                        T.C. Memo. 2005-187



                      UNITED STATES TAX COURT



                ANDREW L. PARADISO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9361-03.              Filed July 26, 2005.



     Andrew L. Paradiso, pro se.

     Theresa G. McQueeny, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COLVIN, Judge:   Respondent determined a deficiency of

$25,490 in petitioner’s Federal income tax for 2000 and that

petitioner is liable for additions to tax of $5,689.80 under
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section 6651(a)(1)1 for failure to file, $2,402.36 under section

6651(a)(2) for failure to pay, and $1,358.88 under section

6654(a) for failure to pay estimated tax.       Respondent conceded

that petitioner is not liable for the addition to tax under

section 6651(a)(2) but contends that petitioner is liable for an

increased addition to tax under section 6651(a)(1) of $6,322 for

2000.       After concessions by the parties, the issues for decision

are:

       1.      Whether petitioner’s sale and purchase of mutual fund

shares in 2000 qualifies as a like-kind exchange under section

1031.       We hold that it does not.

       2.      Whether petitioner may carry forward charitable

contribution deductions from 1995 to 2000 in the amount of $977.

We hold that he may not.

       3.      Whether we have jurisdiction to decide if respondent

erroneously applied a $5,908 overpayment for 1992 to 1979.       We

hold that we do not.

       4.      Whether petitioner is liable for the addition to tax

for failure to file under section 6651(a)(1) of $6,322 for 2000

and the addition to tax for failure to pay estimated tax under

section 6654 for 2000.       We hold that he is.


        1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule References
are to the Tax Court Rules of Practice and Procedure.
                                 - 3 -

     5.      Whether affidavits petitioner sought to offer into

evidence after trial are admissible.     We hold that they are not.

                           FINDINGS OF FACT

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

A.   Petitioner

     Petitioner resided in Kingston, New York, when he filed the

petition in this case.

     Petitioner worked for IBM for 20 years and retired in July

1992.     He began to receive Social Security disability benefits in

December 1994.     From 2000 through the date of trial, petitioner

operated a sole proprietorship through which he sold and repaired

personal computers and provided technical assistance related to

personal computers.     In 2000, petitioner’s sole proprietorship

had gross receipts of $1,704 and a net loss of $5,728.

B.   Purchase and Sale of Shares of Fidelity Magellan and
     Fidelity Growth & Income Funds

     On August 11, 1992, petitioner bought 223.947 shares of

Fidelity Magellan Fund for $15,002.75 and 695.41 shares of

Fidelity SECS Growth & Income Fund for $15,002.75.     Petitioner

reinvested dividends and capital gains distributions he received

from 1992 to 2000 into the Fidelity Magellan Fund and the

Fidelity SECS Growth & Income Fund.      On July 19, 2000, petitioner

sold 280.18 shares of Fidelity Magellan Fund for $38,482.72 and
                                 - 4 -

891.027 shares of Fidelity SECS Growth & Income Fund for

$42,724.74.

     Petitioner received a Form 1099-B, Proceeds From Broker and

Barter Exchange Transactions, for 2000 which states that

petitioner sold his shares of the Fidelity Magellan Fund and the

Fidelity SECS Growth & Income Fund on July 19, 2000.    On a date

not stated in the record, petitioner discussed with his broker,

William Dunstan (Dunstan), whether the sale of his shares of the

two Fidelity funds was taxable.    The record does not indicate

what Dunstan said.

C.   Petitioner’s Returns

     Petitioner prepared draft Federal income tax returns for

1999 and 2000.   He used TurboTax software to prepare a draft 2000

return.   Petitioner did not file Federal income tax returns for

1997, 1998, 1999, or 2000.

D.   Proceedings in This Court

     On April 22, 2004, we sent a notice to petitioner setting

this case for trial.   The notice states:

          The parties are hereby notified that the above-
     entitled case is set for trial at the Trial Session
     beginning on September 27, 2004.

          The calendar for that Session will be called at
     10:00 A.M. on that date and both parties are expected
     to be present at that time and be prepared to try the
     case. * * *
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     On the day of the calendar call and trial, petitioner said

that he expected to receive an affidavit from Dunstan and a

medical affidavit.   Petitioner did not offer the affidavits into

evidence at trial.

     After respondent’s opening brief was filed, petitioner filed

motions to reopen the record to admit (1) an affidavit from

Dunstan regarding the sale of his mutual funds in 2000, and (2)

an affidavit petitioner said pertains to his medical condition.

     Petitioner attached Dunstan’s affidavit to his motion

relating to that affidavit.   In it, Dunstan states that he had

recently learned that petitioner erroneously interpreted the 2000

mutual fund sale as a tax-free exchange.   Petitioner did not

attach an affidavit to the other motion.

                              OPINION

A.   Whether Petitioner’s Sales of Mutual Fund Shares in 2000
     Were Like-Kind Exchanges Under Section 1031

     Petitioner contends that his sales of mutual fund shares in

2000 are not subject to income tax in that year because they were

like-kind exchanges under section 1031(a)(1).   We disagree.

