                  T.C. Summary Opinion 2001-169



                     UNITED STATES TAX COURT



                RICHARD P. KRINGEN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 264-01S.                    Filed October 24, 2001.



     Richard P. Kringen, pro se.

     Dennis R. Onnen, for respondent.




     CARLUZZO, Special Trial Judge:     This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.    Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code in effect for the years in issue.    The decision to

be entered is not reviewable by any other court, and this opinion

should not be cited as authority.
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       Respondent determined deficiencies in, and additions to

petitioner’s Federal income taxes as follows:

                                        Additions to Tax
                             Sec.             Sec.           Sec.
Year        Deficiency     6651(a)(1)       6651(a)(2)      6654(a)

1990        $4,439         $1,109.75           ---          $290.62
1993         8,361          2,090.25           ---           350.31
1994         3,897            974.25           ---           202.21
1995         4,221          1,055.25           ---           228.86
1996         4,446          1,000.35         $844.74         236.64
1997         4,238            953.55          550.94         226.71
1998         4,161            871.65          271.18         175.84


In respondent’s answer, increased deficiencies are claimed as

follows:    (1) $82 and $420, for 1990 and 1993, respectively, to

reflect petitioner’s correct filing status;1 and (2) amounts that

accrued after June 15, 2000, with respect to the additions to tax

under section 6651(a)(2) for 1996, 1997, and 1998.

       After concessions, the issues for decision are:     (1) Whether

petitioner is entitled to any deductions for trade or business

expenses; and (2) whether petitioner is liable for additions to

tax under sections 6651(a)(1) and 6654 for the years in issue,

and under section 6651(a)(2) for 1996, 1997, and 1998.

Background

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




       1
        In the notice of deficiency, respondent determined
deficiencies for 1990 and 1993 based on a filing status of
single; however, the parties stipulated that petitioner’s correct
filing status for those years is married, filing separate.
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At the time that the petition was filed, petitioner resided in

Topeka, Kansas.

     At various times from 1990 through 1998, petitioner worked

as a salesperson, sometimes as an independent contractor and

sometimes as an employee, for no fewer than 10 to 15 companies.

He sold various products or services, such as insurance, tax

services, living trusts, precious coins, travel-related products,

and food products.   Some of the companies reported compensation

paid to him as follows:

     Company                           Year   Amount     Form

Sell America, Inc.                     1990   $13,500    1099
The Lazarus Group, Inc.                1993    10,690    1099
A.I.A., Inc.                           1993       712    1099
Freedom Life Ins. Co.                  1995        86    1099
Loyal American Life Ins.               1997     1,367    1099
Direct Entertainment Service           1997       841    1099
Renaissance                            1998     6,500     W-2

During the years in issue, petitioner also worked as a farm

laborer.   For 1993, the owner of the farm issued a Form 1099 to

petitioner indicating that petitioner was paid $3,000 that year.

     On a loan application dated February 24, 1995, petitioner

represented that his gross income was $1,000 per week.   On

another loan application dated November 29, 1995, petitioner

represented that his income from farming was $20,000 per year.

Petitioner signed both applications under penalties of perjury.

     In a statement filed in a bankruptcy proceeding petitioner

initiated in August 1998, petitioner indicated that he and his
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wife had total projected monthly income of $4,354 and total

projected monthly expenses of $4,200.     Petitioner signed the

statement of his projected monthly income and expenses under

penalties of perjury.

     Petitioner did not file a Federal income tax return for any

year in issue.   Except for $287 of Federal income tax withheld

from the compensation he received as an employee of Renaissance

in 1998, there were no Federal income tax withholdings or

estimated Federal income tax payments made by petitioner during

any of the years in issue.

     Relying upon various indirect methods of determining income

that take into account information received from third parties

and the schedule of income and expenses filed in the bankruptcy

proceeding, respondent, in the notice of deficiency, computed

petitioner’s gross income for each year in issue as follows:


                     Year               Income

                     1990              $18,648
                     1993               36,168
                     1994               21,924
                     1995               22,680
                     1996               23,688
                     1997               24,444
                     1998               18,700

With the exception of the compensation that petitioner received

from Renaissance in 1998, respondent determined that all other

items of gross income for each year in issue constitute net
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earnings from self-employment subject to the tax imposed on such

income pursuant to section 1401.

     Petitioner’s 1990 taxable income was computed by allowing a

personal exemption deduction, a deduction attributable to the

imposition of the self-employment tax, and the standard deduction

applicable to a single individual.     For all other years in issue,

petitioner’s taxable income was computed by allowing a personal

exemption deduction, a deduction attributable to the imposition

of the self-employment tax, and itemized deductions.    Respondent

further imposed additions to tax under sections 6651(a)(1)

(failure to file returns timely) and 6654(a) (underpayment of

estimated tax) for all the years in issue, and under section

6651(a)(2) (failure to pay taxes timely) for the years 1996,

1997, and 1998.

