                          T.C. Memo. 2002-73



                        UNITED STATES TAX COURT



         HERBST ASSET MANAGEMENT TRUST, ET AL.,1 Petitioners v.
              COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 9999-00, 10000-00,        Filed March 27, 2002.
                10001-00, 10002-00.



     John M. Tkacik, Jr., for respondent.



                          MEMORANDUM OPINION


     CHIECHI, Judge:     These consolidated cases are before us on

respondent’s motion to hold petitioner in default in the case at

docket No. 9999-00 (respondent’s motion in the case at docket No.


     1
      Cases of the following petitioners are consolidated here-
with: Herbst Charitable Trust, docket No. 10000-00; Andrea
Herbst, docket No. 10001-00; and Ronald Herbst, docket No. 10002-
00.
                                - 2 -

9999-00), respondent’s motion to hold petitioner in default in

the case at docket No. 10000-00 (respondent’s motion in the case

at docket No. 10000-00), respondent’s motion to dismiss for lack

of prosecution and to impose sanctions under section 66732 in the

case at docket No. 10001-00 (respondent’s motion in the case at

docket No. 10001-00), and respondent’s motion to dismiss for lack

of prosecution and to impose sanctions under section 6673 in the

case at docket No. 10002-00 (respondent’s motion in the case at

docket No. 10002-00).    (We shall refer collectively to those four

motions as respondent’s motions.)    At the request of respondent,

on October 15, 2001, the Court held a trial in order to enable

respondent to present evidence to satisfy the burden of produc-

tion under section 7491(c) that respondent maintains respondent

has with respect to:    (1) The accuracy-related penalty under

section 6662(a) that respondent determined for each of the

taxable years 1996 and 1997 in the notice of deficiency (notice)

issued to Herbst Asset Management Trust (Herbst Management

Trust)3 in the case at docket No. 9999-00; (2) the addition to

tax under section 6651(a)(1) for each of the taxable years 1996


     2
      All section references are to the Internal Revenue Code
(Code) in effect at all relevant times. All Rule references are
to the Tax Court Rules of Practice and Procedure.
     3
      When referring in this Opinion to Herbst Asset Management
Trust and Herbst Management Trust, our use of the word “Trust”
and any similar words is for convenience only and is not intended
to convey any meaning or have any significance for Federal tax
purposes.
                              - 3 -

and 1997 that respondent determined in the notice issued to

Herbst Charitable Trust4 in the case at docket No. 10000-00;5

(3) the accuracy-related penalty under section 6662(a) that

respondent determined for each of the taxable years 1996 and 1997

in the notice issued to Andrea Herbst (Ms. Herbst) in the case at

docket No. 10001-00; and (4) the accuracy-related penalty under

section 6662(a) for each of the taxable years 1996 and 1997 that

respondent determined in the notice issued to Ronald Herbst (Mr.

Herbst) in the case at docket No. 10002-00.

                           Background

     The record establishes and/or the parties do not dispute the

following:

     At the time the respective petitions in these cases were

filed, Herbst Management Trust, Herbst Charitable Trust, Ms.

Herbst, and Mr. Herbst listed in those petitions the same address

in Canton, Ohio.




     4
      When referring in this Opinion to Herbst Charitable Trust,
our use of the word “Trust” and any similar words are for conve-
nience only and is not intended to convey any meaning or have any
significance for Federal tax purposes.
     5
      In the notice issued to Herbst Charitable Trust, respondent
also determined to impose the accuracy-related penalty under sec.
6662(a) for each of the taxable years 1996 and 1997. At the
trial, respondent indicated that respondent was abandoning
pursuing the determinations in the notice issued to Herbst
Charitable Trust to impose the penalty under sec. 6662(a) for
each of the taxable years 1996 and 1997.
                               - 4 -

     Herbst Management Trust filed Form 1041, U.S. Income Tax

Return for Estates and Trusts (trust return), for each of the

taxable years 1996 and 1997.   In separate Schedules K-1, Benefi-

ciary’s Share of Income, Deductions, Credits, etc., that Herbst

Management Trust included with each of its 1996 and 1997 trust

returns, Herbst Management Trust showed Mr. Herbst, Ms. Herbst,

and Herbst Charitable Trust as beneficiaries and Mr. Herbst and

Ms. Herbst as fiduciaries of Herbst Management Trust.

