                        T.C. Memo. 2005-266



                      UNITED STATES TAX COURT



                 JAMES H. JORDAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13351-04.              Filed November 17, 2005.



     Kenneth E. Keate, for petitioner.

     Blaine Holiday, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     KROUPA, Judge:   Respondent determined deficiencies and

additions to tax with respect to petitioner’s income taxes for

1997, 1998, 1999, 2000, 2001, and 2002 as follows:1




     1
      All section references are to the Internal Revenue Code in
effect for the years at issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
                                   -2-

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

       1997      $20,483                 $3,529.75      $717.53

       1998       18,191                  4,547.75       832.41

       1999       59,469                 14,867.25     2,878.05

       2000      143,347                 35,836.75     7,656.87

       2001       64,043                 16,010.75     2,559.36

       2002       54,203                 13,375.00     1,785.21

       After concessions,2 the sole issue for decision is whether
petitioner’s drug addiction for which he underwent approximately

3 weeks of rehabilitation in March 1999, coupled with his other

medical problems and related memory loss, gave him reasonable

cause to fail to file his income tax returns for 1998, 1999, and

2000 (the years at issue) until July 2004.       We hold that they do

not.

                             FINDINGS OF FACT

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

The stipulation of facts and the accompanying exhibits are
incorporated by this reference.      Petitioner resided in Eden

Prairie, Minnesota, at the time he filed the petition.




       2
      Respondent has accepted the returns for 1997 through 2002
that petitioner submitted in July 2004, which returns included
deductions for business expenses. The parties therefore no
longer dispute petitioner’s income tax liabilities for 1997
through 2002. Petitioner has conceded that he is liable for the
additions to tax under sec. 6651(a)(1) for 2001 and 2002 and
under sec. 6654 for all years from 1998 through 2002. Respondent
has conceded that petitioner is not liable for the additions to
tax under secs. 6651(a)(1) and 6654 for 1997.
                                 -3-

Failure To File

     Petitioner did not file his income tax returns for the years

1997-2002 by their due dates.3   They all remained unfiled when an

agent of respondent contacted petitioner regarding petitioner’s

unfiled returns in October 2003.    Petitioner ignored the agent

and did not submit any documents or information in response.

Respondent sent petitioner a deficiency notice on April 27, 2004.

Petitioner finally submitted returns for 1997 through 2002 to

respondent in July 2004, the same month he timely filed a

petition with this Court.

Petitioner’s Background

     Petitioner has been a life insurance salesman since leaving

college.   Petitioner’s life insurance business focused on

individual policies and very seldom involved group policies

during the years at issue.    Petitioner is married, although he

and his wife have filed separate returns since their marriage.

     Petitioner continued his life insurance business during the

years at issue.    Petitioner experienced some success in his

business from 1997 through 2002.    Petitioner’s annual reported

gross receipts from his life insurance business ranged from a low

of $104,368 in 1998 to a high of $387,456 in 2000.    Petitioner’s

gross receipts for 1999 and 2000 were the highest of any of the 6

years 1997-2002.


     3
      Petitioner’s accountants, acting under a limited power of
attorney, obtained extensions of time to file petitioner’s
returns for each year from 1997 through 2002. Each return was
therefore due October 15 of the following year.
                                 -4-

Petitioner’s Drug Addiction

     Petitioner has experienced headaches throughout most of his

adult life, beginning in 1978 or 1979.      Petitioner has seen

numerous doctors and has tried a variety of different medications

and treatments for his headaches.      These included Darvocet,

Percocet, Ativan, and even injections of Botox in his neck.

These medications did not relieve petitioner’s headaches.

     Petitioner’s doctor prescribed petitioner OxyContin in 1996.

Petitioner’s doctor increased the dosage of OxyContin during the

next few years and also continued prescribing petitioner Ativan,

so that petitioner was taking both medications.      Petitioner’s

doctor prescribed only enough OxyContin to last petitioner a week

at a time.    If petitioner missed a dose of OxyContin, however,

petitioner got a headache.    The OxyContin was taking over

petitioner’s life, and he lived in fear of not having his

medication.

     After experiencing heart problems in 1998, petitioner

increasingly relied on the OxyContin.      He sought additional

prescriptions from other doctors and early refills of the

medication.    Petitioner could never take enough OxyContin to feel

normal.

     Petitioner was aware of his increased dependency on

OxyContin and stopped taking the medication in January 1999.

Soon after he stopped taking it, petitioner suffered a grand mal

seizure.   Petitioner was diagnosed with chemical dependency,
                                 -5-

entered rehabilitation in February 1999, and was discharged after

approximately 3 weeks of treatment on March 10, 1999.

