                  T.C. Summary Opinion 2003-125



                     UNITED STATES TAX COURT



                JOHN MICHAEL TREU, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7456-02S.           Filed September 8, 2003.


     John Michael Treu, pro se.

     Monica J. Miller, for respondent.



     POWELL, 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.1    The decision to be

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

should not be cited as authority.


1
     Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year in issue,
and Rule references are to the Tax Court Rules of Practice and
Procedure.
                                - 2 -

     Respondent determined a deficiency in petitioner’s 1999

Federal income tax, an addition to tax under section 6651(a)(1),

and an accuracy-related penalty under section 6662(a) in the

respective amounts of $6,654, $308, and $1,331.     The issues are

(1) whether petitioner had unreported income of $35,000; (2)

whether petitioner is liable for the accuracy-related penalty

under section 6662(a); and (3) whether petitioner is liable for

the addition to tax under section 6651(a)(1).     Petitioner resided

in Orlando, Florida, at the time the petition was filed.

                              Background

     The facts may be summarized as follows.     In January 1999

petitioner associated with his brother in an air conditioning

installation and service business.      Petitioner thought that the

business was a partnership.    It appears, however, that it was

conducted as a corporation under the name of Treu Air, Inc. (Treu

Air).   A cousin, Tom Burgess (Mr. Burgess), was also associated

with Treu Air.   Treu Air treated petitioner, Mr. Burgess, and

petitioner’s brother as independent contractors.     It appears that

each individual supplied his own truck and tools, but the

operating expenses of these items were paid by Treu Air.

     Petitioner’s brother was in charge of the office and

maintained the company records, such as they were, and Mr.

Burgess and petitioner were engaged in the installation and

service of air conditioners.    The company check register and
                               - 3 -

various receipts for the purchase of air conditioner parts and

services on trucks, etc., constituted the records of Treu Air.

Petitioner did not maintain a personal checking account, and he

was paid in cash.   In addition, Treu Air paid for petitioner’s

tolls and gasoline.   Treu Air had no credit, and the expenses for

some of the machinery installed were paid in cash.   Petitioner’s

brother would draw a check payable to cash or to his own name and

note on the check register the amount paid to petitioner.     Mr.

Burgess apparently was paid in the same way, and it appears that

he received $25,000 in compensation during 1999.   At the end of

the year, Treu Air issued a Form 1099-MISC, Miscellaneous Income,

to petitioner showing that he received gross income of $35,000.

In early 2000 petitioner used the Form 1099-MISC to establish his

income in a domestic relations matter.   In 2000 Treu Air hired an

accounting firm to prepare the various corporate tax forms and

returns for 1999.   The corporate returns were prepared from

information supplied by petitioner’s brother.

     Petitioner and his wife filed a joint 1999 Federal income

tax return on May 5, 2000.   The return was not timely filed.    On

the return petitioner reported gross income of $1,000.   He

reported no income from Treu Air.   Petitioner originally

maintained that he had received no income from Treu Air in 1999.

During the examination of the 1999 return, however, petitioner

gave the revenue agent an affidavit claiming that he was paid
                                - 4 -

$400 per week.    In a domestic relations matter around the same

time he also executed an affidavit to the effect that he was paid

$600 per week.    At trial, he maintained that the $600 figure was

correct.

                             Discussion

     There is no question that petitioner received gross income

from Treu Air.    The question is how much he received.   In

answering this we have a contest of credibility between

petitioner and his brother, neither of whom was a model of

candor.2    The matter is more convoluted because the records of

Treu Air and petitioner are either nonexistent or confusing to

the extent that they shed little light on the controversy.     Both

petitioner and his brother probably believe their testimony was

truthful.    But it is questionable whether either really knows the

answer to the question.    Given these facts, we are left to make

an educated guess as to what petitioner’s gross income from Treu

Air was.

     Petitioner executed a contemporaneous affidavit stating that

his income was $600 per week.    It would seem reasonable that he

took at least 2 weeks of vacation for which he was not paid.

While the notations on the company check register indicate that

petitioner was paid more, it is undisputed that Treu Air


2
     Sec. 7491(a), concerning the burden of proof, is inappli-
cable because petitioner has not satisfied its requirements.
                                 - 5 -

reimbursed petitioner for his expenses and for purchasing

equipment.     Furthermore, it is unlikely that petitioner received

$10,000 more than Mr. Burgess.     We conclude that petitioner

received $30,000 ($600 per week x 50 weeks) of gross income in

1999 from Treu Air.

     With respect to the accuracy-related penalty, we sustain

respondent.3    Section 6662(a) provides that “there shall be added

to the tax an amount equal to 20 percent of the portion of the

underpayment to which this section applies.”     Section 6662(b)

applies the section to underpayments due to negligence.

Negligence includes the failure to make a reasonable attempt to

comply with the tax laws and to keep adequate books and records.

Sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs.     Petitioner

was well aware that he had received gross income from Treu Air.

Moreover, he had received the Form 1099-MISC.     While it may be

that he was unsure of the correct amount of income, he failed to

take any action to determine that amount, and he simply reported

no income.     Negligence is strongly indicated where a taxpayer

fails to include in income the amount shown on an information

return.   Sec. 1.6662-3(b)(1)(i), Income Tax Regs.    At best, his

failure to report the income from Treu Air was negligent.




3
     Respondent has satisfied his burden of production under sec.
7491(c).
                               - 6 -

     Finally, turning to the late filing addition to tax, section

6651(a)(1) provides that in the case of a failure to file a

timely return, unless “it is shown that such failure is due to

reasonable cause and not due to willful neglect”, there shall be

added to the tax an amount equal to 5 percent of the tax due “if

the failure is for not more than 1 month, with an additional 5

percent for each additional month or fraction thereof during

which such failure continues, not exceeding 25 percent in the

aggregate”.   Petitioner’s return for 1999 was due on Monday,

April 17, 2000, and the return was not filed until May 5, 2000.

Petitioner has offered no explanation for the late filing, and

respondent’s determination is sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                            Decision will be entered

                                       under Rule 155.
