                  T.C. Summary Opinion 2004-136



                     UNITED STATES TAX COURT



                JANET L. PICKERING, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12190-03S.          Filed October 6, 2004.


     Janet L. Pickering, pro se.

     Nancy C. Carver, for respondent.



     PANUTHOS, Chief Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect at the time the petition was filed.   The

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

this opinion should not be cited as authority.    Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code in effect for the year in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.
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     Respondent determined a deficiency in petitioner’s 2000

Federal income tax and additions to tax as follows:

                              Additions to Tax
  Deficiency    Sec. 6651(a)(1)   Sec. 6651(a)(2)     6654(a)
   $6,555         $1,417.72          $661.60          $337.35

After concessions,1 the issues for decision are:    (1) Whether

petitioner received unreported income of $17,599.12 in wages,

interest, dividends, and gains from the sale of stock for the

2000 taxable year; (2) whether petitioner is liable for an

addition to tax under section 6651(a)(1) of $1,417.72 for the

2000 taxable year; and (3) whether petitioner is liable for an

addition to tax under section 6654(a) of $337.35 for the 2000

taxable year.

                            Background

     Some of the facts have been stipulated, and they are so

found.   The stipulation of facts and the attached exhibits are




     1
        Respondent concedes that petitioner is not liable for the
addition to tax under sec. 6651(a)(2). In the notice of
deficiency, respondent determined that petitioner received $1,068
in dividends from Merrill Lynch Pierce Fenner & Smith (Merrill
Lynch). Respondent concedes that petitioner received only $721
in dividends from Merrill Lynch.
                                - 3 -

incorporated herein by this reference.2    At the time the petition

was filed, petitioner resided in Sterling, Virginia.

     During the 2000 taxable year, petitioner received the

following:    (1) Wages of $1,972 from the Loudon Baptist Temple;

(2) interest of $1,643 from both Merrill Lynch Pierce Fenner &

Smith (Merrill Lynch) and Prudential Securities, Inc.

(Prudential); (3) dividends of $1,561 from Merrill Lynch and

Prudential;3 and (4) an income tax refund of $114 from the

Commonwealth of Virginia Department of Tax.

     On March 9, 2000, petitioner sold 125 shares of Series A,

8.5 percent cumulative preferred stock in Americo (Americo stock)

and received sale proceeds of $2,963.     In January 1994,

petitioner had purchased 560 shares of Americo stock for

$13,864.50.   The sale of Americo stock thus resulted in a loss of

$131.75.




     2
        The stipulation of facts was filed without trial and
without an appearance by petitioner at a trial scheduled for May
12, 2004. By Order dated May 12, 2004, we offered petitioner an
opportunity, if she so desired, to supplement the record by June
11, 2004. During a conference call with the parties on June 22,
2004, we again advised petitioner of an opportunity to supplement
the record. Other than the stipulation of facts and the attached
exhibits, the Court has not received any indication from
petitioner of an intention to supplement the record.
     3
        As indicated earlier, respondent concedes that petitioner
did not receive $347 in dividends, the difference between what
respondent determined in the notice of deficiency and the
stipulated amount of $721.
                                - 4 -

     During the 2000 taxable year, petitioner also sold 769

shares of stock in Peco Energy Co. (Peco stock) and received sale

proceeds of $31,581 through the following transactions:4

     No. of      Date of      Sales      Date of      Purchase
     Shares       Sale       Proceeds    Purchase       Price

          50    02/09/00    $2,045.18    01/10/95     $1,231.25
         180    02/15/00     7,177.03    01/10/95      4,432.50
          50    04/24/00     2,017.47    01/10/95      1,231.25
          50    05/22/00     2,183.76    01/10/95      1,231.25
         295    06/20/00    12,202.53    01/10/95      7,264.38
          13    06/20/00       537.73    06/30/95        354.10
          12    06/20/00       496.37    09/29/95        359.20
          13    06/20/00       537.74    12/20/95        391.21
          15    06/20/00       620.46    03/29/96        396.91
          15    06/20/00       620.47    06/28/96        403.35
          17    06/20/00       703.20    09/30/96        410.09
          17    06/20/00       703.20    12/20/96        431.81
          21    06/20/00       868.66    03/31/97        439.59
          21    06/20/00       868.66    06/30/97        449.24

The sale of Peco stock resulted in a gain of $12,554.87.

     Petitioner made estimated tax payments of $254 for the 2000

taxable year.    In addition, petitioner requested, and respondent

granted, two extensions of time to file a tax return for the 2000

taxable year.    Despite these extensions, petitioner did not file

a return for the 2000 taxable year.

