                        T.C. Memo. 1998-436



                      UNITED STATES TAX COURT



             ANARGYROS GEORGE MYLONAS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20654-97.          Filed December 14, 1998.

     Anargyros George Mylonas, pro se.

     Marilyn S. Ames, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MARVEL, Judge:   Respondent determined the following

deficiencies, additions to tax, and accuracy-related penalties

for the taxable years 1992 and 1993:
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                                  Additions to Tax           Penalty
                                  Sec.                         Sec.
    Year       Deficiency      6651(a)(1)      Sec. 6654     6662(a)

    1992         $19,240       $4,810.25           --        $3,848
    1993          58,255       14,564.00       $2,440.84       --

After concessions, the only issue remaining for decision is

whether petitioner is liable for the addition to tax authorized

by section 6651(a)(1)1 for the taxable year 1993 in the amount of

$13,292.2   We hold that he is.

                            FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

     Petitioner Anargyros George Mylonas resided in Houston,

Texas, at the time he filed his petition.        At all times relevant,

petitioner owned and operated a nightclub (club) which he

reported for tax purposes as a Schedule C business.

     During 1993 and 1994, petitioner worked long and demanding

hours at his club.   In addition to operating his club, petitioner

was renovating it, performing at least some of the work himself.

Working at the club or renovating it occupied most of

petitioner's time during 1993 and 1994.



     1
      All section references are to the Internal Revenue Code in
effect for the years in issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
     2
      In a stipulation of agreed adjustments, the parties have
stipulated revised tax deficiencies for the taxable years 1992
and 1993 and the amount of the addition to tax under sec.
6651(a)(1) which is at issue for 1993.
                                - 3 -


     Petitioner knew that he was required to file a Federal

income tax return for the taxable year 1993.    Petitioner also

knew that the original deadline for filing his 1993 return was

April 15, 1994.    In fact, he obtained an extension of that

deadline.   However, petitioner failed to file his 1993 return by

the extended deadline.

     Petitioner explained his failure to file by pointing out

that he was "too busy to * * * do everything."    However, if

petitioner had known that his failure to file was going to cost

him so much money, he would have closed the club for a week and

taken the steps necessary to file his return on time.

     After conducting an audit with respect to petitioner's

income tax liability for the taxable years 1992 and 1993,

respondent determined petitioner's Federal income tax liability

for those years.    Respondent also determined that petitioner was

liable for the addition to tax under section 6651(a)(1) for 1992

and 1993, for the addition to tax under section 6654 for 1993,

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

1992.

     The parties have entered into a stipulation of agreed

adjustments which resolves all issues in this case except

petitioner's liability for the addition to tax under section

6651(a)(1) for 1993.    As part of that stipulation, the parties

have agreed that the deficiency in income tax for the taxable
                                 - 4 -


year 1993 is $53,167 and that the amount of the addition to tax

in dispute for 1993 under section 6651(a)(1) is $13,292.

                              OPINION

     Section 6651(a)(1) requires a taxpayer to pay an addition to

tax whenever the taxpayer fails to file his Federal income tax

return by its due date (determined with regard to any extension

of time to file) unless the taxpayer shows that his failure to

file a timely return is due to reasonable cause and not due to

willful neglect.   The addition to tax equals 5 percent of the tax

required to be shown on the return if the failure to file is for

not more than 1 month, with an additional 5 percent for each

additional month or fraction of a month during which the failure

to file continues, not to exceed 25 percent in the aggregate.

Sec. 6651(a)(1).

     In this case, respondent seeks to impose the addition to tax

under section 6651(a)(1) because petitioner failed to file his

Federal income tax return for the taxable year 1993 by its

extended due date.   Petitioner, contending that he should not be

liable for the addition to tax, asserts that he had reasonable

cause for his failure to file.

     In order to avoid the liability for the addition to tax

under section 6651(a)(1), a taxpayer who fails to file a return

must prove (1) that the failure to file was "due to reasonable

cause" and (2) that the failure to file a timely return did not
                               - 5 -


result from "willful neglect."3   United States v. Boyle, 469 U.S.

241, 245 (1985); Brittingham v. Commissioner, 66 T.C. 373, 415

(1976), affd. on other grounds 598 F.2d 1375 (5th Cir. 1979);

Electric & Neon, Inc. v. Commissioner, 56 T.C. 1324, 1342 (1971),

affd. without published opinion 496 F.2d 876 (5th Cir. 1974).

     The term "reasonable cause" is not defined by section

6651(a)(1).   However, section 301.6651-1(c)(1), Proced. & Admin.

Regs., gives some guidance.   The pertinent part of that

regulation provides that, "If the taxpayer exercised ordinary

business care and prudence and was nevertheless unable to file

the return within the prescribed time, then the delay is due to a

reasonable cause."   Although the regulation does not explain what

constitutes "ordinary business care and prudence", the Supreme

Court in United States v. Boyle, supra at 246 n.4, emphasized

that, at a minimum, it must mean an absence of fault:

     Congress obviously intended to make absence of fault a
     prerequisite to avoidance of the late-filing penalty.
     * * * A taxpayer * * * must therefore prove that his
     failure to file on time was the result neither of
     carelessness, reckless indifference, nor intentional
     failure. Thus, the Service's correlation of
     "reasonable cause" with "ordinary business care and
     prudence" is consistent with Congress' intent, and over
     40 years of case law as well. That interpretation
     merits deference. [Citations omitted.]




     3
      In view of our ruling regarding reasonable cause, we need
not consider whether petitioner's failure to file was due to
"willful neglect".
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     In this case, petitioner has not demonstrated an absence of

fault.   Petitioner made an ill-informed decision to concentrate

on running his business while ignoring his tax-filing obligation.

Petitioner failed to take any steps to prepare or file his tax

return by the extended deadline.   At trial, petitioner explained

this failure by pointing out that he was "too busy to * * * do

everything."   Reflecting the wisdom of hindsight, petitioner

admitted at trial that, if he had known his failure to file his

return was going to cost him so much money, he would have closed

his business for a week and taken the steps necessary to file his

return on time.

     Petitioner's conduct and his justification of it do not

reflect the ordinary business care and prudence necessary to

establish reasonable cause under section 6651(a)(1).     Since

petitioner has failed to show that his failure to file his return

for 1993 was due to reasonable cause, we hold that petitioner is

liable for the addition to tax under section 6651(a)(1) for 1993.

     To reflect the foregoing and concessions set forth in the

stipulations of the parties,


                                            Decision will be entered

                                       in accordance with this

                                       opinion and the stipulations

                                       of the parties.
