                    T.C. Memo. 2007-292



                  UNITED STATES TAX COURT



               HUBERT JOUBERT, Petitioner v.
       COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 8769-06.               Filed September 24, 2007.


     P failed to file a Federal income tax return for 2002.
R determined a deficiency and asserted in the notice of
deficiency, the answer, and the pretrial memorandum
additions to tax pursuant to secs. 6651(a)(1) and (2), and
6654(a), I.R.C.

       Held: P is liable for the deficiency and additions to
tax.


Hubert Joubert, pro se.

Daniel J. Parent, for respondent.
                                   - 2 -

                  MEMORANDUM FINDINGS OF FACT AND OPINION


        WHERRY, Judge:    This case is before the Court on a petition

for judicial review of a notice of deficiency in which respondent

determined a $51,9841 deficiency for petitioner’s 2002 taxable

year.       The issues for decision are:

     (1) Whether a $168,355 pension distribution to petitioner in

2002 pursuant to a qualified domestic relations order (QDRO) is

includable in petitioner’s 2002 taxable income;

     (2) whether $8,119.20 of the $9,552 in Social Security

benefits received by petitioner in 2002 is includable in

petitioner’s 2002 taxable income;

     (3) whether petitioner is liable for additions to tax under

section 6651(a)(1)2 and (2) in the amounts of $4,120.43, and

$3,204.78, respectively; and

     (4)      whether petitioner is liable for an addition to tax

under section 6654(a) in the amount of $486.95 for failure to pay

estimated income tax.




        1
       The actual amount of the deficiency remaining unpaid,
$18,313 plus applicable penalties and interest, is significantly
less because a portion of the tax due had been withheld.
        2
       All section references are to the Internal Revenue Code of
1986, as amended and in effect for the taxable year at issue.
The Rule references are to the Tax Court Rules of Practice and
Procedure.
                                - 3 -

                          FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts and accompanying exhibits are hereby incorporated by

reference into our findings.    At the time he filed his petition,

petitioner resided in Tracy, California.

     In 2002, petitioner obtained a divorce.    Pursuant to a QDRO

issued the prior year, petitioner received a portion of his ex-

wife’s pension benefits, which were payable by SBC

Communications, Inc., his ex-wife’s former employer.    The QDRO

itself made clear that petitioner was responsible for all taxes

incurred by reason of any benefits paid to him.    On May 24, 2002,

SBC Communications, Inc., issued a check to petitioner in the

amount of $131,317.46.    The gross amount of the check had been

$168,355.71.    However, $33,671.14 in Federal income tax and

$3,367.11 in California State income tax had been withheld.

During 2002, petitioner also received $9,552 in Social Security

benefits.

     For the 2002 taxable year, petitioner’s only Federal income

tax withholding was the aforementioned $33,671.14 withheld on the

SBC Communications, Inc., pension distribution.    The parties have

stipulated that petitioner did not make any estimated tax

payments for the 2002 taxable year.3    Petitioner did not file a


     3
         The $33,671.14 in Federal income tax withheld from the
                                                     (continued...)
                               - 4 -

Federal income tax return for either 2001 or 2002.   Respondent,

pursuant to section 6020(b), filed a return for 2002 for

petitioner.   Petitioner had single filing status for the 2002

taxable year.