     As we indicated earlier, respondent determined that

petitioner received unreported income and that she is liable for

certain additions to tax for the 2000 taxable year.    Respondent


     4
        While the parties stipulated that petitioner received
sale proceeds of $31,581, petitioner’s annual statement from
Merrill Lynch indicates that she received proceeds of $31,582.46.
This difference is immaterial, and we accept the stipulated
amount.
                                - 5 -

further determined that petitioner’s filing status is “married

filing separate return” and that she is entitled to the standard

deduction and a personal exemption deduction for the 2000 taxable

year.5

                             Discussion

     Generally, the burden of proof is on the taxpayer.     Rule

142(a)(1).    However, if the taxpayer satisfies the limitations

under section 7491(a)(2) and introduces credible evidence with

respect to any factual issue relevant to ascertaining the tax

liability, then the Commissioner bears the burden of proof with

respect to such issue.    Sec. 7491(a).   Moreover, if a taxpayer

asserts a reasonable dispute with respect to the income reported

on an information return and fully cooperates, then the

Commissioner shall have the burden of producing reasonable and

probative information in addition to such information return.

Sec. 6201(d); Tanner v. Commissioner, 117 T.C. 237 (2001), affd.

65 Fed. Appx. 508 (5th Cir. 2003); McQuatters v. Commissioner,

T.C. Memo. 1998-88.    In the present case, petitioner has not

satisfied the requirements of either section 6201(d) or 7491(a).

Unless indicated otherwise, the burden of proof remains on the

petitioner.


     5
        Petitioner contends that she is entitled to itemized
deductions and dependency exemption deductions for the 2000
taxable year. Petitioner has not offered any evidence to support
her contention, even though, as we indicated earlier, the Court
has permitted her to supplement the record.
                                  - 6 -

Unreported Income

     A taxpayer’s gross income includes all income from whatever

source derived, including (but not limited to) compensation for

services, gains derived from dealings in property, interest, and

dividends.6    Sec. 61(a)(1), (3), (4), (7).   In the present case,

petitioner received wages of $1,972, dividends of $1,561,

interest of $1,643, a gain of $12,554.87 from the sale of Peco

stock, and a loss of $131.75 from the sale of Americo stock.

Accordingly, petitioner’s gross income for the 2000 taxable year

is $17,599.12.     We sustain respondent’s determination on this

issue to the extent of this amount.

Addition to Tax Under Section 6651(a)(1)

     If a Federal income tax return is not timely filed, an

addition to tax will be assessed “unless it is shown that such

failure is due to reasonable cause and not due to willful

neglect”.     Sec. 6651(a)(1).   A delay is due to reasonable cause

if “the taxpayer exercised ordinary business care and prudence


     6
        A taxpayer’s gross income also includes a refund of State
income tax in the year received to the extent that said tax was
claimed as a deduction in any prior taxable year and resulted in
a reduction in Federal income tax. See sec. 111(a); Kadunc v.
Commissioner, T.C. Memo. 1997-92. While the record indicates
that petitioner received in 2000 an income tax refund of $114
from the Commonwealth of Virginia Department of Tax, said amount
was not included in petitioner’s gross income as part of
respondent’s determination, and respondent did not raise this
matter at any time after the issuance of the notice of
deficiency. Accordingly, we do not address whether the State
income tax refund was includable in petitioner’s gross income for
the 2000 taxable year.
                                - 7 -

and was nevertheless unable to file the return within the

prescribed time”.   Sec. 301.6651-1(c)(1), Proced. & Admin. Regs.;

see also United States v. Boyle, 469 U.S. 241, 243 (1985).       The

Commissioner has the burden of production with respect to the

liability of any individual for an addition to tax under section

6651(a)(1).   Sec. 7491(c).   The burden of showing reasonable

cause under section 6651(a) remains on petitioner.    Higbee v.

Commissioner, 116 T.C. 438, 446-448 (2001).

     In the present case, respondent met his burden of production

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

Petitioner did not file a return for the 2000 taxable year.      Nor

did petitioner provide any evidence to establish she had

reasonable cause for the failure to timely file.    Respondent’s

determination as to this issue is sustained.

Addition to Tax Under Section 6654

     Section 6654(a) provides for an addition to tax “in the case

of any underpayment of estimated tax by an individual”.    The

amount of the underpayment is the excess of the “required

installment” over the amount (if any) of the installment paid on

or before the due date for the installment.    Sec. 6654(b)(1).

The amount of the required installment, in turn, is 25 percent of

the required annual payment, which is the lesser of (1) 90

percent of the tax shown on the return for the taxable year (or,

if no return is filed, 90 percent of the tax for such year), or
                                 - 8 -

(2) if the taxpayer filed a return for the immediately preceding

taxable year, 100 percent of the tax shown on the return of the

individual for the preceding taxable year.       Sec. 6654(d)(1)(A)

and (B).    The Commissioner bears the burden of production in any

court proceeding with respect to the addition to tax under

section 6654.   See sec. 7491(c).    The Commissioner need only make

a prima facie case that imposition of the addition to tax is

appropriate.    Mackey v. Commissioner, T.C. Memo. 2004-70.

     In the present case, respondent did not meet his burden of

production to establish a prima facie case that imposition of the

addition to tax is appropriate.     Petitioner made estimated tax

payments of $254 for the 2000 taxable year.       We cannot conclude

from the record whether this amount is sufficient as the required

annual payment under section 6654(d)(1)(B) because we cannot make

a comparison with the tax shown on the return for the preceding

taxable year.   Accordingly, we deny respondent’s determination

regarding this issue.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                              Decision will be entered

                                         under Rule 155.
