                        T.C. Memo. 2009-77



                      UNITED STATES TAX COURT



                THOMAS P. BRENNAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13919-06.              Filed April 9, 2009.



     Thomas P. Brennan, pro se.

     Thomas M. Rath, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     HAINES, Judge:   Thomas P. Brennan petitioned the Court for

redetermination of the following deficiencies in Federal income

tax and penalties:
                                    - 2 -

                                       Additions to Tax
Year       Deficiency   Sec. 6651(f)      Sec. 6651(a)(2)   Sec. 6654

1992        $26,717       $19,370            $6,679          $1,165
1993         10,904         7,905             2,726             457
1994         17,705        12,836             4,426             919
1995          1,316           954               329            ---

       The issues for decision after concessions1 are:       (1) Whether

petitioner had deficiencies in 1992, 1993, 1994, and 1995 (the

years at issue) of $26,717, $10,904, $17,705, and $1,316,

respectively; (2) whether petitioner is liable for the addition

to tax under section 6651(f) for the years at issue; (3) whether

petitioner is liable for the addition to tax under section

6651(a)(2) for 1992, 1993, and 1994; and (4) whether petitioner

is liable for the addition to tax under section 6654 for 1992,

1993, and 1994.2

                             FINDINGS OF FACT

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

The stipulation of facts and the supplemental stipulation of

facts, together with the attached exhibits, are incorporated

herein by this reference.     At the time petitioner filed his

petition, he resided in Pennsylvania.        During the years at issue


       1
      Respondent concedes the addition to tax under sec.
6651(a)(2) for 1995. Respondent further concedes that
petitioner’s unreported income for 1993 and 1994 should be
reduced by $3,730 and $27,555, respectively.
       2
      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. Amounts
are rounded to the nearest dollar.
                               - 3 -

petitioner’s only income was derived from the business of Harbor

Light Limited Partnership and the real estate activities of TP

Brennan Real Estate, Inc.

I.   Harbor Light Limited Partnership

     On May 25, 1984, petitioner formed the Harbor Light Limited

Partnership (Harbor Light) in New Jersey.   Petitioner served as

Harbor Light’s general partner alongside 10 limited partners.

Harbor Light operated the Harbor Light Restaurant in Stone

Harbor, New Jersey, and conducted other business from 1984

through 1992.

     As the general partner of Harbor Light, petitioner was

responsible for preparing and filing tax returns on its behalf.

On March 6, 1993, petitioner signed Harbor Light’s final Form

1065, U.S. Partnership Return of Income, for 1992.   On March 11,

1993, petitioner filed the Form 1065 with the Internal Revenue

Service (IRS).   The Form 1065 was also signed by Joseph M.

Brennan, a paid preparer and certified public accountant.

     For the taxable year 1992 petitioner received a Schedule K-

1, Partner’s Share of Income, Credits, Deductions, Etc., from

Harbor Light which reported his distributive share of partnership

income as follows:   (i) Ordinary income of $11,612; (ii) interest

income of $8,359; and (iii) net gain under section 1231 of

$23,683.   Petitioner failed to report his distributive share of

partnership income from Harbor Light.
                                - 4 -

II.    TP Brennan Real Estate, Inc.

       On July 11, 1985, TP Brennan Real Estate, Inc. (TP

Brennan), was incorporated in New Jersey.     TP Brennan was engaged

in the business of real estate sales and rentals throughout the

years at issue.    Petitioner was a registered real estate agent

and the sole shareholder, president, and director of TP Brennan.

Petitioner was also responsible for preparing and filing tax

returns on behalf of TP Brennan.

       From 1989 through 1995 William Labrum (Mr. Labrum) worked as

a real estate agent for TP Brennan and was paid by check on a

commission basis.    Mr. Labrum was married to petitioner’s

daughter, Tracey (Mrs. Labrum), during the years at issue.

