any

of those taxable years.   See Brunner v. Commissioner, T.C. Memo.

2004-187, affd. 142 Fed. Appx. 53 (3d Cir. 2005).
                               - 10 -

IV.   Education Credit/Tuition and Fees Deduction

      For qualifying individuals, section 25A allows credits6

against tax for qualified tuition and related expenses paid by

the taxpayer during the taxable year.   Section 222(a) allows a

taxpayer to deduct an amount equal to qualified tuition and

related expenses paid by the taxpayer during the taxable year.7

      Although petitioner asserts that he is entitled to education

credits and/or deductions for his wife’s education expenses that

were incurred in 2001 and 2002, he has failed to substantiate

that assertion.   While petitioner has provided credit card

statements dated in 2001 and 2002 reflecting various charges that

appear to have been made to educational institutions, petitioner

has not shown with any particularity what those charges were for,

who they were made with respect to, and, perhaps most

importantly, who made them.8   Petitioner has therefore failed to

demonstrate entitlement to education credits and/or a deduction

for tuition and fees for the 2001 and 2002 taxable years.



      6
       These credits are called the Hope Scholarship Credit and
the Lifetime Learning Credit. Both are subject to multiple
conditions and limitations that need not be discussed in this
opinion.
      7
       The deduction is also subject to conditions and
limitations that need not be discussed in this opinion.
      8
        The credit card statements provided by petitioner do not
contain a name, and petitioner has provided no basis for linking
the credit card to him. In fact, at trial, petitioner admitted
that the credit card belonged to his wife.
                                 - 11 -

V.   Moving Expenses Deduction

      Under section 217, subject to certain conditions, a taxpayer

can deduct moving expenses incurred during a taxable year in

connection with the commencement of work by the taxpayer as an

employee or as a self-employed individual at a new principal

place of work.

      In this case, petitioner contends that he is entitled to a

deduction for the 2001 and 2002 taxable years for moving expenses

incurred when he and his wife moved from Oregon to New Mexico.

Although, at some point, petitioner appears to have moved from

Oregon to New Mexico, it is unclear whether that move actually

occurred in 2001 or 2002.9   It is also unclear whether it was

petitioner or his wife that actually incurred the moving

expenses.10   Most importantly, petitioner has provided no

evidence, aside from his own unsupported statement at trial, that

his move was work related.   Consequently, petitioner has failed

to demonstrate entitlement to a moving expenses deduction for the

2001 and 2002 taxable years.




      9
       Petitioner has provided receipts dated in 2001 and 2002
regarding his move, apparently from New Mexico to Oregon for a
temporary work assignment and then back to New Mexico.
      10
       As was noted with respect to the education-expenses
issue, it appears that the credit card statements provided by
petitioner relate to his wife.
                                - 12 -

VI.   Additions to Tax

      A.    Respondent’s Burden of Production

      Under section 7491(c), respondent bears the burden of

production with respect to a taxpayer’s liability for penalties

or additions to tax.     This means that respondent must “come

forward with sufficient evidence indicating that it is

appropriate to impose the relevant penalty.”       Higbee v.

Commissioner, 116 T.C. 438, 446 (2001).     In instances where an

exception to the penalty or addition to tax is afforded upon a

showing of reasonable cause, the taxpayer bears the burden of

demonstrating such cause.     Id. at 446-447.

      B.   Section 6651(a)(1) Addition to Tax

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

file a timely return unless it is shown that such failure is due

to reasonable cause and not to willful neglect. “Reasonable

cause” is described by the applicable regulations as the exercise

of “ordinary business care and prudence”.       Sec. 301.6651-1(c)(1),

Proced. & Admin. Regs.; see also United States v. Boyle, 469 U.S.

241, 246 (1985).    “[W]illful neglect” is interpreted as a

“conscious, intentional failure or reckless indifference.”

United States v. Boyle, supra at 245.

