                          T.C. Memo. 1999-59



                       UNITED STATES TAX COURT



                    ROBERT J. GEIGER, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3665-97.                         Filed March 1, 1999.



     Robert J. Geiger, pro se.

     Alan S. Kline, for respondent.



               MEMORANDUM FINDINGS OF FACT AND OPINION

     CARLUZZO, Special Trial Judge:    This case was heard pursuant

to the provisions of section 7443A(b)(3) of the Internal Revenue

Code of 1986, as amended and in effect at the time the petition

was filed, and Rules 180, 181, and 182.    Subsequent section

references are to the Internal Revenue Code in effect for 1992.

Rule references are to the Tax Court Rules of Practice and

Procedure.
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     In a notice of deficiency issued to petitioner on November

20, 1996, respondent determined a deficiency in his 1992 Federal

income tax in the amount of $1,951, and an addition to tax under

section 6651(a)(1) in the amount of $488.

     The issues for decision are:    (1) Whether various items of

income attributed to petitioner in the notice of deficiency must

be included in his 1992 income; (2) whether petitioner is liable

for the 10-percent additional tax imposed by section 72(t) with

respect to a distribution from a qualified retirement plan; (3)

whether petitioner, who did not file a 1992 Federal income tax

return, is liable for the addition to tax under section

6651(a)(1) for his failure to do so; and (4) whether a penalty

under section 6673(a) should be imposed upon petitioner.

                         FINDINGS OF FACT

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

Petitioner was born on July 16, 1947.    He was 45 years old and

married as of the close of 1992.    He resided in Bethlehem,

Pennsylvania, at the time the petition was filed.

     Petitioner graduated from Wittenberg University in 1970.      He

majored in business administration, a curriculum that included

accounting courses.   Apparently, after graduating from college,

petitioner served in the U.S. Army for a period of time.

     In 1972 petitioner began working for Geiger's Beverage,

Incorporated (Geiger's), a family owned corporation engaged in

the business of malt beverage distribution.    Petitioner was

employed by Geiger's from 1972 until 1987 or 1988.    During some
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or all of that time, he served as Geiger's treasurer.    His day-

to-day responsibilities included managing Geiger's warehouse and

routing functions.

     Geiger's stock was owned by petitioner, his brother Michael

Geiger (Geiger's secretary), his mother Alma Geiger (Geiger's

president), and his sister Janice Lee Costner (Geiger's vice

president).   The spouses of the Geiger siblings also held some

interest in Geiger's as well.

     In 1988, all of the assets of Geiger's were purchased by

Linda K. Woodward, Incorporated.   Petitioner's employment with

Geiger's was terminated as a result.

     After the sale of its assets, Geiger's adopted a 5-year plan

of liquidation.   The final distributions in liquidation were made

to its shareholders during 1992.   After reviewing certain of

Geiger's books and records, petitioner's brother computed the

appropriate amounts of distributions in liquidation, and on

December 12, 1992, prepared the Form 1096 and Forms 1099

regarding the distributions.    Petitioner's mother was responsible

for making the distributions.   In calculating the amount of

distributions due to his siblings, petitioner's brother included

the share holdings of their spouses.    Consequently, only four

Forms 1099 were generated; one for each Geiger sibling, and one

for petitioner's mother.

     In 1992, as reflected in Geiger's books and records, the

corporation made a $15,282 distribution in liquidation to

petitioner, as one of its shareholders.
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     During 1992, petitioner maintained an interest bearing

checking account at the First Valley Bank.   For years prior to

the year in issue, he received refunds of Federal income taxes,

sometimes amounting to thousands of dollars.

     Respondent's Information Return Master File (IRMF)

transcript indicates that several payors issued information

returns to petitioner for the taxable year 1992 as follows:

                                      Type of
   Payor                  Form        income            Amount
   Geiger's Bvgs., Inc.   1099B       S-T cap. gains   $15,282
   First Valley Bank      1099-INT    Interest              34
   U.S. Treasury Dept.    1099-INT    Interest              16
   Manufacturer's Life    1099R       Taxable distr.     1,771


     In the notice of deficiency issued to petitioner on November

20, 1996, respondent determined that petitioner must include the

above items of income (the items of income) in his 1992 income.

In computing his 1992 taxable income, respondent took the items

of income into account and allowed petitioner a personal

exemption deduction and the standard deduction appropriate for a

married individual who files a separate return.   Petitioner's

1992 Federal income tax liability and the deficiency here in

dispute were computed by application of the applicable rate of

Federal income tax to petitioner's taxable income and adding to

that amount the additional tax imposed by section 72(t) on the

distribution from Manufacturer's Life.   Respondent further

determined that petitioner is liable for the addition to tax

under section 6651(a) for his failure to file a 1992 Federal

income tax return.
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                              OPINION

     Petitioner does not deny receipt of any of the items of

income.   Nor does he claim that any particular item of income has

been overstated or should be reduced either on technical or

factual grounds.   Furthermore, he does not claim entitlement to

deductions or credits not already allowed in the notice of

deficiency, and he does not contend that respondent erred in

determining his filing status.