     On April 7, 2006, respondent issued the aforementioned

notice of deficiency.4   Petitioner then filed a timely petition




     3
      (...continued)
pension distribution, whether creditable under sec. 31 or any
other section, is treated either as a payment of estimated tax
pursuant to sec. 6654(g)(1) or as a credit against tax under sec.
6654(f). See Wheeler v. Commissioner, 127 T.C. 200, 211 n.13
(2006); Mendes v. Commissioner, 121 T.C. 308, 323 n.12 (2003).
Although we are not bound by stipulations of fact that are
contrary to the facts reflected by the record, whether the
$33,671.14 in Federal income tax withheld from the pension
distribution was treated as a payment of estimated tax or a
credit against estimated tax, the result is the same because
petitioner underpaid his estimated tax for 2002 and because
respondent calculated the addition to tax after accounting for
the $33,671.14 in Federal income tax that had been withheld.
     4
        Before we proceed, it is worth noting that the notice of
deficiency in this case was prepared in a haphazard manner. In
that regard, under the section for penalties and additions to
tax, the notice of deficiency itself lists additions to tax under
secs. 6651(a)(1) and 6654(a). It does not list an addition to
tax under sec. 6651(a)(2). In addition, the Form 5564, Notice of
Deficiency Waiver, sent together with the notice of deficiency,
fails to list the sec. 6651(a)(2) addition to tax. The sec.
6651(a)(2) addition to tax was listed only in the Form 4549,
Income Tax Examination Changes, which was included as an
attachment to the notice of deficiency. Suffice it to note that
respondent raised the sec. 6651(a)(2) addition to tax in his
answer, albeit while misciting that section as sec. 6652(a)(2).
Although the quality of the notice of deficiency is
inconsequential to the outcome in this case, we caution that the
same might not be true in a future case involving a similarly
defective notice of deficiency. In any event, an internally
inconsistent notice of deficiency might be confusing to a
taxpayer and does not serve the interests of justice.
                                 - 5 -

with this Court.   A trial was held on May 22, 2007, in San

Francisco, California.

                                OPINION

I.   Parties’ Contentions

      Petitioner asserts that he believed that the $33,671.14

withheld on the SBC Communications, Inc., pension distribution

constituted full payment of his Federal income tax for 2002.     In

addition, he asserts that he has spent all of his money and has

nothing left.   In his posttrial brief, petitioner asserts that he

spent the money to pay his bills and for the benefit of his

nonprofit foundation, “Starlight Productions, an alternative

juvenile facility and rodeo school for at-risk youth in southern

California.”    In support of that contention, he has submitted a

self-prepared statement, incorporated in his brief, detailing

when and how he spent $123,705 of the pension distribution on

Starlight Productions.5

      Respondent argues, citing section 402(a) and 402(e)(1)(A),

that petitioner must include in his 2002 income the $168,355.71

pension distribution.     Regarding the Social Security benefits,



      5
        At trial, petitioner testified that he had spent $123,705
of the QDRO pension distribution on Starlight Productions but
chose not to detail the expenditures at that time. Statements in
brief are not evidence where they are not contained in the joint
stipulation of facts or introduced as evidence at trial, where
respondent would have been afforded the opportunity to cross-
examine petitioner and provide rebuttal or impeachment testimony.
See Rule 143(b).
                               - 6 -

respondent, citing section 86(a)(2) and 86(c)(2), asserts that

because petitioner’s gross income for 2002 exceeded the statutory

adjusted base amount, 85 percent of petitioner’s Social Security

benefits for 2002, or $8,119, must be included in petitioner’s

2002 income.   Because petitioner did not file an income tax

return for 2002, respondent asserts that petitioner is liable for

an addition to tax under section 6651(a)(1).   Next, respondent

asserts that because petitioner failed to file a 2002 tax return,

the Secretary filed one on petitioner’s behalf pursuant to

section 6020(b); that a return filed pursuant to section 6020(b)

is treated as a return filed by the taxpayer for the purpose of

determining whether an addition to tax for failure to pay is

warranted under section 6651(a)(2); and that petitioner is liable

for an addition to tax under section 6651(a)(2).   Finally,

respondent contends that petitioner is liable for an addition to

tax under section 6654(a) for failing to pay estimated tax in

2002.

II.   Taxability of the Pension Distribution

      As a general rule, the Commissioner’s determination of a

taxpayer’s liability for an income tax deficiency is presumed

correct, and the taxpayer bears the burden of proving that the

determination is improper.   See Rule 142(a); Welch v. Helvering,

290 U.S. 111, 115 (1933).

      Section 61(a) specifies that, “Except as otherwise

provided”, gross income includes “all income from whatever source
                                 - 7 -

derived”. Pensions are listed among the forms of income within

the definition of section 61(a).    Sec. 61(a)(11).   Under section

402(a), a pension distribution is normally taxed to the

distributee.6   Pursuant to section 402(e)(1)(A), the spouse or

former spouse is treated as the distributee with respect to

distributions allocated to that spouse pursuant to a QDRO, and

such distributions therefore become taxable income to that

spouse.   In this situation, the spouse receiving the distribution

pursuant to the QDRO is also known as an “alternate payee”.

