                       T.C. Memo. 2000-79



                     UNITED STATES TAX COURT



                DOUGLAS L. HADSELL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent*




     Docket No. 2423-93.                       Filed March 7, 2000.



     Douglas L. Hadsell, pro se.

     John C. Meaney and Ralph W. Jones, for respondent.


                 SUPPLEMENTAL MEMORANDUM OPINION


     GOLDBERG, Special Trial Judge:    This case is before the

Court on remand from the Court of Appeals for the Ninth Circuit.

Hadsell v. Commissioner, 107 F.3d 750 (9th Cir. 1997), vacating

and remanding T.C. Memo. 1994-198.    Unless otherwise indicated,


     *    This opinion supplements our opinion in Hadsell v.
Commissioner, T.C. Memo. 1994-198, vacated and remanded 107 F.3d
750 (9th Cir. 1997).
                                   - 2 -


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.

       Respondent determined deficiencies in petitioner’s Federal

income taxes and additions to tax as follows:

                                             Additions to Tax
Year          Deficiency           Sec. 6651(a)(1)      Sec. 6654
1988          $2,162               $ 526.00             $133.98
1989           4,238                1,059.50             286.43
1990           3,786                  946.50             249.05


       After concessions by the parties,1 the issues for decision

are:       (1) Whether petitioner is entitled to the filing status of

married filing jointly for the purposes of determining the amount

of any liability for the 1990 taxable year; (2) whether

petitioner is entitled to deductions for expenses incurred while

working as a deckhand on a commercial fishing boat; (3) whether

petitioner is entitled to deductions related to rental real

property; (4) whether petitioner is entitled to casualty losses



       1
          Petitioner concedes that he received unemployment
compensation, wages, and compensation as an independent
contractor in at least the amounts determined by respondent. We
therefore deem the gross income and self-employment tax issues to
be conceded by petitioner for the years at issue.
     Respondent concedes that there was a mathematical error in
the original determination as set forth in the notice of
deficiency for the 1990 taxable year because petitioner was not
given credit equal to one-half of the self-employment tax he owed
for 1990. Accordingly, the deficiency for 1990 should be reduced
by $127, with corresponding reductions in the secs. 6651 and 6654
additions to tax.
                                   - 3 -


for the destruction of a boat and accompanying personal property;

(5) whether petitioner is liable for additions to tax pursuant to

section 6651(a)(1) for failing to file timely Federal income tax

returns for the years at issue; and (6) whether petitioner is

liable for additions to tax pursuant to section 6654 for failing

to pay estimated taxes.

       The stipulations and exhibits are incorporated herein by

this reference.      For convenience, we shall set forth only the

facts necessary to clarify the ensuing discussion.

       Prior to trial in Hadsell v. Commissioner, T.C. Memo. 1994-

198 (Hadsell I), petitioner served subpoenas duces tecum by mail

upon Detective Mike Menzies (Detective Menzies), an employee of

the Newport Police Department, Zong Yan Yu,2 petitioner’s wife,

and Lai Fong Lee, Zong Yan Yu’s aunt and petitioner’s former

employer.       Petitioner served the three subpoenas without

tendering mileage and witness fees as required by Rules 147 and

148.       None of the witnesses appeared at trial on October 14,

1993, and the Court refused to enforce the subpoenas because

petitioner failed to tender the required mileage and witness

fees.




       2
          Zong Yan Yu was referred to as “Zong Gan Yu Hadsell” in
Hadsell v. Commissioner, T.C. Memo. 1994-198, and in Hadsell v.
Commissioner, 107 F.3d 750 (9th Cir. 1997).
                                 - 4 -


     Petitioner testified that he subpoenaed Detective Menzies in

order to obtain his “tax records” which were in the possession of

the Newport Police Department.    Petitioner claimed that the

Newport Police Department had two boxes of his “tax records”

which could substantiate, among other things, petitioner’s work-

related expenses claimed for the years at issue.