Section 1031(a)(1) expressly does not apply to the sale of stock

or other securities.   Sec. 1031(a)(2)(B) and (C).   Thus,

petitioner realized taxable income from his sales of mutual fund

shares in 2000.
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B.   Whether Petitioner May Carry Forward Charitable Contribution
     Deductions From 1995 to 2000

     Petitioner testified and contends that he may carry forward

a charitable contribution deduction of $977 from 1995 to 2000.

Petitioner testified that he had a pattern of charitable giving.

He contends that we may estimate his charitable contributions

under Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930).

     A taxpayer may deduct a charitable contribution if

substantiated with a canceled check, receipt, or other reliable

written record.   Sec. 1.170A-13(a)(1), Income Tax Regs.   Under

Cohan v. Commissioner, supra, we may estimate the amount of a

deductible expense if a taxpayer establishes that he or she paid

the expense but cannot substantiate the precise amount.

Petitioner’s only evidence that he contributed the claimed amount

is his testimony.   He did not provide an adequate basis to permit

us to estimate the amount of his contributions under Cohan.        We

conclude that petitioner may not carry forward charitable

contribution deductions from 1995 to 2000.

C.   Whether Respondent Erroneously Applied an Overpayment From
     1992 To Pay Tax Petitioner Owed for 1979

     Petitioner contends that respondent erroneously applied a

$5,908 overpayment for 1992 to satisfy what respondent contends

was petitioner’s unpaid tax liability for 1979.   Petitioner

contends that he had fully paid his 1979 taxes by 1986.
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       We have jurisdiction in this case to redetermine

petitioner’s deficiency for 2000.      We may consider facts from

other years if necessary to redetermine the deficiency for 2000.

Sec. 6214(b).    We need not review respondent’s application of

petitioner’s overpayment for 1992 to 1979 to redetermine

petitioner’s tax liability for 2000.       Thus, we lack jurisdiction

to decide this issue.

D.     Whether Petitioner Is Liable for the Addition to Tax Under
       Section 6651(a)(1) in an Amount More Than Respondent
       Determined

       1.   Burden of Production

         An unmarried individual (who is not a surviving spouse or

head of household) must file an income tax return if his or her

gross income for the year equals or exceeds the exemption amount

plus the basic standard deduction for that individual.      Sec.

6012(a)(1)(A)(i).

       Section 7491(c) places on the Commissioner the burden of

producing evidence that it is appropriate to impose additions to

tax.    To meet that burden, the Commissioner must produce evidence

showing that it is appropriate to impose the particular addition

to tax, but need not produce evidence relating to defenses such

as reasonable cause or substantial authority.       Higbee v.

Commissioner, 116 T.C. 438, 446 (2001); H. Conf. Rept. 105-599,

at 241 (1998), 1998-3 C.B. 747, 995.       Once the Commissioner meets
                                - 8 -

the burden of production, the taxpayer must, in order to not be

found liable for the addition to tax, produce evidence sufficient

to show that the Commissioner’s determination is incorrect.

Higbee v. Commissioner, supra at 447.      Respondent has met the

burden of production under section 7491(c) with respect to the

addition to tax for failure to file under section 6651(a)(1).

     2.   Whether Petitioner Is Liable for the Addition to Tax
          Under Section 6651(a)(1) for Failure To File

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

file a tax return unless the taxpayer shows that the failure was

due to reasonable cause and not willful neglect.      United States

v. Boyle, 469 U.S. 241, 245 (1985).      Reasonable cause may exist

if the taxpayer exercised ordinary business care and prudence but

nevertheless could not file the return within the prescribed

time.   Id. at 246; Bank of the West v. Commissioner, 93 T.C. 462,

471 (1989).

          a.     Incapacity or Illness

     Petitioner contends that he lacked the mental capacity to

file a 2000 return.   Petitioner testified that he could not work

at IBM or cope with IRS problems after he began to show symptoms

of posttraumatic shock syndrome around 1992.     He testified that

he had a therapist but offered no other evidence relating to his

mental health.
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     A taxpayer's disability or mental incapacity may constitute

reasonable cause for failure to file returns.      United States v.

Boyle, supra at 248 n.6; Brown v. United States, 630 F. Supp. 57

(M.D. Tenn. 1985).    While general incompetence, mental illness,

alcoholism, or other incapacity may excuse a taxpayer from

filing, a taxpayer's selective inability to perform his tax

obligations in view of his ability to perform normal business

operations does not excuse his failure to file.      See Kemmerer v.

Commissioner, T.C. Memo. 1993-394; Bear v. Commissioner, T.C.

Memo. 1992-690, affd. 19 F.3d 26 (9th Cir. 1994); Bloch v.

Commissioner, T.C. Memo. 1992-1; Fambrough v. Commissioner, T.C.

