                         T.C. Memo. 1999-121



                      UNITED STATES TAX COURT



                  RONALD W. STEWART, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23541-97.             Filed April 12, 1999.



     Ronald W. Stewart, pro se.

     John R. Gilbert, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     RUWE, Judge:   Respondent determined deficiencies and

additions to tax in petitioner's Federal income tax as follows:

                                     Additions to Tax
     Year       Deficiency     Sec. 6651(a)(1) Sec. 6654
     1992       $30,790           $2,345          $305
     1993        29,153            2,686           364
     1994        23,117            1,061           111
     1995        44,177            4,809           898
                                - 2 -


     Subsequent to the filing of his petition, petitioner filed

delinquent Federal income tax returns for each of the years 1992

through 1995, inclusive.    Each of petitioner's returns was due on

or before April 15, following the close of the calendar year.

Sec. 6072(a).1    The returns for each of the years 1992 through

1994, inclusive, claim credit for tax withheld from petitioner's

wages and claim an overpayment of tax for those respective return

years.    Respondent accepted each of the returns as filed.    As a

consequence of respondent's accepting the returns for 1992

through 1995, assessing the tax reported on the returns, and

other concessions, petitioner overpaid tax for the years 1992,

1993, and 1994.    In respondent's post trial memorandum, he

concedes an overpayment of $3,067 for 1992.    The amount of the

overpayment ($3,067) is the sum of a $2,993 overpayment from 1996

and the $74 overpayment that petitioner claimed on his 1992

return.

     The issues for decision are:    (1) Whether petitioner's

overpayments of tax for the taxable years 1993 and 1994 are

either partially or fully time barred under sections 6511(b) and

6512, and (2) whether petitioner is liable for an addition to tax

under section 6651(a)(1) for the taxable year 1995.


     1
      Unless otherwise indicated, all 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.
                                   - 3 -


                              FINDINGS OF FACT

     Petitioner resided in Laurel Springs, New Jersey, at the

time of filing his petition and amended petition with this Court.

After filing his petition in this case, petitioner filed

delinquent Federal income tax returns for each of the years in

issue.    The returns for 1992, 1993, 1994, and 1995 are dated

January 15, 1998, January 31, 1998, February 7, 1998, and

February 23, 1998, respectively.       No requests for extensions of

time to file were requested or granted.

     Petitioner's 1992 and 1993 tax returns claim capital loss

carryover deductions emanating from a nonbusiness bad debt

incurred in 1990.     The capital loss carryovers claimed in 1992

and 1993 are $3,000 and $788,2 respectively.            Petitioner's tax

return for the 1994 year does not claim any capital loss

carryforward.      Petitioner's tax returns show tax liabilities in

the following amounts:

                                  Years
                       1993        1994          1995

         Amount:    $15,594      $15,787    $25,113

Petitioner had taxes withheld from his wages for each of the

years in issue.     The amounts withheld for the years 1993 through

1995 are as follows:




     2
      All amounts have been rounded to the nearest dollar.
                                - 4 -


                                Years
                  1993           1994         1995
   Amount
   withheld:    $18,457        $18,875       $24,943

     Respondent issued notices of deficiency for the years 1994

and 1995 on September 17, 1997, and for the year 1993 on October

1, 1997.

                               OPINION

     Our jurisdiction to determine an overpayment and order a

refund is provided in section 6512.3     The Supreme Court has

     3
      Sec. 6512(b) provides in relevant part:

          (1) Jurisdiction to determine.--Except as provided by
     paragraph (3) and by section 7463, if the Tax Court finds
     that there is no deficiency and further finds that the
     taxpayer has made an overpayment of income tax for the same
     taxable year * * * in respect of which the Secretary
     determined the deficiency, or finds that there is a
     deficiency but that the taxpayer has made an overpayment of
     such tax, the Tax Court shall have jurisdiction to determine
     the amount of such overpayment, and such amount shall, when
     the decision of the Tax Court has become final, be credited
     or refunded to the taxpayer.

                 *    *    *      *      *    *      *

          (3) Limit on amount of credit or refund.--No such
     credit or refund shall be allowed or made of any
     portion of the tax unless the Tax Court determines as
     part of its decision that such portion was paid--
               (A) after the mailing of the notice of deficiency,
               (B) within the period which would be applicable
          under section 6511(b)(2), (c), or (d), if on the date
          of the mailing of the notice of deficiency a claim had
          been filed (whether or not filed) stating the grounds
          upon which the Tax Court finds that there is an
          overpayment, or
               (C) within the period which would be applicable
          under section 6511(b)(2), (c), or (d), in respect of
                                                   (continued...)
                              - 5 -


recently interpreted this provision.   In Commissioner v. Lundy,

516 U.S. 235 (1996), the Court stated:

         The analysis dictated by section 6512(b)(3)(B) is
    not elegant, but it is straightforward. * * * all that
    matters for the proper application of section
    6512(b)(3)(B) is that the "claim" contemplated in that
    section be treated as the only mechanism for
    determining whether a taxpayer can recover a refund.
    Section 6512(b)(3)(B) defines the look-back period that
    applies in Tax Court by incorporating the look-back
    provisions from section 6511(b)(2), and directs the Tax
    Court to determine the applicable period by inquiring
    into the timeliness of a hypothetical claim for refund
    filed "on the date of the mailing of the notice of
    deficiency."