     In the first subpoena, petitioner directed that Detective

Menzies, who at one time was custodian of the Newport Police

evidence locker,3 appear at trial and bring with him:

     Two (2) cardboard boxes with Miscelaneous [sic] Papers
     that you seized and described in Your Return to Search
     Warrant dated January 9th, 1992. And each and every
     item made from paper and/or paper products, including
     Reciepts [sic], photocopies, envelopes, photographs,
     Letters, Correspondences, Tax Papers, Books, Magazines,
     Folders, and all other things that you siezed [sic]
     made of paper or paper products.


     The second and third subpoenas were served on Zong Yan Yu

and Lai Fong Lee in order to establish:    (1) Petitioner’s

marriage; and (2) petitioner’s wage income at Lai Fong Inn,

respectively.

     Petitioner contended in Hadsell I that the Court’s failure

to enforce the subpoenas, despite the fact that he failed to

tender the required mileage and witness fees, violated his


     3
          The Court was informed at trial in Hadsell I on Oct.
14, 1993, that Detective Menzies no longer worked for the Newport
Police Department and therefore was no longer the custodian of
the records subpoenaed by petitioner.
                                - 5 -


constitutional right to a fair trial, specifically, that it

violated his due process right of access to the courts.

Petitioner argued that such fees should be waived in his case

because he was indigent and was prevented from earning money

because of his incarceration.

      We concluded in Hadsell I that the Court had no authority to

waive subpoena fees and that petitioner was not denied his

constitutional rights even though the subpoenas were not

enforced.   See Hadsell v. Commissioner, T.C. Memo. 1994-198.   We

held:

      civil litigants * * * before this Court enjoy no
      constitutional right to have the Federal Government pay
      their litigation expenses, and that the party who
      summons a witness is responsible for paying the fees
      and mileage to which the witness is entitled under
      Rules 147 and 148(c).
Id.

      The Court of Appeals for the Ninth Circuit, while not

deciding whether Rule 147 is unconstitutional as applied to

indigent litigants, stated:

      Hadsell did not have adequate alternatives for proving
      all of his claims. On the one hand, the tax court did
      not err by denying witness fees to Zong Gan Yu Hadsell,
      because Hadsell could testify as to the date of their
      marriage as readily as she could have. Nor did it err
      in denying fees to Lai Fong Lee, because her testimony
      was not essential to resolve the questions of whether
      certain expenses were business deductions or whether
      Hadsell had appropriately filed his tax returns. As to
      the seized tax records, on the other hand, Hadsell
      claims that they alone could substantiate his claim
      that he had indeed properly filed tax returns in the
      years in question.
                                  - 6 -


                   *   *      *    *      *   *   *

          Without having to declare [28 U.S.C.] section 1915
     unconstitutional as applied to Hadsell, the tax court
     could have attempted to acquire these records in at
     least two ways. By relying on Federal Rule of Evidence
     614(a), the court could have, on its own accord, called
     Detective Menzies and ordered him to bring with him
     Hadsell’s tax records that were still in the possession
     of the Newport Police Department. * * * Alternatively,
     it could have granted Hadsell a continuance with the
     suggestion that he seek the return of the documents
     directly from the City of Newport, either through
     administrative channels or an action in state court.

Hadsell v. Commissioner, 107 F.3d at 753.

     The Court of Appeals vacated our decision and remanded the

case in order for the Court to:

     consider its power either to call Detective Menzies as
     a witness, bringing with him the requested tax
     documents, under Federal Rule of Evidence 614(a), or to
     continue the hearing to allow Hadsell an opportunity to
     obtain the documents directly.

Id. at 754.