Discussion

     In the petition, petitioner alleged that respondent erred in

the determinations made for each year because each determination

was based “on no facts”.   At trial, however, petitioner did not

dispute the amount of gross income attributed to him for each

year in the notice of deficiency.    He testified that those

amounts “would probably be close to what I earned” and, to the

extent that the income represented “gross salaries”, the amounts

“would probably be correct”.   Instead, he claimed that he should

have been allowed deductions for trade or business expenses
                                - 6 -

incurred in connection with the income.      Consequently, we proceed

as though petitioner conceded the correctness of the adjustments

contained in the notice of deficiency and consider his claim for

additional deductions.

     According to petitioner, he “had a huge amount of business

expenses * * * because * * * [he] was a commissioned

salesperson”.    Petitioner further testified that these expenses

would offset the income attributed to him in the notice of

deficiency.

     Petitioner was engaged in one or more trades or businesses

during each of the years in issue.      In general, a taxpayer is

entitled to a deduction for all ordinary and necessary expenses

paid or incurred in carrying on the taxpayer’s trade or business.

Sec. 162(a).    Entitlement to a deduction presupposes that the

taxpayer can substantiate by adequate books and records the

amount of the deduction claimed.    Sec. 6001; sec. 1.6001-1(a),

Income Tax Regs.

     Petitioner’s business records were not made available to the

Court.   Petitioner claims that his records for the years 1990

through 1996 were confiscated by a storage company because he

failed to pay the required storage fees; he claims his records

for 1997 and 1998 are in the possession of an accountant who will

not return the records until petitioner pays the accountant for

services rendered.
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     Except for expenses subject to section 274(d), if books and

records are not available to substantiate business expense

deductions, the Court may estimate the amount of deductions to

which a taxpayer is entitled, Cohan v. Commissioner, 39 F.2d 540

(2d Cir. 1930), if there is a sufficient factual basis in the

record that allows us to do so, Vanicek v. Commissioner, 85 T.C.

731, 742-743 (1985).    Here, there is no factual basis in the

record on which an estimate can be made.    Petitioner made no

attempt to reconstruct the business records that he claims are

now unavailable to him.    Instead, he makes only a broad assertion

that he is entitled to business expense deductions for each year

in issue.   On the basis of the record before us, we are not

satisfied that petitioner has established his entitlement to any

deduction not already allowed by respondent in the notice of

deficiency.   Therefore, petitioner is not entitled to any trade

or business expense deductions for any of the years in issue.

The deficiencies for the years in issue, including respondent’s

claim for increased deficiencies for the years 1990 and 1993, are

therefore sustained.

     Respondent also determined that petitioner is liable for

additions to tax for:    (1) Failure to file tax returns under

section 6651(a)(1); (2) failure to make timely payment of taxes

under section 6651(a)(2); and (3) failure by an individual to pay

estimated income tax in accordance with section 6654.
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     Section 6651(a)(1) provides for an addition to tax of 5

percent of the tax required to be shown on the return for each

month or fraction thereof for which there is a failure to file,

not to exceed 25 percent.   Section 6651(a)(2) provides for an

addition to tax of .5 percent per month up to 25 percent for

failure to pay the amount shown or required to be shown on a

return.   A taxpayer may be subject to both paragraphs (1) and

(2), in which case the amount of the addition to tax under

section 6651(a)(1) is reduced by the amount of the addition to

tax under section 6651(a)(2) for any month to which an addition

to tax applies under both paragraphs (1) and (2).   The combined

amounts under paragraph (1) and paragraph (2) cannot exceed 5

percent per month.   Sec. 6651(c)(1).

     The additions to tax under section 6651(a)(1) and (2) are

applicable unless the taxpayer establishes that:    (1) The failure

to file and/or pay did not result from willful neglect, and (2)

the failure to file and/or pay was due to reasonable cause.

United States v. Boyle, 469 U.S. 241, 245 (1985); Heman v.

Commissioner, 32 T.C. 479 (1959), affd. 283 F.2d 227 (8th Cir.

1960).

     Although required to do so, petitioner did not file a

Federal income tax return for any of the years in issue.   Other

than his generalized assertions that respondent’s determinations

are erroneous, petitioner makes no claim that his failure to
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file and pay for each year in issue was due to reasonable cause

and not due to willful neglect.   Accordingly, we sustain the

determinations of respondent with respect to the section

6651(a)(1) and (2) additions to tax.     We further sustain

respondent’s assertion of increased deficiencies under section

6651(a)(2) for the years 1996, 1997, and 1998.      Lopez v.

Commissioner, T.C. Memo. 2001-93.

     Subject to exceptions that do not apply in this case,

section 6654(a) provides for an addition to tax “in the case of

any underpayment of estimated tax by an individual”.     Although

required to do so, petitioner made no estimated tax payments

during any year in issue.   Therefore, respondent’s imposition of

the addition to tax under section 6654(a) for each year in issue

is sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                            Decision will be entered

                                       for respondent.