Petitioner’s Life After Rehabilitation

     Petitioner’s approximate 3-week stint in drug rehabilitation

ended on March 10, 1999.    Petitioner had not filed returns for

1997 or 1998 when he was discharged.     After his discharge,

petitioner returned to work and attended support group meetings.

His finances were in disarray, he was disorganized, and he was

experiencing some memory problems.     Petitioner’s home had been

sold at a foreclosure sale in February 1999, but petitioner and

his wife were ultimately able to repurchase it later that year.

     Petitioner began to organize his receipts and information to

give to his accountant in late 1999.     His goal was to file all

late returns at one time.    It took several years.   Petitioner

finally filed his returns for the years at issue in July 2004,

after respondent had sent petitioner the deficiency notice.

                               OPINION

     Petitioner admits that he failed to file his returns timely.

We are asked to decide whether petitioner’s failure to file

timely was due to reasonable cause.      Petitioner argues that his

drug addiction and the time he spent in drug rehabilitation, as

well as his other medical problems and related memory loss

constitute reasonable cause for his failure to timely file a

return for the years at issue.

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

failure to timely file a tax return on or before the specified
                                -6-

filing date.   The addition to tax under section 6651(a)(1) does

not apply, however, if the failure to timely file is due to

reasonable cause and not to willful neglect.    United States v.

Boyle, 469 U.S. 241, 245 (1985).

     Petitioner has the burden of proof with respect to defenses

to the additions to tax under section 6651(a)(1).    Higbee v.

Commissioner, 116 T.C. 438, 446 (2001).   Accordingly, petitioner

must prove that his failure to file was due to reasonable cause

and not to willful neglect.   Id.   To satisfy this burden, a

taxpayer must show that he or she exercised ordinary business

care and prudence but was nevertheless unable to file the return

within the prescribed time.   Crocker v. Commissioner, 92 T.C.

899, 913 (1989); sec. 301.6651-1(c)(1), Proced. & Admin. Regs.

     A taxpayer may have reasonable cause for failure to timely

file a return where the taxpayer or a member of the taxpayer’s

family experiences an illness or incapacity that prevents the

taxpayer from filing his or her return.   See, e.g., Hobson v.

Commissioner, T.C. Memo. 1996-272 (reasonable cause found where

taxpayers cared for a child suffering from multiple sclerosis and

an invalid, amputee parent and taxpayer husband’s job forced

taxpayers to live apart for part of the year); Tabbi v.
Commissioner, T.C. Memo. 1995-463 (reasonable cause found where

taxpayers’ son had heart surgery and taxpayers spent 4 months

continuously in the hospital with him, and taxpayers filed their

return 2 months after their son’s death); Carnahan v.

Commissioner, T.C. Memo. 1994-163 (reasonable cause found where
                                  -7-

taxpayer was confined to hospitals for severe mental illness),

affd. without published opinion 70 F.3d 637 (D.C. Cir. 1995);

Jones v. Commissioner, T.C. Memo. 1988-542 (reasonable cause

found where taxpayer was disabled for 42 weeks of the year);

Harris v. Commissioner, T.C. Memo. 1969-49 (reasonable cause

found where taxpayer’s activities were severely restricted, and

taxpayer was in and out of hospitals due to various severe

medical ailments including stroke, paralysis, heart attack,

bladder trouble, and breast cancer); Hayes v. Commissioner, T.C.

Memo. 1967-80 (reasonable cause found where two children were

seriously ill with pneumonia, taxpayer wife suffered a ruptured

appendix requiring an emergency operation, taxpayer husband

suffered a mental and physical collapse requiring hospitalization

and to be wheelchair-bound); Estate of Kirchner v. Commissioner,

46 B.T.A. 578, 585 (1942) (reasonable cause found where estate’s

executrix was confined to bed with a stroke, suffered from

diabetes, developed gangrene in her leg, and had little to no

knowledge of business affairs).

     On the other hand, a taxpayer generally does not have

reasonable cause for his or her failure to timely file a return

where the taxpayer’s illness does not prevent the taxpayer from

filing his or her return.   See, e.g, Judge v. Commissioner, 88
T.C. 1175 (1987) (no reasonable cause found where taxpayer had a

long history of delinquent filing of returns and taxpayer was

actively involved in preparing and executing business-related

documents despite illness during years at issue); Williams v.
                               -8-

Commissioner, 16 T.C. 893 (1951) (reasonable cause not found

where evidence lacking that taxpayer’s mental and physical

condition was continuously impaired due to series of strokes);