     In each of its 1996 and 1997 trust returns, Herbst Manage-

ment Trust deducted depreciation with respect to certain personal

assets of Ms. Herbst and/or Mr. Herbst, including their personal

residence that they had transferred to Herbst Management Trust at

a time that is not disclosed by the record.   Herbst Management

Trust also deducted other amounts in its 1996 and 1997 trust

returns with respect to personal expenses of Ms. Herbst and/or

Mr. Herbst.

     During respondent’s examination of Herbst Management Trust’s

1996 and 1997 trust returns and thereafter, respondent was

provided with a trust document relating to Herbst Management

Trust.   That document showed an individual named Edward Bartolli

as the original trustee of Herbst Management Trust.   Edward

Bartolli resigned shortly after the Herbst Management Trust was

purportedly formed.   During respondent’s examination of Herbst

Management Trust’s 1996 and 1997 trust returns and thereafter, no
                              - 5 -

books, records, or other reliable information was provided to

respondent establishing (1) the jurisdiction under the laws of

which Herbst Management Trust was purportedly organized, (2) the

person who is authorized to act on behalf of Herbst Management

Trust, and (3) that Herbst Management Trust was at all relevant

times a trust cognizable for Federal tax purposes.   Nor did

Herbst Management Trust at any time provide any books, records,

or other information to respondent establishing the income

reported and the expense deductions claimed in Herbst Management

Trust’s 1996 and 1997 trust returns.

     In the notice issued to Herbst Management Trust, respondent

determined, inter alia, that Herbst Management Trust is liable

for each of the taxable years 1996 and 1997 for the accuracy-

related penalty under section 6662(a).

     Respondent has no record of Herbst Charitable Trust’s having

filed with respondent Form 990-PF, Return of Private Foundation

(Form 990-PF), for either of the taxable years 1996 and 1997.

Nor does respondent have a record of any other Federal tax

returns having been filed by Herbst Charitable Trust for those

years.

     In response to a request by respondent for information with

respect to Herbst Charitable Trust, respondent was provided with

a copy of Form 990-PF for each of the taxable years 1996 and 1997

that showed Herbst Charitable Trust as the organization to which
                               - 6 -

each such form pertained.   However, as discussed above, respon-

dent has no record that Herbst Charitable Trust filed with

respondent Forms 990-PF for the taxable years 1996 and 1997.

     During respondent’s examination of Herbst Charitable Trust’s

taxable years 1996 and 1997 and thereafter, no books, records, or

other information was provided to respondent establishing (1) the

jurisdiction under the laws of which Herbst Charitable Trust was

purportedly organized, (2) the person who is authorized to act on

behalf of Herbst Charitable Trust, and (3) that Herbst Charitable

Trust was at all relevant times a trust cognizable for Federal

tax purposes.   Nor did Herbst Charitable Trust at any time

provide any books, records, or other information to respondent

establishing the income shown and the expense deductions claimed

in the copies of Forms 990-PF for the taxable years 1996 and 1997

that were provided to respondent during respondent’s examination

of Herbst Charitable Trust in response to respondent’s request

for information with respect to Herbst Charitable Trust and that

showed Herbst Charitable Trust as the organization to which each

such form pertained.

     In the notice issued to Herbst Charitable Trust, respondent

determined, inter alia, that Herbst Charitable Trust is liable

for each of the taxable years 1996 and 1997 for the addition to

tax under section 6651(a)(1) and for the accuracy-related penalty

under section 6662(a).
                                 - 7 -

     Ms. Herbst filed Form 1040, U.S. Individual Income Tax

Return (return), for each of the taxable years 1996 and 1997.

During respondent’s examination of Ms. Herbst’s 1996 and 1997

returns and thereafter, Ms. Herbst provided no books, records, or

other information to respondent establishing the income reported

and the expense deductions claimed in those returns.

     In the notice issued to Ms. Herbst, respondent determined,

inter alia, that Ms. Herbst is liable for each of the taxable

years 1996 and 1997 for the accuracy-related penalty under

section 6662(a).

