                           T.C. Memo. 2005-19



                         UNITED STATES TAX COURT



                    TONY MALFATTI, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17616-03.                 Filed February 8, 2005.


     Tony Malfatti, pro se.

     Rebecca Duewer-Grenville, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:      Respondent determined deficiencies in and

additions to petitioner’s Federal income tax as follows:

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

     1998       $9,161           $2,223.00         $405.52
     1999        8,741            2,185.25          423.01
     2000        2,887              721.75          154.24
     2001        1,187              296.75            --
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     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

     Petitioner petitioned the Court to redetermine the

deficiencies and additions to tax.1     We must decide whether:   (1)

Petitioner had unreported income in the amounts determined by

respondent for 1998, 1999, 2000, and 2001; (2) petitioner is

liable for the section 6651(a) addition to tax for 1998, 1999,

2000, and 2001; (3) petitioner is liable for the section 6654(a)

addition to tax for 1998, 1999, and 2000; and (4) whether to

impose a penalty pursuant to section 6673(a).

                          FINDINGS OF FACT

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.     At the time he filed the

petition, petitioner resided in Oakland, California.

     Petitioner did not file tax returns for 1998, 1999, 2000,

and 2001.    Petitioner received total income of $38,863, $42,486,

$23,806, and $16,830, in 1998, 1999, 2000, and 2001,

respectively.   Respondent received information from third parties




     1
        Petitioner also alleged that the deficiencies/liabilities
determined by respondent are excise taxes.
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(The Gus Team, Have-a-Party Productions, Johnny B. Soroka,

Randall L. Biagi, Bay Area Motorcycle Training, Earl Heckscher

Orchestra, Kellco Training Institute, Debs Motorcycle Training,

James Labarbera, Hornblower Yachts, Joel Nelson Productions,

Bonnie Kellogg/Two Wheel Safety, and Mark William Lytal)

reporting that petitioner received the aforementioned income

during the years in issue.   No Federal income tax was withheld

from the aforementioned income.

     Petitioner did not cooperate with respondent at any time

during the administrative or judicial process.   Petitioner failed

to meet with or to provide respondent with any information that

would have enabled respondent to properly determine petitioner’s

tax liability.

                              OPINION

A.   Burden of Proof

     Generally, respondent’s deficiency determinations set forth

in the notices of deficiency are presumed correct, and petitioner

bears the burden of showing the determination is in error.   Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).    There are

exceptions to this rule.

     Section 7491(a) shifts the burden of proof to the

Commissioner with respect to a factual issue affecting the tax

liability of a taxpayer who meets certain preliminary conditions.

Petitioner failed to cooperate with respondent and did not
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produce any credible evidence with respect to any matter in this

case.    See sec. 7491(a).   Furthermore, petitioner did not claim

that section 7491(a) applies.    Accordingly, section 7491(a) does

not apply in this case.

     Section 6201(d) provides that if a taxpayer asserts a

reasonable dispute with respect to any item of income reported on

an information return filed with the Secretary by a third party

and the taxpayer has fully cooperated with the Secretary, the

Secretary shall have the burden of producing reasonable and

probative information concerning such deficiency in addition to

such information return.     As noted supra, petitioner failed to

cooperate with respondent.    Accordingly, section 6201(d) does not

apply in this case.

     Additionally, the U.S. Court of Appeals for the Ninth

Circuit (to which an appeal would normally lie) has held that in

order for the presumption of correctness to attach to the notice

of deficiency in unreported income cases,2 the Commissioner must

establish “some evidentiary foundation” linking the taxpayer to

the income-producing activity, Weimerskirch v. Commissioner, 596

F.2d 358, 361-362 (9th Cir. 1979), revg. 67 T.C. 672 (1977), or


     2
        Although Weimerskirch v. Commissioner, 596 F.2d 358 (9th
Cir. 1979), revg. 67 T.C. 672 (1977), was an unreported income
case regarding illegal source income, the U.S. Court of Appeals
for the Ninth Circuit applies the Weimerskirch rule in all cases
involving the receipt of unreported income. See Edwards v.
Commissioner, 680 F.2d 1268, 1270-1271 (9th Cir. 1982); Petzoldt
v. Commissioner, 92 T.C. 661, 689 (1989).
                                - 5 -

“demonstrating that the taxpayer received unreported income”,

Edwards v. Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982); see

also Rapp v. Commissioner, 774 F.2d 932, 935 (9th Cir. 1985).

Once there is evidence of actual receipt of funds by the

taxpayer, the taxpayer has the burden of proving that all or part

of those funds are not taxable.    Tokarski v. Commissioner, 87

T.C. 74 (1986).