       TP Brennan filed Forms 1120, U.S. Corporation Income Tax

Return, for 1986 and 1987.    TP Brennan requested an extension of

time to file a Federal income tax return for 1988 but ultimately

failed to file a return for that year.     TP Brennan also did not

file Federal income tax returns for 1989 through 1995.

       On February 25, 1992, petitioner signed Form 1096, Annual

Summary and Transmittal of U.S. Information Returns, for

TP Brennan for 1991.    The address reported on the return for the

corporation was 2528 Dune Drive, Avalon, New Jersey.

III.    Petitioner’s Federal Income Tax Return Filing History

       Petitioner filed Forms 1040, U.S. Individual Income Tax

Return, for 1985, 1986, and 1988.     Petitioner requested
                                 - 5 -

extensions of time to file Federal income tax returns for 1987,

1996, 1997, and 1998 but failed to file returns for those

years.   Petitioner also failed to file Federal income tax returns

for 1989 through 1995.

IV.   Catalyst & Labrum/Prabhakar Checking Accounts

           A.   Establishment

      On June 8, 1990, Catalyst Enterprises, Inc. (Catalyst), was

incorporated in New Jersey.     The initial registered address for

Catalyst was the same as that for TP Brennan, 2528 Dune Drive,

Avalon, New Jersey.   The incorporator of Catalyst was

petitioner’s attorney, Thomas Rossi.     Catalyst was initially

formed at petitioner’s request to explore one or more business

ventures petitioner was considering.     Catalyst did not obtain a

Federal employment identification number and did not file any

Federal income tax returns.     Catalyst’s certificate of

incorporation listed petitioner as a board member and its

corporate agent.

      In 1990 petitioner opened the Catalyst checking account.

Petitioner had signatory authority over the Catalyst account.

Mr. Labrum also occasionally wrote checks on the Catalyst

account, but only at the discretion of petitioner.

      With the exception of a 3-month period in 1994, petitioner

deposited the gross receipts of TP Brennan and the distributions

he received from Harbor Light into the Catalyst checking account
                                 - 6 -

throughout the years at issue.     Petitioner used the Catalyst

account as the operating account for TP Brennan and to pay his

personal expenses.

     In 1992 petitioner opened the Labrum/Prabhakar checking

account to receive the payments petitioner made for renting his

home and to pay his mortgage, property insurance, and real estate

tax expenses.   Before he opened the Labrum/Prabhakar account,

petitioner’s home had gone through foreclosure and was purchased

by petitioner’s friend Mahaveer Prabhakar (Mr. Prabhakar) for

purposes of leasing it to petitioner.     Mr. and Mrs. Labrum were

listed as joint owners on the account and joint tenants on the

deed because Mr. Prabhakar did not want either asset to be

included in his estate.

     During the 3-month period in 1994 when petitioner did not

deposit the gross receipts of TP Brennan into the Catalyst

account, petitioner deposited them into the Labrum/Prabhakar

account.   During this period petitioner used the Labrum/Prabhakar

account as TP Brennan’s operating account.     Petitioner used the

income earned by TP Brennan to make the lease payments on his

personal residence and to pay personal expenses.

     B.    Personal Expenditures

           1.   1992

     In 1992 checks totaling $20,567 were written to cash on the

Catalyst account and cashed for petitioner’s personal use.
                                - 7 -

Petitioner also wrote checks on the Catalyst account to pay a

variety of personal expenses:   (i) Utility, cable television, and

telephone bills totaling $11,630; (ii) personal medical expenses

of $1,584; (iii) payments to family members of $8,500; and (iv)

other personal expenses of $15,198.

     In 1992 petitioner withdrew $25,221 of the gross receipts

from his real estate business from the Catalyst account and

deposited it into the Labrum/Prabhakar account.   Petitioner used

$14,460 of these deposits to pay the rent for his personal

residence.

          2.   1993

     In 1993 checks totaling $30,263 were written to cash on the

Catalyst account and cashed for petitioner’s personal use.