     Mr. Herbst filed a return for each of the taxable years 1996

and 1997.   During respondent’s examination of Mr. Herbst’s 1996

and 1997 returns and thereafter, Mr. Herbst provided no books,

records, or other information to respondent establishing the

income reported and the expense deductions claimed in those

returns.

     In the notice that respondent issued to Mr. Herbst, respon-

dent determined, inter alia, that Mr. Herbst is liable for each

of the taxable years 1996 and 1997 for the accuracy-related

penalty under section 6662(a).

     James Binge (Mr. Binge) was the return preparer for each of

Herbst Management Trust’s 1996 and 1997 trust returns, each of

Ms. Herbst’s 1996 and 1997 returns, and each of Mr. Herbst’s 1996

and 1997 returns.   Mr. Binge was also listed as the return
                               - 8 -

preparer for each of Herbst Charitable Trust’s Forms 990-PF for

the taxable years 1996 and 1997 that were provided to respondent

during respondent’s examination of Herbst Charitable Trust but

that respondent has no record of having been filed with respon-

dent.   Respondent has identified Mr. Binge as an individual

involved with purported trusts used for tax avoidance purposes.

      On August 31, 2001, respondent filed separate motions to

compel answers to interrogatories and to compel production of

documents in each of the cases at docket Nos. 10001-00 and 10002-

00.   On September 19, 2001, the Court granted each of those

motions.   Neither Ms. Herbst nor Mr. Herbst answered respondent’s

interrogatories or produced the documents requested by respon-

dent, as ordered by the Court on September 19, 2001.

      On October 3, 2001, Herbst Management Trust, Herbst Charita-

ble Trust, Ms. Herbst, and Mr. Herbst filed a joint motion to

continue the trial in these cases, which the Court denied on

October 4, 2001.

      On October 15, 2001, these cases were called from the

Court’s trial calendar at the Court’s trial session in Cleveland,

Ohio (Cleveland trial session).   At that calendar call, there was

no appearance by or on behalf of Herbst Management Trust, Herbst

Charitable Trust, Ms. Herbst, and Mr. Herbst.   At that time,

respondent orally moved to dismiss each of these cases for

failure to prosecute, and respondent requested, and the Court
                              - 9 -

held, a trial because, according to respondent, respondent has

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

to (1) the accuracy-related penalties under section 6662(a) for

1996 and 1997 that respondent determined against Herbst Manage-

ment Trust, (2) the additions to tax under section 6651(a)(1) for

1996 and 1997 that respondent determined against Herbst Charita-

ble Trust,6 and (3) the respective accuracy-related penalties

under section 6662(a) for 1996 and 1997 that respondent deter-

mined against Ms. Herbst and against Mr. Herbst.   At the trial in

these cases on October 15, 2001, there was no appearance by or on

behalf of Herbst Management Trust, Herbst Charitable Trust, Ms.

Herbst, or Mr. Herbst.

     On November 13, 2001, respondent filed a written motion to

hold petitioner in default in each of the cases at docket Nos.

9999-00 and 10000-00 and a written motion to dismiss for lack of

prosecution and to impose sanctions under section 6673 in each of

the cases at docket Nos. 10001-00 and 10002-00.

     On December 3, 2001, the Court sua sponte issued separate

Orders (December 3, 2001 Show Cause Orders) directing each party

in the case at docket No. 9999-00 in which Herbst Asset Manage-

ment Trust is named as petitioner and in the case at docket No.

10000-00 in which Herbst Charitable Trust is named as petitioner

to

     6
      See supra note 5.
                             - 10 -

     show cause in writing why the Court has jurisdiction
     over this case, including the identity of any purported
     fiduciary of petitioner and a detailed analysis of why
     such purported fiduciary has the capacity to litigate
     in the Court on behalf of petitioner.

     On December 19, 2001, respondent filed separate written

responses to the December 3, 2001 Show Cause Orders in the cases

at docket Nos. 9999-00 and 10000-00 in which respondent con-

tended, inter alia, that Herbst Management Trust and Herbst

Charitable Trust, respectively,

           11. * * * failed to establish that a trustee, if
     authorized, acted on its behalf when the purported
     petition was filed with the Court on September 25,
     2000.

          12. * * * failed to file a proper petition with
     this Court in that the petition was not brought by and
     with the full descriptive name of the fiduciary enti-
     tled to institute a case on its behalf.