     There is ample evidence, including petitioner’s admissions,

linking petitioner to several income-producing activities--he

worked as a musician, mechanic, and motorcycle instructor during

the years in issue.   At trial, respondent submitted Forms W-2,

Wage and Tax Statement, Forms 1099-MISC, Miscellaneous Income,

employer records, and the testimony of several of petitioner’s

employers as to the validity of these underlying documents.     The

witnesses also testified that they paid petitioner income during

the years in issue.   Respondent satisfied his Weimerskirch

obligation, and petitioner bears the burden of proving

respondent’s determinations are in error.

B.   Deficiencies

     Petitioner alleged that he did not receive the income

determined by respondent.    Petitioner relies on his own

testimony.   The Court is not required to accept petitioner’s

unsubstantiated testimony.    See Wood v. Commissioner, 338 F.2d

602, 605 (9th Cir. 1964), affg. 41 T.C. 593 (1964).
                                - 6 -

     Petitioner was not credible.   His testimony was questionable

in certain material respects, and under the circumstances

presented here, we are not required to, and generally do not,

rely on petitioner’s testimony to sustain his burden of

establishing error in respondent’s determinations.    See Lerch v.

Commissioner, 877 F.2d 624, 631-632 (7th Cir. 1989), affg. T.C.

Memo. 1987-295; Geiger v. Commissioner, 440 F.2d 688, 689-690

(9th Cir. 1971), affg. per curiam T.C. Memo. 1969-159; Tokarski

v. Commissioner, supra at 77.   Accordingly, we sustain

respondent’s determination regarding the unreported income for

all the years.

C.   Additions to Tax

     Section 7491(c) requires that respondent bear the burden of

production regarding additions to tax.    To meet this burden,

respondent must present evidence indicating that it is

appropriate to impose the addition to tax.    See Higbee v.

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

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

file a return on the date prescribed (determined with regard to

any extension of time for filing), unless the taxpayer can

establish that such failure is due to reasonable cause and not

due to willful neglect.   Petitioner admitted he did not file tax

returns for 1998, 1999, 2000, and 2001.    Thus, respondent

satisfied his burden of production.
                               - 7 -

     Contrary to his assertions, petitioner was required to file

Federal income tax returns for each of the years in issue because

his income exceeded the maximum amount exempt from filing in each

of the taxable years.   Secs. 6012, 6072.   Petitioner offered no

evidence that his failure to timely file was due to reasonable

cause and not due to willful neglect.    We conclude that

petitioner is liable for an addition to tax pursuant to section

6651(a)(1).

     Section 6654 imposes an addition to tax for failure to pay

estimated income tax.   Forms 4340, Certificate of Assessments,

Payments, and Other Specified Matters, Forms W-2, Forms 1099, and

the testimony of petitioner’s employers establish that petitioner

failed to pay the required estimated tax for 1998, 1999, and

2000.   We conclude that respondent satisfied his burden of

production regarding this issue.

     Petitioner presented no evidence that he is not liable for

this addition to tax for any of the years in issue.    Accordingly,

we hold that petitioner is liable for the addition to tax

pursuant to section 6654(a).

D.   Penalty Pursuant to Section 6673(a)

     Respondent filed a motion asking the Court to impose a

penalty pursuant to section 6673(a).    Section 6673(a)(1)

authorizes this Court to require a taxpayer to pay to the United

States a penalty not to exceed $25,000 if the taxpayer took
                               - 8 -

frivolous or groundless positions in the proceedings or

instituted the proceedings primarily for delay.

     In the petition, petitioner alleged that the deficiencies

determined by respondent are excise taxes.   This argument is

frivolous and groundless.

     At trial, petitioner mainly objected to the admission of any

evidence that tended to prove that he earned income during the

years in issue and sought to impugn the integrity of his former

employers by implying that they overstated the income they paid

him in order to obtain a fraudulently higher deduction (for

compensation paid) on their own tax returns.    He feigned lack of

memory regarding his earnings during the years in issue even

though he admitted working for all the employers who were called

as witnesses and that he was paid for services he rendered to

those employers.   Furthermore, in a home loan application

petitioner signed in 2001, petitioner listed his monthly income

as $9,625.

     Petitioner established his pattern of delay early on when he

failed to cooperate with respondent.   Petitioner failed to meet

with or to provide respondent with any information that would

have enabled respondent to properly determine petitioner’s tax

liability or resolve this case without trial.   Furthermore, after

asking the Court for additional briefing time at the conclusion

of the trial, petitioner failed to file any posttrial briefs.    We
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conclude that petitioner instituted and maintained this

proceeding primarily for delay.

     Accordingly, we hold that petitioner is liable for a $15,000

penalty pursuant to section 6673(a).

     In reaching all of our holdings herein, we have considered

all arguments made by the parties, and to the extent not

mentioned above, we find them to be irrelevant or without merit.

To reflect the foregoing,



                                           An appropriate order

                                      and decision will be entered

                                      for respondent.