         To this end, section 6512(b)(3)(B) directs the Tax
    Court's attention to section 6511(b)(2), which in turn
    instructs the court to apply either a 3-year or a 2-
    year look-back period. See sections 6511(b)(2)(A) and
    (B) (incorporating by reference section 6511(a)); * * *
    To decide which of these look-back periods to apply,
    the Tax Court must consult the filing provisions of
    section 6511(a) and ask whether the claim described by
    section 6512(b)(3)(B)--a claim filed "on the date of
    the mailing of the notice of deficiency"--would be
    filed "within 3 years from the time the return was
    filed." See section 6511(b)(2)(A) (incorporating by
    reference section 6511(a)). If a claim filed on the
    date of the mailing of the notice of deficiency would
    be filed within that 3-year period, then the look-back

     3
      (...continued)
          any claim for refund filed within the applicable period
          specified in section 6511 and before the date of the
          mailing of the notice of deficiency--
                     (i) which had not been disallowed before that
               date,
                     (ii) which had been disallowed before that
               date and in respect of which a timely suit for
               refund could have been commenced as of that date,
               or
                     (iii) in respect of which a suit for refund
               had been commenced before that date and within the
               period specified in section 6532.
                                 - 6 -


     period is also three years and the Tax Court has
     jurisdiction to award a refund of any taxes paid within
     three years prior to the date of the mailing of the
     notice of deficiency. Secs. 6511(b)(2)(A) and
     6512(b)(3)(B). If the claim would not be filed within
     that 3-year period, then the period for awarding a
     refund is only two years. Secs. 6511(b)(2)(B) and
     6512(b)(3)(B).

          In this case, we must determine which of these two
     look-back periods to apply when the taxpayer fails to
     file a tax return when it is due, and the Commissioner
     mails the taxpayer a notice of deficiency before the
     taxpayer gets around to filing a late return. * * *
     We think the proper application of section
     6512(b)(3)(B) * * * requires that a 2-year look-back
     period be applied. [Commissioner v. Lundy, supra at
     242-243.]

     In 1993, petitioner had tax withheld from his wages in the

total amount of $18,457.   This amount is deemed to have been paid

on April 15, 1994.   Sec. 6513(a).   Respondent has conceded that

petitioner's tax liability is $15,594, the amount shown by

petitioner on his 1993 return.    This results in an overpayment of

$2,863.    Most of this overpayment ($2,642) is time barred because

the date on which the notice of deficiency was mailed, the

hypothetical claim for refund, is more than 2 years from the date

(April 15, 1994) the tax was deemed paid.   Secs. 6511(b)(2)(B),

6512, 6513(a); Commissioner v. Lundy, supra; Galuska v.

Commissioner, 5 F.3d 195 (7th Cir. 1993), affg. 98 T.C. 661

(1992); Allen v. Commissioner, 99 T.C. 475 (1992), affd. without

published opinion 23 F.3d 406 (6th Cir. 1994).   The portion of

the claim attributable to a capital loss carryforward is not so

limited.   The amount of carryforward claimed in petitioner's 1993
                                - 7 -


return was $788.    The statute of limitations on a capital loss

carryforward arising from a bad debt deduction is 7 years.      Sec.

6511(d)(1).    Petitioner was in the 28 percent marginal tax

bracket in 1993.    The maximum portion of an overpayment

attributable to the capital loss carryforward ($788) would be

$221.4    Consequently, we hold that petitioner is entitled to a

refund for 1993 in the amount of $221.

     For 1994, respondent concedes that petitioner's tax

liability is $15,787 as shown by petitioner on his delinquent

return and that petitioner had tax withheld from his wages in the

total amount of $18,875.    This results in an overpayment of

$3,088.    None of this amount is claimed to be related to a

capital loss carryforward.    For the reasons stated above, the tax

withheld is deemed to have been paid on April 15, 1995, and the

hypothetical claim for refund was made on September 17, 1997.

The hypothetical claim for refund, having been made more than 2

years from the date the tax was deemed paid, is time barred by

virtue of sections 6511(b)(2)(B) and 6512.    Commissioner v.

Lundy, supra; Galuska v. Commissioner, supra; Allen v.

Commissioner, supra.



     4
      The amount of the overpayment attributable to the capital
loss carryforward is the product of the full amount of the loss
carryforward times petitioner's marginal rate; i.e., $788 x .28 =
$221. Respondent agrees that petitioner is entitled to an
overpayment of $221 for 1993.
                                 - 8 -


     For 1995, respondent concedes petitioner's tax liability is

$25,113, the amount shown by petitioner on his return for that

year.   The parties agree that the total amount petitioner had

withheld from his wages was $24,943.     Petitioner's income tax

deficiency for 1995 is $170.

     Respondent determined that petitioner is liable for an

addition to tax under section 6651(a)(1) for failure to file a

timely return for 1995.   Generally, individual income tax returns

must be filed on or before the 15th day of April following the

close of the calendar year.    Sec. 6072(a).

     Section 6651(a)(1) provides for an addition to tax for

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

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

return, with an additional 5 percent for each additional month or

fraction thereof during which such failure continues, not

exceeding 25 percent in the aggregate.

     A taxpayer may avoid the addition to tax by establishing

that the failure to file a timely return was due to reasonable

cause and not willful neglect.    Rule 142(a); United States v.

Boyle, 469 U.S. 241, 245-246 (1985).     Petitioner presented no

evidence as to the cause for the late filing.     In the absence of

a satisfactory explanation for the failure to file a timely

return, we cannot conclude that the failure was due to a

reasonable cause.   Consequently, we uphold respondent's
                                 - 9 -


determination that petitioner is liable for an addition to tax

for the 1995 taxable year pursuant to section 6651(a)(1).

     To reflect the foregoing,

                                            Decision will be entered

                                         under Rule 155.