      Here, respondent has met the burden of production because

the Court has found that petitioner failed to file a Federal

income tax return for 1998, 2000, 2001, 2002, and 2003.
                                - 13 -

Petitioner has not presented any evidence to suggest that his

failure to file was due to reasonable cause.     In fact, his sole

argument is a terse assertion that respondent failed to meet the

burden of production.    Petitioner is incorrect.   Consequently,

the Court sustains respondent’s imposition of an addition to tax

pursuant to section 6651(a)(1).

     C. Section 6654(a) Addition to Tax

     Section 6654(a) imposes an addition to tax for underpayment

of estimated income tax by an individual taxpayer.     That addition

to tax, asserted by respondent only with respect to the 2001

taxable year, is computed by reference to four required

installment payments of the taxpayer’s estimated tax liability,

each constituting 25 percent of the “required annual payment.”

Sec. 6654(d)(1)(A).     For taxpayers whose adjusted gross income

for the preceding year was $150,000 or less, the “required annual

payment” is equal to the lesser of (1) 90 percent of the tax

shown on the individual's return for the year or, if no return is

filed, 90 percent of his or her tax for such year, or (2) if the

individual filed a return for the immediately preceding taxable

year, 100 percent of the tax shown on that return. Sec.

6654(d)(1)(A), (B)(i) and (ii).

     Here, petitioner failed to file a 2001 Federal income tax

return and made no estimated tax payments for 2001.     Petitioner

also failed to file a 2000 Federal income tax return.     Because
                              - 14 -

petitioner did not file a return for the preceding taxable year,

2000, respondent has met his burden of producing evidence that

petitioner had a required annual payment of estimated tax for

2001 payable in four installments under section 6654(d)(1)(B)(i)

and the Court need not engage in any analysis under section

6654(d)(1)(B)(ii).

      The Court also concludes that petitioner does not fit

within any of the exceptions listed in section 6654(e).11   As a

consequence, the Court sustains respondent’s determination of the

addition to tax pursuant to section 6654(a).

     D.   Section 6673(a)(1) Penalty

     Section 6673(a)(1) authorizes the Tax Court to impose a

penalty not in excess of $25,000 on a taxpayer for proceedings

instituted primarily for delay or in which the taxpayer’s

position is frivolous or groundless.   “A position maintained by

the taxpayer is ‘frivolous’ where it is ‘contrary to established



     11
       Sec. 6654(e) provides two exceptions to the sec. 6654(a)
addition to tax. First, the addition is not applicable if the
tax shown on the taxpayer’s return for the year in question (or,
if no return is filed, the taxpayer’s tax for that year), reduced
for these purposes by any allowable credit for wage withholding,
is less than $1,000. Sec. 6654(e)(1). Second, the addition is
not applicable if the taxpayer’s tax for the full 12 month
preceding taxable year was zero and the taxpayer was a citizen or
resident of the United States. Sec. 6654(e)(2). The Court has
determined that petitioner had a liability for a Federal income
tax deficiency for 2001 that net of withholding exceeds $1,000.
And, in light of our earlier conclusion regarding petitioner’s
liability for a deficiency for 2000, it has not been shown that
petitioner had no tax liability in 2000.
                              - 15 -

law and unsupported by a reasoned, colorable argument for change

in the law.’”   Williams v. Commissioner, 114 T.C. 136, 144 (2000)

(quoting Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir.

1986)).

     Respondent, by motion, has asked the Court to impose a

penalty under section 6673(a)(1).   Because some of the issues

raised by petitioner, including his entitlement to dependency

exemptions, education credits/a deduction for tuition and fees,

and a moving expense deduction were not frivolous, we afford

petitioner the benefit of the doubt and do not impose a penalty

under section 6673(a)(1).   Petitioner is warned, however, that

the Court may not be so inclined should he return to the Court

and advance arguments as groundless as some of the other

arguments advanced in this case.

     The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.   To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

     To reflect the foregoing,


                                         An appropriate order and

                                    decision will be entered.