Ramirez v. Commissioner, T.C. Memo. 2005-179 (reasonable cause

not found where, despite taxpayer’s prior illness and surgery,

taxpayer was able to continue his legal practice, pay business

expenses, manage two rental properties, and care for two minor

children); Black v. Commissioner, T.C. Memo. 2002-307 (reasonable

cause not found where filing delinquencies continued beyond

duration of taxpayer’s illness, and taxpayer refused to implement

bookkeeping system that would have permitted accountants to

prepare returns), affd. 94 Fed. Appx. 968 (3d Cir. 2004); Watts

v. Commissioner, T.C. Memo. 1999-416 (reasonable cause not found

where, although taxpayer’s mother and daughter were both ill and

taxpayer frequently took them to see doctors, taxpayer also

performed extensive architectural services in taxpayer’s

business); Wright v. Commissioner, T.C. Memo. 1998-224

(reasonable cause not found where taxpayer had capacity to attend

to matters other than filing tax returns despite his mother’s

traumatic disappearance and death and the taxpayer’s failure to

file returns continued beyond the duration of these events),

affd. without published opinion 173 F.3d 848 (2d Cir. 1999);

Marrin v. Commissioner, T.C. Memo. 1997-24 (reasonable cause not
found where taxpayer was a full-time employee and was also

actively transacting business in the securities market despite

claimed depression), affd. 147 F.3d 147 (2d Cir. 1998).
                                 -9-

      A taxpayer’s illness or incapacity generally does not

prevent the taxpayer from filing returns where the taxpayer is

able to continue his or her business affairs despite the illness

or incapacity, or where the taxpayer’s failure to file returns

continues beyond the duration of the illness or incapacity.4

Wright v. Commissioner, supra.    Selective incapacity only with

respect to a taxpayer’s income tax returns is not sufficient.

Id.

      Petitioner suffered medical problems during the years at

issue.    Petitioner introduced evidence regarding his heart

problems, his headaches, and his drug addiction and

rehabilitation.    We do not find, however, that petitioner’s

illnesses incapacitated him to such an extent that he was unable

to file his returns.    See Ramirez v. Commissioner, supra.

Petitioner was in rehabilitation for approximately 3 weeks at the

beginning of 1999.    Although petitioner testified he experienced

some memory problems, petitioner was able to continue his life


      4
      Petitioner argues that he is only required to prove that he
had reasonable cause for his failure to file on the due date of
the return and for the 4 months thereafter. The reasonable cause
standard is a one-time test to be passed or failed at the payment
due date. See Indus. Indem. v. Snyder, 41 Bankr. 882, 883 (E.D.
Wash. 1984); Photographic Assistance Corp. v. United States, 82
AFTR 2d 98-6804, 98-2 USTC par 50,820 (N.D. Ga. 1998). Events
that occur after the due date, however, are relevant and
probative evidence assisting the Court in determining whether the
taxpayer’s failure was reasonable. See Estate of Sowell v.
United States, 198 F.3d 169, 172-173 & n.4 (5th Cir. 1999);
Estate of Hartsell v. Commissioner, T.C. Memo. 2004-211.
Accordingly, we shall consider evidence relating to events after
the due date of the return and the 4 months thereafter to assist
us in determining whether petitioner’s failure to timely file his
returns was due to reasonable cause and not to willful neglect.
                               -10-

insurance business during the years at issue.     In fact,

petitioner’s gross receipts for 1999 and 2000 were the two

highest totals for all years from 1997 through 2002.     Selective

incapacity only with respect to income tax returns is not

sufficient to prove reasonable cause.   Wright v. Commissioner,

supra.   We find petitioner’s illnesses did not incapacitate him

so severely that he was unable to conduct his business affairs

during the years at issue.   We find, therefore, that petitioner’s

illnesses also did not render him unable to timely file his

returns for the years at issue.

     Moreover, petitioner’s failure to timely file continued for

years beyond the due date of the returns.   Petitioner’s drug

addiction and rehabilitation admittedly affected him during a

portion of 1999, particularly the time he spent in drug

rehabilitation, and likely for some time before he entered drug

rehabilitation as well.   The returns remained unfiled for almost

5 years from when petitioner began to assemble this information

by fall 1999.   See Ramirez v. Commissioner, supra; Wright v.

Commissioner, supra.   We find that petitioner’s failure to file

continued well beyond the duration of his illnesses or

incapacity.   See Black v. Commissioner, supra.    Accordingly,

petitioner’s illnesses did not constitute reasonable cause for

his failure to timely file a return.

     In sum, petitioner has not shown that his failure to timely

file income tax returns for the years at issue was due to

reasonable cause and not to willful neglect.    Thus, we find that
                              -11-

petitioner is liable for the addition to tax under section

6651(a)(1).

     To reflect the foregoing and the concessions of the parties,


                                          Decision will be entered

                                     under Rule 155.