Secs. 402(e)(1)(A), 414(p)(8).

     In 2002, petitioner received the $168,355.71 pension

distribution as an alternate payee under the QDRO.    As a

consequence, he was required to include the full amount of that

distribution in his 2002 income.    Although the Court is

sympathetic to petitioner’s claimed financial hardship, his

argument that he has spent the money primarily for eleemosynary

purposes and may now be unable to pay his tax liability is

irrelevant to the existence of the tax liability.

     To the extent that petitioner asserts entitlement to

charitable contribution deductions for asserted expenditures

related to his foundation, the Court concludes that he has not

carried the burden of proving entitlement to any such deductions.



     6
       As a technical matter, sec. 402(a) provides that the
distribution is taxable under sec. 72.
                                - 8 -

See Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84

(1992).7    In that regard, many of petitioner’s claimed

expenditures relate to taxable years other than 2002, the only

taxable year at issue in this case.     In addition, some of the

expenditures are vaguely described and do not appear to

constitute charitable contributions.     For instance, petitioner

asserts that he spent $10,000 in 2002 on “vacations.”      Most

importantly, petitioner has not demonstrated that any

expenditures that might qualify for deduction were actually made,

for instance, by submitting canceled checks or other proof.

Although the Court applauds petitioner’s efforts to help

children, he has not demonstrated entitlement to any charitable

contribution deductions for the 2002 taxable year.

III. Taxability of the Social Security Benefits

     Section 86 contains a formula for taxing Social Security

benefits.    Although the formula is somewhat complex, the bottom

line is that a single taxpayer whose modified adjusted gross

income plus one-half of his Social Security benefits exceeds an



     7
        As an initial matter, it is questionable whether
petitioner’s foundation even qualifies as an organization
described in sec. 170(c)(2) for which a charitable contribution
deduction can be taken under sec. 170(a). Although there is a
Starlight Productions in California listed in IRS Publication 78,
Cumulative List of Organizations Described in Section 170(c) of
the Internal Revenue Code, it is unclear whether that
organization is the one to which petitioner refers. In any
event, for the reasons stated in this opinion, that issue has no
bearing on the outcome of this case.
                                  - 9 -

“adjusted base amount” of $34,000 must include in his gross

income 85 percent of his Social Security benefits.      Sec.

86(a)(2), (c)(2).

      In this case, in light of our earlier conclusion that

petitioner was required to include the full amount of the

$168,355.71 pension distribution in his 2002 income,

petitioner’s 2002 modified adjusted gross income greatly exceeded

$34,000, the statutory “adjusted base amount.”      As a consequence,

85 percent of the $9,552 in Social Security benefits that

petitioner received in 2002, or $8,119.20, was taxable income to

petitioner in 2002.      Sec. 86(a)(2)(B).

IV.   Additions to Tax

      A.   Respondent’s Burden of Production

       Under section 7491(c), respondent bears the burden of

production with respect to a taxpayer’s liability for penalties

or additions to tax.      This means that respondent must “come

forward with sufficient evidence indicating that it is

appropriate to impose the relevant penalty.”      Higbee v.

Commissioner, 116 T.C. 438, 446 (2001).      In instances where an

exception to the penalty or addition to tax is afforded upon a

showing of reasonable cause, the taxpayer bears the burden of

demonstrating such cause.      Id. at 446-447.
                               - 10 -

     B.    Section 6651(a)(1) Addition to Tax

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

file a timely return unless it is shown that such failure is due

to reasonable cause and not to willful neglect. “[R]easonable

cause” is described by the applicable regulations as the exercise

of “ordinary business care and prudence”.    Sec. 301.6651-1(c)(1),

Proced. & Admin. Regs.; see also United States v. Boyle, 469 U.S.