Respondent further argued in those separate responses to the

December 3, 2001 Show Cause Orders in the cases at docket Nos.

9999-00 and 10000-00 that

     Since the petition in this case was not brought by a
     party with proper capacity as required by the Tax Court
     Rules of Practice and Procedure, the Court lacks juris-
     diction * * *.

     On December 20, 2001, Herbst Management Trust and Herbst

Charitable Trust filed separate written responses to the December

3, 2001 Show Cause Orders in the cases at docket Nos. 9999-00 and

10000-00 (Herbst Management Trust’s response to the December 3,

2001 Show Cause Order and Herbst Charitable Trust’s response to

the December 3, 2001 Show Cause Order, respectively), each of
                                  - 11 -

which was signed by Terrence A. Bentivegna (Mr. Bentivegna) who

identified himself in each such response as “Trustee”.       Each such

response asserted that “Petitioner does not believe that this

Court has jurisdiction.”       In support of that position, Herbst

Management Trust’s response to the December 3, 2001 Show Cause

Order and Herbst Charitable Trust’s response to the December 3,

2001 Show Cause Order set forth statements and contentions that

the Court finds to be frivolous and/or groundless.7


     7
      Each such response to the December 3, 2001 Show Cause Order
stated in pertinent part:

     1.       Petitioner petitioned this Court after having
              received false and misleading information from the
              respondent and attorneys David Wise and his asso-
              ciate Carol Jackson. The respondent has failed to
              properly assess any taxes in accordance with their
              required administrative procedures, and yet ad-
              vised the petitioner that the only method of dis-
              agreeing with the purported tax liability was to
              petition this Court.

     2.       This Courts’ [sic] order states “. . . petitioner
              purports to be a trust . . .” Petitioner is a
              trust, and the respondent has never been able to
              prove otherwise. Nor does the respondent have the
              right or ability to set aside a contract.

          *        *       *         *       *       *       *

     4.       Petitioner does not want this false tax claim to
              be litigated in court, and has petitioned this
              Court to have this case removed from the docket as
              having been petitioned in error due to the errone-
              ous instructions given by the respondent.

     WHEREFORE it is prayed that:

     1.       This Court dismiss this case at petitioner’s re-
                                                       (continued...)
                              - 12 -

     On January 16, 2002, Herbst Management Trust filed a re-

sponse to respondent’s motion to hold petitioner in default in

the case at docket No. 9999-00, and petitioner in each of the

cases at docket Nos. 10001-00 and 10002-00 filed a response to

respondent’s motion in each such case to dismiss for lack of

prosecution and to impose sanctions under section 6673.   On

January 30, 2002, Herbst Charitable Trust filed a response to

respondent’s motion to hold petitioner in default in the case at

docket No. 10000-00.   Each of those respective responses con-

tained arguments and contentions that the Court found in an Order

dated January 18, 2002, in the case at docket No. 9999-00, an



     7
      (...continued)
          quest as the original petition was issued in error
          due to false directions given to petitioner by
          respondent. Petitioner believes that he has the
          right to correct his mistake and withdraw the
          original petition.

     2.   This Court and the respondent recognize the peti-
          tioner as a Trust and cease attempting to set
          aside a contract in direct opposition to the Con-
          stitution of the United States of America.

     3.   This court sanction the respondent for using this
          Court for illegal purposes. Respondent has no
          legal tax claim as petitioner has noted to respon-
          dent and this Court on numerous occasions. With-
          out a legal claim, respondent fraudulently in-
          structed petitioner to use this Court to legiti-
          mize his illegal attempt to deprive petitioner of
          his assets.

     4.   This Court instruct the respondent to cease, now
          and forever, harassment of petitioner.
                                - 13 -

Order dated February 4, 2002, in the case at docket No. 10000-00,

an Order dated January 18, 2002, in the case at docket No. 10001-

00, and an Order dated January 18, 2002, in the case at docket

No. 10002-00 to be frivolous and/or groundless.    In each of those

Orders, the Court reminded each petitioner about section

6673(a)(1).8

     On February 15, 2002, Herbst Management Trust, Herbst

Charitable Trust, Ms. Herbst, and Mr. Herbst filed a joint brief

in these cases.    That brief sets forth statements, contentions,




     8
      Sec. 6673(a)(1) states:

     SEC. 6673.    SANCTIONS AND COSTS AWARDED BY COURTS.

