                     T.C. Summary Opinion 2004-34



                       UNITED STATES TAX COURT



         LOUIS BONNER, JR. AND CELESTE BONNER, Petitioners v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 2421-02S.               Filed March 18, 2004.


     Louis Bonner, Jr. and Celeste Bonner, pro se.

     Emile L. Hebert, III, for respondent.



     COUVILLION, Special Trial Judge:    This case was heard

pursuant to section 74631 in effect at the time the petition was

filed.    The decision to be entered in this case is not reviewable

by any other court, and this opinion should not be cited as

authority.




     1
          Unless otherwise indicated, section references are to
the Internal Revenue Code in effect for the year at issue.
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     Respondent determined a deficiency of $2,508 in petitioners'

Federal income tax for 1999.

     The sole issue for decision is whether Louis Bonner, Jr.

(petitioner) received payments during 1999 that constitute gross

income under section 61(a)(1) as compensation for services

rendered.

     Some of the facts were stipulated.   Those facts, with the

exhibits annexed thereto, are so found and are incorporated

herein by reference.   Petitioners, husband and wife, were

residents of Shreveport, Louisiana, at the time the petition was

filed.

     Petitioner is a cabinet maker, building such things as

kitchen cabinets, bookcases, and shelves.   He has been engaged in

this kind of work for approximately 30 years.   Petitioner Celeste

Bonner was employed by Century Telephone Co. during the year in

question in the collections department.   At trial, she was

employed by Alltell Telephone Co.

     Petitioners filed a joint Federal income tax return for 1999

on which they reported wage and salary income of $37,314, taxable

interest income of $13, and taxable pension income of $755, all

of which totaled $38,082.   In their tax computation, petitioners

included the 10-percent tax under section 72(t) for early

distributions from a qualified plan in the amount of $76.

Respondent determined that petitioners failed to include on their
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return self-employment income earned by petitioner in his

woodworking activity in addition to the wage and salary income he

earned and correctly reported on the income tax return for 1999.

     Petitioner contends that his sole employment during 1999 was

with Bollinger Cabinet Co., and he only worked for that employer

from late April through the remainder of 1999.     He contends that

he was not gainfully employed from January 1, 1999, until his

employment with Bollinger Cabinet Co. beginning in late April

1999.   A third-party payer, Jerry Brown, filed an information

return with the Internal Revenue Service that reflected

nonemployee compensation payments to petitioner of $8,946 during

the year 1999.   This income was not reported on petitioners'

Federal income tax return for 1999; consequently, the notice of

deficiency includes these payments as gross income and allows

petitioners a deduction for one-half of the self-employment tax

thereon.   Sec. 164(f).

     Petitioners deny that they received any income from Mr.

Brown during 1999.   Petitioner contends he was unemployed from

January to late April 1999, when he commenced employment with

Bollinger Cabinet Co.     Petitioner, however, admitted that in

years past, beginning in 1997 and in 1998, he performed cabinet

work for Mr. Brown and his wife but denied that he performed any

services for Mr. Brown during 1999 or received any compensation

from Mr. Brown for past services.     For the year 1998, Mr. Brown,
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as a payer, had filed an information return with the Internal

Revenue Service for payments of $25,980 to Mr. Bonner.

Petitioners failed to include these payments as income on their

1998 Federal income tax return.    A notice of deficiency was

issued to them for that income, and they instituted an action in

this Court challenging the proposed deficiency in docket No. 839-

01S.    At the trial of that case, petitioner denied receiving any

money from Mr. Brown during 1998, and, only when petitioner was

confronted with the canceled checks at trial, did he reluctantly

concede that the payments had in fact been made.    A decision was

entered in favor of respondent, T.C. Summary Opinion 2001-170.

       The case for petitioners' 1998 tax year is relevant to the

current case because that case brings into focus petitioner's

credibility on the issue before this Court as to whether similar

payments were received from Mr. Brown during 1999.    Section 7491

provides that the burden of proving facts relevant to a

deficiency may shift to the Commissioner under section 7491 if

the taxpayer introduces credible evidence with respect to any

factual issue relevant to ascertaining a tax liability, provided

the taxpayer has substantiated all items at issue and has

generally maintained books and records with respect to the item

at issue.    Petitioner maintained no books and records of the

income he earned during 1999, and the Court holds that section

7491 is not applicable in this case.    Section 6201(d), however,
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provides that, if the taxpayer in a court proceeding reasonably

disputes income reported on an information return and fully

cooperates with the Commissioner, the burden of producing

reasonable and probative information in addition to the

information return shifts to the Commissioner.    Although, as

noted, petitioner vehemently denied receiving any payments from

Mr. Brown during 1998 in the earlier case, at the trial of this

case, petitioner took an entirely different position for the 1998

tax year, readily agreeing that he had received income payments

from Mr. Brown during 1998, contrary to what he testified in the

earlier case, but emphatically denying he had performed any

services for Mr. Brown during 1999.    The evidence submitted by

respondent overwhelms petitioner's testimony.    That evidence

consists of records from Mr. Brown for 1999 that describe

numerous jobs or projects for which Mr. Brown compensated

petitioner for services rendered.   The documentary information

also includes what purports to be the initials of petitioner with

the dollar amounts paid for each project, the totals of which

equal the amount reported on the information return filed with

respondent.   In his testimony, petitioner acknowledged his

familiarity with most of the projects identified on these

documents, and, when questioned whether he had inscribed the

initials "LB" on the documents, he testified: "I can't recall

it."   Based on the preponderance of the evidence presented to the
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Court, including the Court's view on the credibility of the

testimony, the Court holds that petitioner did receive

compensation payments from Mr. Brown during 1999, as reported by

the third-party payer, and the requirements of section 6201(d)

have been satisfied.   Respondent, therefore, is sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                            Decision will be entered

                                       for respondent.