     In accordance with the mandate of the Court of Appeals, the

Court issued an order on June 3, 1997, ordering Newport Chief of

Police James Rivers (Chief Rivers) to have the Newport Police

Evidence Officer personally deliver to petitioner’s Corrections

Counselor by June 30, 1997:

     certain boxes of documents seized and described in
     ‘Your Return to Search Warrant’ dated January 9, 1992,
     and any other documents of Mr. Hadsell which may remain
     with the Newport, Oregon Police Department, which
     documents this Court has been advised are located in
     the Evidence Vault of the Newport, Oregon Police
     Department and are in the custody of James Rivers * * *
                               - 7 -



     The Newport Police Evidence Officer, Detective David

Thalman, delivered the papers to petitioner’s corrections

counselor on June 17, 1997, and later filed a document with the

Court captioned:   “Return of Order From Newport, OR Police Dept.,

With Attached Inventory of Delivered Items”.

     On July 7, 1997, petitioner informed respondent that none of

the documents returned by the Newport Police Department applied

to his Tax Court case and that he believed that the police had

failed to turn over all of the documents in their possession.

     In a telephone conference between the parties and the Court

on July 28, 1997, petitioner stated that he had again reviewed

the documents delivered by the Newport Police Department and

believed that there were some documents relevant to the tax years

involved herein to which he wanted to stipulate.   The parties, by

way of an Order from the Court, were urged to meet in an attempt

to stipulate the documents to be submitted to the Court.

     In an effort to determine whether the authorities involved

with petitioner’s criminal case still had some of petitioner’s

records in their possession, respondent, at the Court’s request,

obtained an affidavit from Mr. Stephen E. Dingle, who had acted

as a special prosecutor for the Lincoln County District

Attorney’s Office when prosecuting petitioner’s State criminal

case.   The affidavit, filed with the Court on August 4, 1997,
                               - 8 -

stated that Mr. Dingle had not retained any records relating to

petitioner’s criminal prosecution.

     Respondent also contacted Chief Rivers and requested that he

“double check” the police evidence locker to ascertain whether

the police had inadvertently retained any of petitioner’s papers.

Chief Rivers confirmed that the Newport Police had delivered all

of petitioner’s papers to petitioner’s corrections counselor.

     On September 17, 1997, petitioner filed a document which the

Court treated as a motion to reopen the record.   In that document

petitioner stated:

     The Mandate of the Court of Appeals in this case is
     that Detective Menzies will be subpoenaed by the Court
     to Testify at a Trial. Bingo!!!! That is exactly what
     this Petitioner wanted in his first trial and was the
     basis for the entire appeal. There was NO other reason
     for the Appeal. Petitioner was [sic] Detective Menzies
     to appear in Person and testify under oath about what
     he has done with the missing two thirds of
     Petitioner[‘s] Papers, which happen to include the
     pertinent evidence that Petitioner wants presented to
     this Court * * *


     On November 5, 1997, the Court issued an order setting the

case for further proceedings “in accordance with the mandate of

the United States Court of Appeals for the Ninth Circuit”.

     A trial was held on January 30, 1998, to permit petitioner

to introduce additional evidence relating to his tax liability

for the years at issue.   The Court also made Detective Menzies

and Detective Steven L. Etter (Detective Etter) of the Salem
                               - 9 -

Police Department4 available to petitioner at the trial.    Another

witness, Detective David Thalman, was recovering from open heart

surgery and was unable to appear.

     Both Detective Menzies and Detective Etter testified

concerning the papers which had been in the custody of the

Newport Police Department.   The witnesses testified as to the

collection, custody, and eventual delivery of the papers to

petitioner’s corrections counselor.

     During the course of the hearing it was established that the

papers had originally been seized by the police from a storage

room at the Port of Newport, Oregon, on January 9, 1992, as

evidence for use in petitioner’s State criminal trial.     The

papers had originally been stored on a boat previously owned by

petitioner, but had been moved to a storage room around the time

the boat was destroyed.   It is not known who initially removed

the records from the boat and put them in the storage room.

     The papers, contained in two cardboard boxes, were placed in

the evidence locker of the Newport Police on January 9, 1992.