Petitioner also wrote checks on the Catalyst account to pay a

variety of personal expenses:   (i) Utility, cable television, and

telephone bills totaling $9,113; (ii) medical bills of $4,912;

(iii) medical insurance payments of $4,026; (iv) payments to

family members of $2,341; and (v) other personal expenses of

$16,548, including the purchase of a 1973 Corvette which

petitioner titled in Catalyst’s name.

     Petitioner withdrew $47,442 of the gross receipts from his

real estate business from the Catalyst account and deposited it

in the Labrum/Prabhakar account.   Petitioner used $26,926 of

these deposits to pay the rent for his personal residence.
                               - 8 -

Petitioner also made a gift or loan of $28,000 to the Labrums

using funds from his real estate business.

           3.   1994

     In 1994 checks totaling $19,200 were written to cash on the

Catalyst account and cashed for petitioner’s personal use.

Petitioner also wrote checks on the Catalyst and Labrum/Prabhakar

accounts to pay a variety of personal expenses:   (i) Utility,

cable television, and telephone bills totaling $7,801; (ii)

medical bills of $2,317; (iii) medical insurance payments of

$4,974; (iv) payments to family members of $150; and (v) other

personal expenses of $1,539.

     In 1994 petitioner deposited $82,267 of the gross

receipts from his real estate business into the Labrum/Prabhakar

account.   These receipts were either withdrawn from the Catalyst

account or deposited into the Labrum/Prabhakar account.

Petitioner used $30,859 of these deposits to pay the rent for his

personal residence.

           4.   1995

     In 1995 petitioner deposited $64,255 of gross receipts from

TP Brennan into the Catalyst account.   Petitioner withdrew

$14,540 of these funds for personal use.
                               - 9 -

V.   Criminal Case

     In 1995 respondent’s Collection Division was assigned

to collect the outstanding employment tax liabilities of TP

Brennan and to secure delinquent individual and corporate

returns from petitioner and TP Brennan.   The Collection Division

referred the case to the Criminal Investigation Division.    In the

criminal investigation respondent determined that TP Brennan

failed to file Federal income tax returns and diverted its income

to petitioner for his personal use through the Catalyst and

Labrum/Prabhakar accounts from 1992 through 1994.

     Respondent determined that TP Brennan failed to report gross

receipts of $210,359, $134,171, and $115,908 for 1992, 1993, and

1994, respectively.   Petitioner did not dispute the amounts or

sources of these gross receipts at any time.

     Respondent determined that petitioner had unreported income

for 1992, 1993, and 1994 of $58,489, $52,683, and $75,195,

respectively.3   Petitioner did not dispute the amounts or sources

of this income in his criminal case.

     On January 10, 2000, petitioner was charged with three

counts of income tax evasion under section 7201 and three counts

of willful failure to make returns or pay taxes under section

7203 for 1992, 1993, and 1994 in the U.S. District Court for the


     3
      The figure for 1992 includes additional income respondent
determined petitioner received through petitioner’s distributive
share of Harbor Light.
                              - 10 -

District of New Jersey.   On May 17, 2000, petitioner was found

guilty on all six counts of the indictment by a jury verdict and,

on August 1, 2000, was sentenced to 30 months’ imprisonment.

United States v. Brennan, Criminal No. 2000-10 (DRD) (D. N.J.

Aug. 9, 2000), affd. 33 Fed Appx. 601 (3d Cir. 2002).     Petitioner

also was ordered to file his delinquent returns.

      On August 10, 2000, petitioner appealed his criminal

conviction to the U.S. Court of Appeals for the Third Circuit.

On February 19, 2002, petitioner’s criminal conviction was

affirmed.

VI.   Civil Case

      After petitioner’s criminal conviction, Revenue Agent Mark

Fillion (Mr. Fillion) was assigned to the civil examination of

petitioner for the years at issue.     Petitioner refused to file

his delinquent returns, and Mr. Fillion prepared substitutes for

returns under section 6020(b) for petitioner and TP Brennan for

1992, 1993, and 1995.

      On October 20, 2005, at a meeting with petitioner and

his parole officer, Agent Fillion presented petitioner with the

substitutes for returns, including a civil report, but petitioner

refused to take them.