241, 246 (1985).    “[W]illful neglect” is interpreted as a

“conscious, intentional failure or reckless indifference.”

United States v. Boyle, supra at 245.

     Here, respondent has met the burden of production because

petitioner has admitted that he failed to file a Federal income

tax return for 2002.    Petitioner has not presented any evidence

to suggest that his failure to file was due to reasonable cause.

Although, at trial, petitioner testified that he thought that the

Government had recouped all of the tax that he owed for 2002,

that does not establish reasonable cause for failing to file a

tax return.    See Knight v. Commissioner, T.C. Memo. 1984-376

(holding that an unconfirmed belief that petitioner did not owe

tax did not constitute reasonable cause for failing to file a tax

return).    Consequently, the Court sustains respondent’s

imposition of an addition to tax pursuant to section 6651(a)(1).
                                - 11 -

       C.   Section 6651(a)(2) Addition to Tax

       Section 6651(a)(2) imposes an addition to tax for failure to

pay the amount of tax shown on a return.     That addition to tax

applies only when an amount of tax is shown on a return.         Cabirac

v. Commissioner, 120 T.C. 163, 170 (2003).       Under section

6651(g), a return prepared by the Secretary pursuant to section

6020(b) is treated as a return filed by the taxpayer for the

purpose of determining the amount of an addition to tax under

section 6651(a)(2).

        Petitioner did not file a return for 2002. Nevertheless,

respondent, pursuant to section 6020(b), filed a return for

petitioner that qualifies as a return for purposes of section

6651(a)(2).     See Wheeler v. Commissioner, 127 T.C. 200, 208-210

(2006).     Petitioner failed to pay his entire 2002 tax liability

as shown on the return filed by the Secretary pursuant to section

6020(b).     Accordingly, respondent has met the burden of

production with respect to the section 6651(a)(2) addition to

tax.    Because petitioner has not demonstrated reasonable cause

and has offered no reason, other than that he spent all of his

money, for failing to pay the amount of tax shown on his 2002

return, he is liable for an addition to tax pursuant to section

6651(a)(2).
                              - 12 -

     D.   Section 6654(a) Addition to Tax

     Section 6654(a) imposes an addition to tax for underpayment

of estimated income tax by an individual taxpayer.    That addition

to tax is computed by reference to four required installment

payments of the taxpayer’s estimated tax liability, each

constituting 25 percent of the “required annual payment.”    Sec.

6654(d)(1)(A).   For taxpayers whose adjusted gross income for the

preceding year was $150,000 or less, the “required annual

payment” 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)(A), (B)(i) and (ii).

     Here, petitioner failed to file a 2002 Federal income tax

return and made no estimated tax payments for 2002.   Petitioner

also failed to file a 2001 Federal income tax return.   Because

petitioner did not file a return for the preceding taxable year,

2001, respondent has met his burden of producing evidence that

petitioner had a required annual payment of estimated tax for

2002.
                                - 13 -

         The Court also concludes that petitioner does not fit

within any of the exceptions listed in section 6654(e).8    As a

consequence, the Court sustains respondent’s determination of the

addition to tax pursuant to section 6654(a).

     The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.     To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

     To reflect the foregoing,


                                           Decision will be entered

                                      for respondent.




     8
      Sec. 6654(e) provides two exceptions to the sec. 6654(a)
addition to tax. First, the addition is not applicable if the
tax shown on the taxpayer’s return for the year in question (or,
if no return is filed, the taxpayer’s tax for that year), reduced
for these purposes by any allowable credit for wage withholding,
is less than $1,000. Sec. 6654(e)(1). Second, the addition is
not applicable if the taxpayer’s tax for the full 12-month
preceding taxable year was zero and the taxpayer was a citizen or
resident of the United States. Sec. 6654(e)(2). In light of our
earlier conclusions regarding the taxability of the pension
distribution and Social Security benefits, petitioner is liable
for a deficiency for 2002 that net of withholding exceeds $1,000.
And, because petitioner failed to file a 2001 Federal income tax
return, it has not been shown that he had no tax liability in
2001.