     Petitioner is aware and understands that, in general,

determinations made by the Commissioner in a notice of deficiency

are presumptively correct, and the taxpayer has the burden of

proving them in error.   Rule 142(a); Welch v. Helvering, 290 U.S.

111, 115 (1933).   However, relying upon cases such as Portillo v.

Commissioner, 932 F.2d 1128 (5th Cir. 1991), affg. in part, revg.

in part and remanding T.C. Memo. 1990-68; Anastasato v.

Commissioner, 794 F.2d 884 (3d Cir. 1986), vacating and remanding

T.C. Memo. 1985-101; and Gerardo v. Commissioner, 552 F.2d 549

(3d Cir. 1977), affg. in part, revg. in part and remanding T.C.

Memo. 1975-341, petitioner takes the position that the

determinations made in the notice of deficiency in this case are

arbitrary and excessive, and therefore the determinations are not

entitled to a presumption of correctness.   Petitioner goes on to

argue that without the presumption of correctness, the

determinations made in the notice of deficiency cannot be

sustained.   According to petitioner, the determinations are

invalid because they are based upon "naked assertions".
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     During his presentation at trial and in his brief,

petitioner correctly (more or less) recited the general

principles that govern the burden of proof in deficiency

proceedings.   However, he mistakenly proceeded as though those

principles relieved him of his burden of proof in this case.

     Unlike taxpayers in Portillo v. Commissioner, supra,

Anastasato v. Commissioner, supra, and Gerardo v. Commissioner,

supra, who denied receipt of all, or portions of, certain income

charged to each in notices of deficiency, petitioner has not

denied, either in a pleading or in his testimony, that he

received any of the items of income.   Unsupported by such a

denial, his claim that respondent's determination is arbitrary

and excessive is itself nothing more than a "naked assertion"

that does not entitle him to the relief from the burden of proof

that he seeks.   Because petitioner did not deny receipt of some

or all of the items of income, or point to some other error made

in the notice of deficiency, we fail to see how respondent's

determinations could be arbitrary and excessive.   See White v.

Commissioner, T.C. Memo. 1997-459.

     There is insufficient evidence in the record to apply the

body of law established in the line of cases upon which

petitioner relies.   Petitioner's case-in-chief amounted to little

more than his testimony that he could not remember whether he

received any of the items of income.   As we advised petitioner at

trial, we consider his testimony in this regard incredible given

his educational background and apparent good health.   As
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recognized by other Federal courts, we understand the

difficulties encountered in proving a negative; however, if

petitioner did not receive any of the items of income, we would

expect that, at the very least, he would tell us so.    See Wichita

Terminal Elevator Co. v. Commissioner, 6 T.C. 1158 (1946), affd.

162 F.2d 513 (10th Cir. 1947).

     Nevertheless, to the extent that respondent had an

obligation to link petitioner to the income-generating activities

relating to the items of income, he has satisfied that obligation

through the introduction of predicate evidence.   Absent some

showing by petitioner as to how the distribution in liquidation

should have been divided between himself and his spouse, there is

no basis for making any apportionment.   In any case, the

presumption of correctness to which the Commissioner is normally

entitled remains intact in this case.

     The burden of proof in this case is upon petitioner.

Rule 142(a); Welch v. Helvering, supra at 115.

His testimony that he cannot remember any of the relevant

transactions that gave rise to the items of income is

insufficient to satisfy his burden of proof.   Because he has

failed to meet that burden, the determinations made in the notice

of deficiency, including the additional tax imposed by section

72(t) and the addition to tax under section 6651(a) are

sustained.
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       By motion made at the conclusion of trial, respondent

requests the Court to impose a penalty on petitioner under

section 6673(a).    Section 6673(a)(1) authorizes the Tax Court to

require a taxpayer to pay a penalty not to exceed $25,000 if the

proceedings have been instituted or maintained by the taxpayer

primarily for delay or if the taxpayer's position in such

proceeding is frivolous or groundless.         Sec. 6673(a)(1)(A) and

(B).    A position maintained by the taxpayer is "frivolous" where

it is "contrary to established law and unsupported by a reasoned,

colorable argument for change in the law."          Coleman v.

Commissioner, 791 F.2d 68, 71 (7th Cir. 1986).

       Petitioner's pretrial correspondence to respondent contained

arguments that are typically deemed frivolous for purposes of

section 6673(a).    The objectionable arguments, however, are

contained in documents introduced into evidence not by

petitioner, but by respondent.      Petitioner's position in this

case focused almost entirely on issues related to the burden of

proof, demonstrated by his ill-fated strategy to proceed as

though it did not rest with him.      Although we consider

petitioner's position on the point to be tenuous, we do not

consider it to be frivolous within the meaning of section

6673(a).    Respondent's motion for a penalty under that section

will therefore be denied.

       To reflect the foregoing,

                                           An appropriate order and

                                   decision will be entered.