      On April 17, 2006, respondent mailed a notice of

deficiency to petitioner for the years at issue.     Petitioner

filed a timely petition and later an amended petition with this
                                  - 11 -

Court, and a trial was held on April 21, 2008, in Philadelphia,

Pennsylvania.

VII.       Frivolous Arguments

       The record indicates that petitioner raised several

frivolous tax-protester arguments throughout his criminal and

civil case:       (i) During his criminal trial, petitioner argued

that the Internal Revenue Code and regulations did not apply to

him; (ii) in his criminal appeal, petitioner argued that payment

of the Federal income tax is not mandated by any Federal statute

or regulation;4 (iii) during his civil examination, petitioner

did not dispute any specific item of unreported income, but

rather argued that Mr. Fillion did not have the authority to

prepare substitutes for returns; (iv) in his petition, petitioner

claimed that the Paperwork Reduction Act prohibited respondent’s

assessment; and (v) in his amended petition and at trial,

petitioner claimed that respondent lacked the authority to issue

a notice of deficiency and that no statute required him to pay

income tax.

                                  OPINION

I.     Petitioner’s Federal Income Tax Deficiencies

       Petitioner presented tax-protester arguments that he was not

liable for Federal income tax deficiencies as determined in the



       4
      Petitioner’s counsel in his criminal appeal was permitted
to withdraw on the grounds that the appeal was wholly frivolous.
                              - 12 -

notices of deficiency for the years at issue, including:   (1) He

is not a taxpayer; (2) respondent has no jurisdiction over him;

and (3) respondent lacks authority to assert income tax

deficiencies.   Petitioner’s assertions have been rejected by this

Court and other courts, and “We perceive no need to refute these

arguments with somber reasoning and copious citation of

precedent; to do so might suggest that these arguments have some

colorable merit.”   Crain v. Commissioner, 737 F.2d 1417, 1417

(5th Cir. 1984); see Stelly v. Commissioner, 761 F.2d 1113, 1115

(5th Cir. 1985) (“It is clear beyond peradventure that the income

tax on wages is constitutional.”); United States v. Romero, 640

F.2d 1014, 1016 (9th Cir. 1981) (“Compensation for labor or

services, paid in the form of wages or salary, has been

universally held by the courts of this republic to be income,

subject to the income tax laws currently applicable.”); Wetzel v.

Commissioner, T.C. Memo. 2005-211 (rejecting as frivolous the

argument that the taxpayer was not a taxpayer); Nunn v.

Commissioner, T.C. Memo. 2002-250 (rejecting as without merit the

argument that the Commissioner had no jurisdiction over the

taxpayer or his documents).   The Court rejects petitioner’s tax-

protester arguments as frivolous and without merit.

     Section 61(a) defines gross income for purposes of

calculating taxable income as “all income from whatever source

derived”.   Section 1 imposes a tax on individuals for taxable
                              - 13 -

income received.   The liability for the payment of the income tax

is on the individual earning the income.    Lucas v. Earl, 281 U.S.

111, 114-115 (1930).

     Respondent determined that in the years at issue petitioner

received and failed to report gross income from Harbor Light and

TP Brennan of $102,323 for 1992, $48,954 for 1993, $66,840 for

1994, and $14,540 for 1995.   Respondent also determined

petitioner failed to file Federal income tax returns for the

years at issue.

     In an unreported income case the Commissioner is required to

make some evidentiary showing to link the taxpayer to income-

producing activity or otherwise to identify a likely source of

income.   Respondent has satisfied this burden of going forward by

submitting a record of petitioner’s bank deposits, which are

prima facie evidence of income.   See Tokarski v. Commissioner, 87

T.C. 74 (1986).

     Generally, the taxpayer has the burden of proving the

Commissioner’s determinations are in error.   Rule 142(a).

Petitioner failed to produce any evidence to contradict or

discredit respondent’s determinations.    Petitioner testified that

the income generated by Harbor Light and TP Brennan might belong

to relatives, but his testimony was unspecific and self-serving.