They were later transferred to a single cardboard box on May 3,

1996, and, as stated above, were delivered to petitioner’s




     4
          Detective Etter had previously worked for the Newport
Police Department and had also served as the officer “second in
charge of the evidence locker”.
                               - 10 -

corrections counselor on June 17, 1997, pursuant to an Order of

the Court.

     At the trial on January 30, 1998, petitioner testified that

the papers delivered by the Newport Police included receipts

which would substantiate his claimed deductions for the years at

issue, but that he did not bring the receipts to trial because he

“didn’t know that that’s what we were going to be dealing with

today”.    A recess was called, and petitioner was excused to

retrieve the documents from the prison law library.

     Petitioner returned with a voluminous amount of receipts

which he claimed were from the 1988, 1989, and 1990 taxable

years.    The receipts, in no particular order, were all thrown

together in a box.    Petitioner had made no attempt to organize

the receipts in any manner, even though he conceded that he had

received the receipts “Three or four months, or six months” prior

to the evidentiary hearing.5

     The Court requested that respondent assign a revenue agent

to meet with petitioner and ascertain whether petitioner had

receipts which could substantiate additional business deductions

which had not been allowed in Hadsell I.    In order to facilitate

such an examination, the Court instructed petitioner to organize



     5
          In fact, since the documents were part of the records
delivered by the Newport Police Department on June 17, 1997,
petitioner had possession of the records for over 7 months.
                               - 11 -

his receipts by tax year, activity, and type of deduction

claimed.    Petitioner promised to cooperate with the examination

“100 percent”.    The Court then ordered that the record be held

open for 60 days to allow an examination of petitioner’s

receipts.

     On March 3, 1998, one of respondent’s revenue agents

contacted petitioner by phone and explained to petitioner how to

organize his receipts in order to facilitate the examination.      On

March 5, 1998, the agent visited petitioner and attempted to

examine his receipts for the years at issue.

     The agent found that petitioner had failed to organize his

receipts in any manner and was totally unprepared for the

examination.    The agent explained to petitioner that he was

acting pursuant to a deadline set by the Court and suggested that

they reschedule the examination so that petitioner could properly

prepare.    Petitioner declined to meet with the agent again and

told the agent that he would be unable to organize the receipts

before the expiration of the Tax Court deadline because he was

appealing his criminal conviction and needed all of his time to

work on the appeal.

     The agent decided to give petitioner time to reconsider his

decision and scheduled another call with petitioner for March 11,

1998.   When the agent phoned on that date, however, petitioner
                              - 12 -

refused to reschedule the examination and abruptly ended the

phone call.

     In an Order dated May 7, 1998, the Court ordered petitioner

to meet with a revenue agent in order to complete the examination

of petitioner’s receipts.   Pursuant to that Order, respondent’s

agent again attempted to phone petitioner on June 8, 1998, but

petitioner refused to take the call.   Petitioner alleged that the

agent had treated him rudely during the previous visit and

demanded that another agent be assigned to the examination.

Petitioner later informed the Court during a conference call on

November 6, 1998, that he had destroyed his receipts after

originally meeting with the agent on March 5, 1998.

     In light of petitioner’s allegations that he had destroyed

his receipts, the Court ordered petitioner to file a status

report with the Court by December 9, 1998, setting forth the

facts surrounding petitioner’s destruction of his tax records.

Petitioner refused to comply with the Order but stated in later

filings with the Court that he had destroyed only a portion, not

all, of the receipts.   The record in this case was closed on June

28, 1999, more than 1 full calendar year after petitioner refused

to meet with respondent’s agent.

     The Court has made every attempt to accommodate petitioner

in this case; however, the record is clear that petitioner has
                              - 13 -

failed to respond to any of our Orders and has abused the

judicial process of the Court.