          (a) Tax Court Proceedings.--

               (1) Procedures instituted primarily for de-
          lay, etc.--Whenever it appears to the Tax Court
          that--

                       (A) proceedings before it have been
                  instituted or maintained by the taxpayer
                  primarily for delay,

                       (B) the taxpayer’s position in such
                  proceeding is frivolous or groundless, or

                       (C) the taxpayer unreasonably failed to
                  pursue available administrative remedies,

          the Tax Court, in its decision, may require the
          taxpayer to pay to the United States a penalty not
          in excess of $25,000.
                               - 14 -

and arguments that the Court finds to be frivolous and/or ground-

less.9


     9
        Petitioners’ joint brief in these cases states in pertinent
part:

     This is a proceeding to determine if the Internal
     Revenue Service can ignore the strict limitations
     imposed on it by Congress, via the Code of Federal
     Regulations, and its’ [sic] own required administrative
     procedures to extort assets from unsuspecting inhabit-
     ants of one of the fifty (50) states of the United
     States of America, to wit: Ronald Herbst, et al.

         *       *       *       *       *       *        *

     U.S.C. Title 26 Section 7602 is the I.R.S.’s authority
     to examine books and records regarding “internal reve-
     nue tax”--not income tax. This is corroborated by the
     fact that the implementing regulation for Section 7602
     is located in C.F.R. Title 27, parts 70, 170 and 296.

          *       *       *       *       *       *       *

     In accordance with C.F.R. 1.861-8(f) petitioners, et
     al, do not receive any “income” or receipts from a
     “taxable source”.

          *       *       *       *       *       *       *

     Petitioners, et al, have never been legally assessed
     any tax as required by U.S.C. Title 26 Section 6203 and
     C.F.R. regulation 301.6203-1 and corroborated in Bull
     v. U.S., 295 US 247 * * *.

     Petitioners, et al, determinations are based on Supreme
     Court decisions, Treasury Orders, U.S.C. Title 26
     codes, and implementing (or lack of implementing)
     C.F.R. Title 26 regulations and various other refer-
     ences, and as such cannot be considered frivolous or
     “. . . a hodgepodge of unsupported assertions, irrele-
     vant platitudes and legalistic gibberish.”

          *       *       *       *       *       *       *

                                                      (continued...)
                             - 15 -

                           Discussion

Herbst Management Trust and Herbst Charitable Trust

     On December 3, 2001, the Court sua sponte issued the respec-

tive December 3, 2001 Show Cause Orders regarding the Court’s

jurisdiction over the cases at docket Nos. 9999-00 and 10000-00.

     Rule 60 provides in pertinent part:




     9
      (...continued)
     Ronald Herbst, et al, petitioners in the cases at
     Docket Nos. 9999-00, 10000-00, 10001-00 and 10002-00
     are not liable for any income tax, penalties and/or
     interest pursuant to any U.S.C. Title 26 code sections.

     Petitioners, et al, have at all times rebutted and
     refuted respondents prima facie allegations; thus, the
     burden of proof is on the respondent.

     Treasury Order 120-01 dated June 6, 1972 establishes
     the Bureau of Alcohol, Tobacco and Firearms and trans-
     fers U.S.C. Title 26 Section 61 through 80, inclusive,
     to U.S.C. Title 27 and the Bureau of Alcohol, Tobacco
     and Firearms. Petitioners, et al, are not now and
     never have been involved in the manufacture, distribu-
     tion or sale of alcohol, tobacco or firearms, or been
     involved in any other excise taxable activity. This is
     corroborated by the Code of Federal Regulations Table
     of Authority and Rules.

     A review of the Department of the Treasury organization
     chart reveals that the Internal Revenue Service is not
     administered by any of the organizations with enforce-
     ment authority. This is corroborated by the fact that
     there are no Title 26 implementing regulation under
     Title 26 C.F.R.