Petitioner’s testimony is not credible.    The record is devoid of

any evidence which would indicate that petitioner did not receive
                                 - 14 -

unreported income from Harbor Light and TP Brennan for the years

at issue.     For the foregoing reasons, the Court finds that

petitioner received and failed to report gross income for the

years at issue in the amounts respondent determined.

II.   Additions to Tax

      A.      Section 6651(f)

      Section 6651(f) imposes an addition to tax of up to 75

percent of the amount of tax required to be shown on the tax

return when the failure to file a Federal income tax return

timely is due to fraud.      In ascertaining whether petitioner’s

failure to file was fraudulent under section 6651(f), the Court

considers the same elements that are considered in imposing the

fraud penalty under section 6663 and former section 6653(b).        See

Clayton v. Commissioner, 102 T.C. 632, 653 (1994).      In a case

involving fraud, the Commissioner bears the burden of proof of

establishing fraud with clear and convincing evidence.      Sec.

7454(a); Rule 142(b).      There are two elements of fraud under the

Code:      (1) Existence of an underpayment and (2) fraudulent intent

with respect to some part of the underpayment.      Sec. 7454(a);

Rule 142(b); Conti v. Commissioner, 39 F.3d 658, 664 (6th Cir.

1994), affg. 99 T.C. 370 (1992) and T.C. Memo. 1992-616; Petzoldt

v. Commissioner, 92 T.C. 661, 699 (1989); Recklitis v.

Commissioner, 91 T.C. 874, 909 (1988); Stone v. Commissioner, 56
                                - 15 -

T.C. 213, 223 (1971); Otsuki v. Commissioner, 53 T.C. 96, 105

(1969).

          1.   1992, 1993, and 1994

     To establish that there was an underpayment in 1992, 1993,

and 1994 and that a portion of the underpayment for each year was

due to fraud, respondent relies on petitioner’s criminal

convictions under sections 7201 and 7203.       Respondent argues that

petitioner’s convictions are binding on petitioner and that under

the doctrine of collateral estoppel petitioner is estopped from

denying that for the years 1992, 1993, and 1994 he fraudulently

failed to file returns.     We agree.

               a.      Underpayment of Tax

     Petitioner was convicted under section 7203 for willfully

failing to file returns for 1992, 1993, and 1994.       It is well

settled that a taxpayer’s conviction under section 7203 for a

given year conclusively establishes the willfulness of that

taxpayer’s failure to file returns.        Wilkinson v. Commissioner,

T.C. Memo. 1997-410.     Petitioner is thus estopped from denying

that he underpaid his income tax and failed to file returns for

1992, 1993, and 1994.

               b.      Fraudulent Intent

     A conviction under section 7203 for willful failure to file

does not conclusively establish the fraudulent intent required

under section 6651(f).    Accordingly, we must look to petitioner’s
                              - 16 -

conviction for willfully attempting to evade income tax under

section 7201 for 1992, 1993, and 1994.   This Court addressed the

effect of convictions under section 7201 on determinations made

under section 6653(b) in Amos v. Commissioner, 43 T.C. 50, 55-56

(1964), affd. 360 F.2d 358 (4th Cir. 1965).   In Amos this Court

concluded that the fraudulent intent required under section

6653(b) is included within the fraudulent intent element of a

conviction under section 7201.   A finding in a criminal

proceeding that a taxpayer willfully attempted to evade income

tax under section 7201 therefore is binding on that taxpayer

under the doctrine of collateral estoppel in a subsequent civil

proceeding involving a tax deficiency for the same year.

Tomlinson v. Lefkowitz, 334 F.2d 262 (5th Cir. 1964); Brooks v.

Commissioner, 82 T.C. 413, 431 (1984), affd. without published

opinion 772 F.2d 910 (9th Cir. 1985); Amos v. Commissioner, supra

at 55-56; Deletis v. Commissioner, T.C. Memo. 1995-512; Knoff v.