      Having endeavored to comply with the mandate of the Court of

Appeals for the Ninth Circuit by calling Detective Menzies as a

witness and by providing petitioner with the tax documents

previously in the possession of the Newport Police Department, we

now address again the following issues in turn.

1.   Petitioner’s Filing Status

      Respondent calculated deficiencies for each of the years at

issue based upon single filing status.   While petitioner concedes

that he was not married in either 1988 or 1989, he contends that

he was married twice in 1990 and is therefore entitled to claim

married, filing jointly status for the 1990 taxable year based on

at least one of his marriages.

      Petitioner testified that he divorced Yu Fang Wang, his

first wife, on November 12, 1990, and married his second wife,

Zong Yan Yu, in China on November 11, 1990.   Zong Yan Yu did not

come to the United States until May 30, 1991.

      A taxpayer's filing status is determined as of the close of

the taxable year, and a taxpayer legally separated from his

spouse under a decree of divorce shall not be considered married.

See secs. 6013(d)(2), 7703(a)(1).   Petitioner concedes that his

marriage to Yu Fang Wang, his first wife, ended in divorce on

November 12, 1990, and that he was not married to her at the
                               - 14 -

close of the taxable year.    See secs. 6013(d)(1)(A), 7703(a)(1).

     Though petitioner contends that he is entitled to claim

married, filing jointly status for the 1990 taxable year based on

at least one of his marriages, he has also argued that his second

marriage, which took place in China on November 11, 1990, was not

legitimate.   Petitioner stated that he married Zong Yan Yu on

November 11, 1990, but conceded that he was not sure that the

marriage was valid because his divorce from Yu Fang Wang did not

become final until November 12, 1990.   In addition, petitioner

stated in his original petition, filed with this Court on January

29, 1993:   “Lai Fong Lee’s family bribed the marriage officer for

a fake marriage [between petitioner and Zong Yan Yu] which was

against the laws of China.”   Petitioner also testified as follows

at the trial on January 30, 1998:   “I have a decree now that says

we [petitioner and Zong Yan Yu] were never married”.

     In any event, section 6013(a)(1) provides that no joint

return shall be made if either spouse at any time during the

taxable year is a nonresident alien.    According to petitioner’s

testimony, Zong Yan Yu did not reside in the United States during

the 1990 taxable year.   In addition, petitioner conceded that

Zong Yan Yu did not execute a joint income tax return for the

1990 taxable year.   Therefore, based on the record, we hold that

petitioner is not entitled to claim married, filing jointly
                                - 15 -

status for the 1990 taxable year.    Respondent is sustained on

this issue.

2.   Whether Petitioner Is Entitled to Deductions for Expenses

Incurred While Working as a Dockhand on a Commercial Fishing Boat

      Pursuant to Cohan v. Commissioner, 39 F.2d 540 (2d Cir.

1930), we are permitted to estimate expenses when we are

convinced from the record that the taxpayer has incurred such

expenses.     In Hadsell I, we found that petitioner was entitled to

deduct $750 as business expenses attributable to his fishing

activity for each year of the years at issue.

      At trial on January 30, 1998, petitioner failed to adduce

any additional evidence substantiating his claimed expenses.

Therefore, we do not change our previous finding that petitioner

is entitled to deduct $750 as business expenses attributable to

his fishing activity for each year of the years at issue.

3.   Deductions Related to Rental Property

      Petitioner contends that he is entitled to deduct expenses

with respect to rental real property he purchased in 1989 and

also claim a casualty loss for items he had stored on the rental

property which were sold by the tenants.

      In Hadsell I, we found that petitioner’s testimony

concerning his claimed expenses and casualty losses was vague and

unsupported and that we had no basis to allow petitioner to claim

either a rental property expense or casualty loss for the years
                               - 16 -

at issue.    At trial on January 30, 1998, petitioner failed to

adduce any additional evidence substantiating his claimed

deductions.    Therefore, we do not change our previous finding

that we have no basis to allow petitioner to claim either rental

real property expenses or casualty losses for the years at issue.