     The established trusts bear no burden of proof as their
     records are not subject to review. Boyd vs. U.S. 116
     U.S. 618; Silver Thorne Lumber Co. vs U.S. 1251 U.S.
     385.
                               - 16 -

          (a) Petitioner: (1) Deficiency or Liability
     Actions: A case shall be brought by and in the name of
     the person against whom the Commissioner determined the
     deficiency (in the case of a notice of deficiency)
     * * * or by and with the full descriptive name of the
     fiduciary entitled to institute a case on behalf of
     such person. See Rule 23(a)(1). A case timely brought
     shall not be dismissed on the ground that it is not
     properly brought on behalf of a party until a reason-
     able time has been allowed after objection for ratifi-
     cation by such party of the bringing of the case; and
     such ratification shall have the same effect as if the
     case had been properly brought by such party. * * *

          *     *       *        *        *         *       *

          (c) Capacity: * * * The capacity of a fiduciary
     or other representative to litigate in the Court shall
     be determined in accordance with the law of the juris-
     diction from which such person’s authority is derived.

     The record does not establish where Herbst Management Trust

and Herbst Charitable Trust were organized.      The respective

petitions in the cases at docket Nos. 9999-00 and 10000-00 listed

an address for Herbst Management Trust and Herbst Charitable

Trust in Canton, Ohio,10 which is also the service address used

by the Court in those cases.   Assuming arguendo that Herbst

Management Trust and Herbst Charitable Trust were trusts orga-

nized under the laws of the State of Ohio, the administration of

each of which is subject to the laws of that State, under Ohio

law, see Rule 60(c), a trustee generally is the proper party

authorized to act on behalf of a trust.       Firestone v. Galbreath,


     10
      The Ohio address listed in the respective petitions in the
cases at docket Nos. 9999-00 and 10000-00 is the same address
listed by petitioners in the respective cases at docket Nos.
10001-00 and 10002-00.
                                 - 17 -

976 F.2d 279, 284 (6th Cir. 1992); Saxton v. Seiberling, 48 Ohio

St. 554, 29 N.E. 179 (1891); see Ohio R. Civ. P. 17(A).11

     In the cases at docket Nos. 9999-00 and 10000-00, Herbst

Management Trust and Herbst Charitable Trust, respectively, have

the burden of proving that this Court has jurisdiction, see Fehrs

v. Commissioner, 65 T.C. 346, 348 (1975); Natl. Comm. to Secure

Justice in the Rosenberg Case v. Commissioner, 27 T.C. 837, 839

(1957), by establishing affirmatively all facts giving rise to

our jurisdiction, see Wheeler’s Peachtree Pharmacy, Inc. v.

Commissioner, 35 T.C. 177, 180 (1960); Consol. Cos. v. Commis-

sioner, 15 B.T.A. 645, 651 (1929).        In order to meet that burden,

Herbst Management Trust in the case at docket No. 9999-00 and

Herbst Charitable Trust in the case at docket No. 10000-00 must

provide evidence establishing who has the authority to act on its

behalf in each such proceeding.     See Natl. Comm. to Secure

Justice in the Rosenberg Case v. Commissioner, supra at 839-840;



     11
          Ohio R. Civ. P. 17(A) provides in pertinent part:

     RULE 17.     Parties plaintiff and defendant; capacity

          (A) Real party in interest. Every action shall be
     prosecuted in the name of the real party in interest.
     An executor, administrator, guardian, bailee, trustee
     of an express trust, a party with whom or in whose name
     a contract has been made for the benefit of another, or
     a party authorized by statute may sue in his name as
     such representative without joining with him the party
     for whose benefit the action is brought. * * * [Empha-
     sis added.]
                                - 18 -

Coca-Cola Bottling Co. v. Commissioner, 22 B.T.A. 686, 700

(1931).

     On the instant record, we find that Herbst Management Trust

in the case at docket No. 9999-00 and Herbst Charitable Trust in

the case at docket No. 10000-00 have failed to establish who has

the authority to act on their behalf in those respective proceed-

ings.     We further find on that record that neither of the cases

at docket Nos. 9999-00 and 10000-00 was brought by and with the

full descriptive name of the fiduciary entitled to institute each

such case on behalf of Herbst Management Trust or Herbst Charita-

ble Trust, as the case may be, as required by Rule 60(a)(1).     On

the record before us, we conclude that we do not have jurisdic-

tion over the cases at docket Nos. 9999-00 and 10000-00.     Accord-

ingly, we shall dismiss those cases for lack of jurisdiction.12

Ms. Herbst and Mr. Herbst

     Neither Ms. Herbst nor any authorized representative of Ms.