Commissioner, T.C. Memo. 1992-624; Savage v. Commissioner, T.C.

Memo. 1992-129.   Accordingly, petitioner’s convictions under

section 7201 for 1992, 1993, and 1994 estop him from disputing

that a portion of the underpayment he made for those years was

due to fraud.
                                - 17 -

           2.   1995

                a.     Underpayment of Tax

     Respondent must first show by clear and convincing evidence

that petitioner made an underpayment of tax for 1995.    See sec.

7454(a).   Because respondent alleges that the underpayment for

1995 stems from petitioner’s diversions from TP Brennan,

respondent must also establish that these diversions represented

a constructive distribution of TP Brennan’s profits under section

301(c) as distinct from a return of capital.    See Boulware v.

United States, 552 U.S. ___, 128 S. Ct. 1168 (2008).

     Respondent demonstrated through testimony, check records,

payment schedules, and other documentation that petitioner

received income in 1995 in the form of diversions from TP Brennan

and failed to file an income tax return.     The record establishes

that the 1995 earnings and profits of TP Brennan exceeded the

total of the specific item diversions for that year.

Accordingly, petitioner’s diversions from TP Brennan in 1995

constituted a constructive distribution of TP Brennan’s profits,

and we find that respondent has met his burden of proving that

petitioner made an underpayment of tax and failed to file an

income tax return for 1995.

                b.     Fraudulent Intent

     Respondent must establish that petitioner’s failure to file

an income tax return for 1995 was due to fraud.    See Niedringhaus
                                - 18 -

v. Commissioner, 99 T.C. 202, 210 (1992); Ferguson v.

Commissioner, T.C. Memo. 2004-90.    Because direct evidence of

fraud is rarely available, fraud may be proved by circumstantial

evidence and reasonable inferences from the facts.     Petzoldt v.

Commissioner, supra at 699.    Courts have developed a nonexclusive

list of factors, or “badges of fraud”, that demonstrate

fraudulent intent.     Niedringhaus v. Commissioner, supra at 211.

These badges of fraud include:    (1) Understating income, (2)

maintaining inadequate records, (3) implausible or inconsistent

explanations of behavior, (4) concealment of income or assets,

(5) failing to cooperate with tax authorities, (6) engaging in

illegal activities, (7) an intent to mislead which may be

inferred from a pattern of conduct, (8) lack of credibility of

the taxpayer’s testimony, (9) filing false documents, (10)

failing to file tax returns, and (11) dealing in cash.       Id.; see

also Spies v. United States, 317 U.S. 492, 499 (1943); Morse v.

Commissioner, 419 F.3d 829, 832 (8th Cir. 2005), affg. T.C. Memo.

2003-332; Recklitis v. Commissioner, supra at 910.     The

taxpayer’s business background is also relevant to a

determination of fraud.    See Wheadon v. Commissioner, T.C. Memo.

1992-633.   Although no single factor is necessarily sufficient to

establish fraud, a combination of factors may constitute

persuasive evidence.     Niedringhaus v. Commissioner, supra at 211.
                                - 19 -

     The record indicates that petitioner’s behavior with respect

to his income in 1995 shows multiple badges of fraud, as follows.

     (1) Petitioner understated his income by consistently

failing to report any income.

     (2) Petitioner has provided no plausible explanation for his

failure to file returns, and maintained frivolous tax-protester

arguments regarding his obligation to file returns and pay taxes.

     (3) Petitioner attempted to conceal his income by funneling

proceeds from Harbor Light and TP Brennan into the Catalyst and

Labrum/Prabhakar accounts and by using those accounts for

personal expenditures.

     (4) Petitioner repeatedly failed to cooperate with tax

authorities.

     (5) Petitioner engaged in a pattern of conduct intended to

mislead tax authorities by repeatedly failing to file returns,

siphoning money from his businesses for personal use, and

claiming that he was exempt from taxation.

     (6) Petitioner’s testimony that the income generated by

Harbor Light and TP Brennan in 1995 belonged to relatives was not

credible.