Memo. 1990-104.

     Petitioner operated a personal computer business from 2000

through the date of trial.    In 2000, that business had gross

receipts of $1,704 and a net loss of $5,728.      Petitioner used

TurboTax software to prepare a draft return for 2000.      These

facts undermine petitioner’s claim that he lacked capacity to

file a return.    We conclude that petitioner lacked reasonable

cause for his failure to file a return for 2000.

          b.      Reliance on Tax Professionals

     Reasonable cause for failure to file may exist when a

taxpayer shows that he or she reasonably relied on the advice of

an accountant or attorney that it was unnecessary to file a
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return, even if such advice was mistaken.    United States v.

Boyle, supra at 250. Petitioner contends that he is not liable

for the addition to tax under section 6651(a)(1) because he

relied on Dunstan, TurboTax, and respondent.

     There is no evidence that Dunstan is an accountant,

attorney, or tax professional or that Dunstan told petitioner

that he was not required to file a return for 2000.    Petitioner

contends that his TurboTax computer software showed that he was

due a refund for 2000.    However, petitioner did not show what

information he entered.    Petitioner did not offer any evidence

showing that he relied on advice from respondent in deciding not

to file a return for 2000.    We conclude that petitioner has not

shown reasonable cause for failure to file his Federal income tax

return for 2000.

          c.   Increased Amount of the Addition to Tax Under
               Section 6651(a)(1)

     Respondent conceded that petitioner is not liable for the

addition to tax under section 6651(a)(2) for 2000.    Thus, section

6651(c)(1) (reducing the amount imposed by section 6651(a)(1) to

4.5 percent for any month in which both section 6651(a)(1) and

(2) are imposed) does not apply, and the 5-percent rate does.

     Petitioner’s taxable income for 2000 was substantially

greater than the $2,800 personal exemption plus the $4,400

standard deduction.   Thus, petitioner was required to file a
                              - 11 -

return for 2000 and is liable for the addition to tax under

section 6651(a)(1) of $6,322 for 2000.

     3.   Whether Petitioner Is Liable for the Addition to Tax
          Under Section 6654 for Failure To Pay Estimated Tax

     Respondent has met the burden of production under section

7491(c) with respect to the addition to tax for failure to pay

estimated tax under section 6654(a) because the record shows that

petitioner did not pay estimated tax with respect to his tax

liability for 2000.

     Petitioner contends that he is not liable for the addition

to tax under section 6654 for 2000 because no tax was due.    We

disagree because (a) tax was due from petitioner for 2000 as

discussed above at paragraph A of the opinion, and (b) section

6654(a) applies for reasons described next.

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

pay estimated income taxes unless one of the exceptions in

section 6654(e) applies.   Niedringhaus v. Commissioner, 99 T.C.

202, 222 (1992); Grosshandler v. Commissioner, 75 T.C. 1, 20-21

(1980).   Petitioner does not allege, and we do not find, that he

paid estimated tax or that any of the exceptions apply.   Thus, we

sustain respondent’s determination that petitioner is liable for

the addition to tax under section 6654(a).

E.   Petitioner’s Motions To Reopen the Record

     Petitioner requests that we reopen the record to admit into

evidence affidavits from Dunstan and his therapist.   He contends
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that he did not have the affidavits at trial because he expected

the trial to be 2 weeks after the calendar call.    We deny his

request for reasons stated next.

     Reopening the record to submit additional evidence is a

matter within the discretion of the trial court.    Zenith Radio

Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 331 (1971);

Butler v. Commissioner, 114 T.C. 276, 286-287 (2000).    A court

generally will not grant a motion to reopen the record unless,

among other requirements, the evidence relied on (1) is material

to the issue for decision and (2) probably would change the

outcome of the case.    Butler v. Commissioner, supra at 287.

        Dunstan’s affidavit states that petitioner misunderstood

that a stock transaction was a nontaxable exchange and not a

sale.    Dunstan’s affidavit does not show that the sales of mutual

fund shares were nontaxable exchanges, that Dunstan believed or

told petitioner that they were nontaxable exchanges, that Dunstan

was a tax professional, or that petitioner relied on Dunstan’s

advice.    Petitioner has not provided any other affidavits.    Thus,

we have no reason to believe that, if admitted, the affidavits

would change the outcome of this case.    In addition, affidavits

are generally inadmissible to show the proof of the contents

because they are hearsay.    Woodall v. Commissioner, T.C. Memo.

2002-318 n.6; Yang-Wu v. Commissioner, T.C. Memo. 2002-68 n.11;
                             - 13 -

Coutsoubelis v. Commissioner, T.C. Memo. 1993-457; Davis v.

Commissioner, T.C. Memo. 1991-603.

     To reflect concessions and the foregoing,


                                          An order denying

                                     petitioner’s motions to reopen

                                     the record will be issued, and

                                     decision will be entered under

                                     Rule 155.