Herbst appeared at the Court’s Cleveland trial session on October

15, 2001, at the call of these consolidated cases from the

Court’s trial calendar.     Neither Mr. Herbst nor any authorized

representative of Mr. Herbst appeared at that calendar call.

     At the trial held by the Court in the case at docket No.



     12
      Because we shall dismiss the cases at docket Nos. 9999-00
and 10000-00 for lack of jurisdiction, we shall deny respondent’s
motion in the case at docket No. 9999-00 and respondent’s motion
in the case at docket No. 10000-00.
                              - 19 -

10001-00, neither Ms. Herbst nor any authorized representative of

Ms. Herbst appeared.   At the trial held by the Court in the case

at docket No. 10002-00, neither Mr. Herbst nor any authorized

representative of Mr. Herbst appeared.

     The respective written responses by Ms. Herbst and Mr.

Herbst to respondent’s respective motions to dismiss for lack of

prosecution and to impose sanctions under section 6673 in the

cases at docket Nos. 10001-00 and 10002-00 do not contain any

valid reason why those cases should not be dismissed for lack of

prosecution.   Those respective responses contained contentions

and arguments that the Court found in the Court’s respective

Orders in those cases dated January 18, 2002, to be frivolous

and/or groundless.   The joint brief filed by Ms. Herbst and Mr.

Herbst (and Herbst Management Trust and Herbst Charitable Trust)

also contains statements, contentions, and arguments that the

Court finds to be frivolous and/or groundless and do not set

forth any valid reason why the cases at docket Nos. 10001-00 and

10002-00 should not be dismissed for lack of prosecution.

     Section 7491(c) provides in pertinent part:

     SEC. 7491.   BURDEN OF PROOF.

          (c) Penalties.–-Notwithstanding any other provi-
     sion of this title, the Secretary shall have the burden
     of production in any court proceeding with respect to
     the liability of any individual for any penalty * * *.

     Section 6662(a) imposes an accuracy-related penalty equal to

20 percent of the underpayment of tax resulting from, inter alia,
                                - 20 -

negligence or disregard of rules or regulations, sec. 6662(b)(1),

or a substantial understatement of income tax, sec. 6662(b)(2).

For purposes of section 6662(a), an understatement is equal to

the excess of the amount of tax required to be shown in the tax

return over the amount of tax shown in the tax return, sec.

6662(d)(2)(A), and is substantial in the case of an individual if

it exceeds the greater of 10 percent of the tax required to be

shown in the return or $5,000, sec. 6662(d)(1)(A).     For purposes

of section 6662(a), the term “negligence” includes any failure to

make a reasonable attempt to comply with the Code, and the term

“disregard” includes any careless, reckless, or intentional

disregard.    Sec. 6662(c).   Negligence has also been defined as a

lack of due care or failure to do what a reasonable person would

do under the circumstances.     Leuhsler v. Commissioner, 963 F.2d

907, 910 (6th Cir. 1992), affg. T.C. Memo. 1991-179; Antonides v.

Commissioner, 91 T.C. 686, 699 (1988), affd. 893 F.2d 656 (4th

Cir. 1990).

     The accuracy-related penalty under section 6662(a) does not

apply to any portion of an underpayment if it is shown that there

was reasonable cause for, and that the taxpayer acted in good

faith with respect to, such portion.     Sec. 6664(c)(1).   The

determination of whether the taxpayer acted with reasonable cause

and in good faith depends on the pertinent facts and circum-

stances, including the taxpayer’s efforts to assess his or her
                                - 21 -

proper tax liability, the knowledge and experience of the tax-

payer, and the reliance on the advice of a professional, such as

an accountant.   Sec. 1.6664-4(b)(1), Income Tax Regs.     Reliance

on the advice of a professional, such as an accountant, does not

necessarily demonstrate reasonable cause and good faith unless,

under all the circumstances, such reliance was reasonable and the

taxpayer acted in good faith.    Id.     In the case of claimed

reliance on the accountant who prepared the taxpayer’s tax

return, the taxpayer must establish that correct information was

provided to the accountant and that the item incorrectly omitted,

claimed, or reported in the return was the result of the accoun-

tant’s error.    Ma-Tran Corp. v. Commissioner, 70 T.C. 158, 173

(1978).