Respondent is sustained on this issue.

4.   Casualty Losses for a Boat and Personal Property That Were

Destroyed

      At trial in Hadsell I, petitioner testified concerning a

boat he purchased in either 1986 or 1987 which was later

destroyed.    Petitioner also testified that he incurred a casualty

loss for personal property stored on the boat when it was

destroyed.    Petitioner concedes that the boat at issue, and any

personal property stored aboard, was destroyed in 1992.     Since

petitioner’s loss did not occur during the years at issue, any

casualty loss deduction to which petitioner might be entitled

with respect to either the boat or personal property stored on

the boat when it was destroyed would not be allowable in any of

the years at issue in this case.

5.   Additions to Tax for Failure To File a Timely Return

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

file a timely tax return.    The addition to tax is equal to 5

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

return if the failure to file is not for more than 1 month.      See
                                - 17 -

sec. 6651(a)(1).     An additional 5 percent is imposed for each

month or fraction thereof in which the failure to file continues,

to a maximum of 25 percent of the tax.     See id.   The addition to

tax is imposed on the net amount due.     See sec. 6651(b).   The

addition is applicable unless a taxpayer establishes that the

failure to file was due to reasonable cause and not willful

neglect.   See id.

     Petitioner testified that an accountant prepared

petitioner’s Federal and State income tax returns for the 1988,

1989, and 1990 taxable years and that he mailed the returns

sometime in 1991.

     To support his testimony, petitioner submitted copies of his

Federal and State income tax returns for the 1988 and 1989

taxable years along with a bill dated August 31, 1990, from an

accountant for the preparation of those returns.

     In addition, petitioner filed a motion to extend the time to

file his brief on January 27, 1994, and attached to the motion a

photocopy of a money order dated September 12, 1990, made payable

to the “Internal Rev. Service” in Ogden, Utah, in the amount of

$515.93.   Petitioner, however, never attempted to enter the money

order into evidence, and nothing on the money order indicates

what the payment was for, or for which taxable year it applied.

     Petitioner’s testimony as to the filing of his returns for

the years at issue is also contradictory.     While refusing to
                              - 18 -

concede that he may have failed to timely file his tax returns,

petitioner stated at trial in Hadsell I:

      Well, you know, for a long time the IRS sent me those
      inquiring letters, and I’ve always had a philosophy;
      ignore them and they’ll go away, but they didn’t. They
      were persistent. So I made a mistake. I wrote to
      them, and eventually the inquiring letters became
      demanding, They wanted money. * * *

      Additionally, when asked by the Court whether he filed a

1990 Federal or Oregon State income tax return or whether the

timing of his arrest interfered with the filing of such return,

petitioner replied:   “And, you know, I can’t answer that”.

      Upon the basis of the record, we find that petitioner has

not shown that he timely filed his Federal income tax returns for

the years at issue, and, therefore, hold that petitioner is

liable for additions to tax pursuant to section 6651(a)(1).

Respondent is sustained on this issue.

6.   Additions to Tax for Failure To Pay Estimated Income Taxes

      Section 6654(a) imposes an addition to tax where prepayments

of tax, either through withholding or estimated quarterly tax

payments during the year, do not equal the percentage of total

liability required under the statute.     However, the addition to

tax is not imposed if the taxpayer can show that one of several

exceptions applies.   See sec. 6654(e).
                             - 19 -

     It is undisputed that petitioner received both unemployment

compensation and compensation as an independent contractor for

the years at issue and failed to make estimated tax payments.

     Upon the basis of the record, petitioner does not qualify

for any of the exceptions listed in section 6654(e).    Therefore,

we hold that he is liable for the additions to tax pursuant to

section 6654(a) for the 1988, 1989, and 1990 taxable years.

Respondent is sustained on this issue.

     To reflect the foregoing,

                                      Decision will be entered

                                 under Rule 155.