     (7) Petitioner failed to file Federal income tax returns for

over a decade.
                                  - 20 -

     (8) The record indicates that petitioner often dealt in

cash.     Petitioner wrote checks to cash from the Catalyst account

and used the money for personal expenditures.

     (9) Petitioner is an experienced businessman who

demonstrated that he knew how to file returns and pay taxes.

     As a result of the number of badges of fraud, we find that

respondent has shown by clear and convincing evidence that

petitioner’s failure to file an income tax return for 1995 was

due to fraud within the meaning of section 6651(f).

     B.      Section 6651(a)(2)

     Respondent also determined that petitioner was liable for

the addition to tax imposed by section 6651(a)(2) for failure to

pay the amounts of tax shown on his returns for 1992, 1993, and

1994.5    Section 6651(a)(2) provides for an addition to tax of 0.5

percent per month up to 25 percent for failure to pay the amount

shown on a return.     This addition to tax, however, applies only

in the case where a return has been filed.    See Spurlock v.

Commissioner, T.C. Memo. 2003-124; see also Burr v. Commissioner,

T.C. Memo. 2002-69, affd. 56 Fed. Appx. 150 (4th Cir. 2003);

Heisey v. Commissioner, T.C. Memo. 2002-41, affd. 59 Fed. Appx.

233 (9th Cir. 2003).




     5
      Respondent is unable to find the substitute for return he
prepared for 1995 and concedes the addition to tax for that year.
                               - 21 -

     Respondent relies on section 6651(g)(2) to contend that a

return that the Secretary prepared under section 6020(b) is

treated as “the return filed by the taxpayer for purposes of

determining the amount of the addition” under section 6651(a)(2).

Section 6651(g)(2), however, is effective only for returns due

after July 30, 1996.    Taxpayer Bill of Rights 2, Pub. L. 104-168,

sec. 1301, 110 Stat. 1475 (1996).   As his returns were due before

this date, petitioner is not liable for additions to tax under

section 6651(a)(2) for any of the years at issue.

     C.   Section 6654(a)

     Respondent determined that petitioner is liable for

additions to tax under section 6654(a) for failure to make

estimated tax payments for 1992, 1993, and 1994.    A taxpayer has

an obligation to pay estimated tax for a particular year only if

he has a “required annual payment” for that year.   Sec. 6654(d).

A “required annual payment” generally is equal to the lesser of

(1) 90 percent of the tax shown on the individual’s return for

that year (or, if no return is filed, 90 percent of his or her

tax for such year), or (2) if the individual filed a return for

the immediately preceding taxable year, 100 percent of the tax

shown on that return.    Sec. 6654(d)(1); Wheeler v. Commissioner,

127 T.C. 200, 210-212 (2006), affd. 521 F.3d 1289 (10th Cir.

2008); Heers v. Commissioner, T.C. Memo. 2007-10.    To show a

required annual payment for 1992, respondent must also show proof
                              - 22 -

of petitioner’s failure to file a return for 1991.     See Wheeler

v. Commissioner, supra at 210-212.

     Respondent introduced evidence to prove petitioner was

required to file Federal income tax returns for 1992, 1993, and

1994.   Petitioner failed to file returns and failed to make any

estimated tax payments for those years.   Additionally, the record

indicates that petitioner failed to file a return for 1991.

Thus, the Court finds that respondent has met his burden of

production under section 7491(c) with regard to the additions to

tax under section 6654(a).   Petitioner offered no evidence to

refute respondent’s evidence or to establish a defense to

respondent’s determination that petitioner is liable for the

section 6654 additions to tax.   Therefore, the Court finds that

petitioner is liable for additions to tax under section 6654 for

1992, 1993, and 1994.

     In reaching our holdings herein, we have considered all

arguments made, and, to the extent not mentioned above, we

conclude they are moot, irrelevant, or without merit.

     To reflect the foregoing,


                                          Decision will be entered

                                     under Rule 155.