     On the record before us, we find that respondent has satis-

fied the burden of production that respondent maintains respon-

dent has with respect to the respective accuracy-related penal-

ties under section 6662(a) that respondent determined to impose

on Ms. Herbst and on Mr. Herbst for the taxable years 1996 and

1997.13

     Based on our examination of the entire record before us, we

shall grant respondent’s motion in the case at docket No. 10001-



     13
      We are not deciding in the cases at docket Nos. 10001-00
and 10002-00 whether the Commissioner of Internal Revenue has the
burden of production in cases subject to sec. 7491(c) when a
taxpayer fails to appear for trial.
                             - 22 -

00 and respondent’s motion in the case at docket No. 10002-00 in

that we shall dismiss each of those cases for failure by peti-

tioner in each such case to prosecute such case, and we shall

enter a decision in each of those cases sustaining the determina-

tions that respondent made in the notice to which each such case

pertains but in the reduced amounts which respondent concedes are

appropriate in order to reflect the duplication of certain income

determinations in the respective notices issued to Ms. Herbst and

Mr. Herbst.14

     In respondent’s motions in the cases at docket Nos. 10001-00

and 10002-00, respondent also asks the Court to impose a penalty

under section 6673(a)(1) on petitioner in each of those cases.

As grounds therefor, respondent contends that each of those



     14
      As explained in respondent’s respective motions in the
cases at docket Nos. 10001-00 and 10002-00, respondent attributed
the income reported for each of the taxable years 1996 and 1997
by Herbst Management Trust 100 percent to Ms. Herbst, Mr. Herbst,
and Herbst Charitable Trust. The amounts of such income attrib-
uted to Herbst Charitable Trust were reattributed to Ms. Herbst
and Mr. Herbst, which resulted in a duplication of said amounts
of income in the respective notices issued to Ms. Herbst and Mr.
Herbst. As set forth in respondent’s respective motions in the
cases at docket Nos. 10001-00 and 10002-00 and in the respective
exhibits attached to those motions, the revised deficiencies for
Ms. Herbst for the taxable years 1996 and 1997 are $46,909 and
$55,145, respectively, and the revised deficiencies for Mr.
Herbst for the taxable years 1996 and 1997 are $47,449 and
$55,906, respectively. Consistently, the revised accuracy-
related penalties under sec. 6662(a) imposed on Ms. Herbst for
the taxable years 1996 and 1997 are $9,381.80 and $11,029,
respectively, and the revised accuracy-related penalties under
sec. 6662(a) imposed on Mr. Herbst for the taxable years 1996 and
1997 are $9,489.80 and $11,181.20, respectively.
                              - 23 -

petitioners (1) instituted proceedings in the Court primarily for

delay, (2) advanced frivolous and groundless positions in such

proceedings, and (3) unreasonably failed to pursue administrative

remedies.

     On the record before us, we find that Ms. Herbst instituted

the proceedings in the case at docket No. 10001-00 primarily for

delay.   We also find on that record that Ms. Herbst’s position in

the case at docket No. 10001-00 is frivolous and/or groundless.

On the record before us, we shall impose a penalty on Ms. Herbst

pursuant to section 6673(a)(1) in the amount of $25,000.

     On the record before us, we find that Mr. Herbst instituted

the proceedings in the case at docket No. 10002-00 primarily for

delay.   We also find on that record that Mr. Herbst’s position in

the case at docket No. 10002-00 is frivolous and/or groundless.

On the record before us, we shall impose a penalty on Mr. Herbst

pursuant to section 6673(a)(1) in the amount of $25,000.

     To reflect the foregoing,


                                      An appropriate order of dis-

                                 missal for lack of jurisdiction and

                                 denying respondent’s motion will be

                                 entered in each of the cases at

                                 docket Nos. 9999-00 and 10000-00,

                                 and an appropriate order granting

                                 respondent’s motion and decision
- 24 -

will be entered in each of the

cases at docket Nos. 10001-00 and

10002-00 sustaining respondent’s

determinations in reduced amounts

and imposing a penalty under sec-

tion 6673(a)(1) in each of those

two cases.
