                   T.C. Summary Opinion 2006-8



                     UNITED STATES TAX COURT



                TERRY FRED BURNHAM, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 15339-04S.             Filed January 26, 2006.


     Terry Fred Burnham, pro se.

     Anthony J. Kim, for respondent.



     PANUTHOS, Chief 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.   The

decision to be entered is not reviewable by any other court, and

this opinion should not be cited as authority.   Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code in effect for the year in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.
                               - 2 -

     Respondent determined a deficiency in petitioner’s 2000

Federal income tax and additions to tax as follows:

                              Additions to Tax
  Deficiency    Sec. 6651(a)(1)   Sec. 6651(a)(2) Sec. 6654(a)

   $16,600          $3,735             $2,739         $892

After concessions,1 the issues for decision are:   (1) Whether a

distribution of $20,102 petitioner received from the California

Field Ironworkers Trust Funds (CFITF) is includable in gross

income; (2) whether petitioner is entitled to a dependency

exemption deduction for Lupe Chitwood; (3) whether a distribution

petitioner received of $8,000 from Jackson National Life Ins. Co.

(Jackson) is includable in gross income, and (4) whether

petitioner is liable for an addition to tax under section

6651(a)(1) of $3,735.

                             Background

     Some of the facts have been stipulated, and they are so

found.   The stipulation of facts and the attached exhibits are




     1
        With respect to adjustments for the taxable year 2000,
petitioner concedes that: (1) He is taxable on Social Security
benefits received to the extent of $12,755, and (2) that he
received $37,050 in gambling winnings. Respondent concedes the
following: (1) Petitioner is entitled to deduct gambling losses
against gambling winnings of $37,050; (2) petitioner is entitled
to a deduction of $2,150 for mortgage interest; (3) petitioner is
entitled to a deduction of $1,648 for property tax paid; and (4)
petitioner is not liable for additions to tax under secs.
6651(a)(2) and 6654(a).
                               - 3 -

incorporated herein by this reference.2   At the time the petition

was filed, petitioner resided in Santa Rosa, California.

     Petitioner previously was employed as an ironworker.   He was

injured on the job in 1991, became disabled, and was unable to

return to work.   Petitioner received a disability pension from

CFITF.   According to a statement from CFITF, petitioner received

$1,435.86 per month, plus two bonus checks, for a total annual

payment of $20,102.   According to the terms of the disability

pension, payments would cease if petitioner were to return to

work.

     During the year in issue, petitioner lived with his

girlfriend, Lupe Chitwood.   The record is unclear as to whether

Ms. Chitwood worked during the year 2000.   Ms. Chitwood received

a disability pension during at least part of the year 2000.   Ms.

Chitwood sometimes gambled with petitioner, but the record is

unclear as to her winnings and losses during the year in issue.

     On April 24, 1995, Jackson issued an annuity policy naming

petitioner as the owner.   Petitioner paid $50,000 for the policy.

The anticipated maturity date was April 24, 2007.   During the

taxable year 2000, petitioner received a distribution of $8,000

from Jackson.   Respondent received an information document from


     2
        At the end of trial, the Court kept the record open to
permit petitioner to produce an additional document relating to a
distribution from Jackson National Life Ins. Co. When the
document was received, the Court admitted the document into
evidence and closed the record.
                                - 4 -

Jackson indicating that a taxable distribution was made to

petitioner of $8,000.

     Petitioner’s Federal income tax return for the taxable year

2000 was signed and submitted to the Internal Revenue Service on

November 16, 2004.   Petitioner did not request an extension of

time to file his 2000 return.    On the return, petitioner reported

$28,102 on line 16a (total pensions & annuities) and $8,000 on

line 16b (taxable amount).3    Petitioner further claimed a

dependency exemption deduction for Lupe Chitwood.

                              Discussion

     Generally, the burden of proof is on the taxpayer.       Rule

142(a)(1).   However, if the taxpayer satisfies the limitations

under section 7491(a)(2) and introduces credible evidence with



     3
        The record is not clear as to the source of the amounts
reported on the return or the exact adjustments made by
respondent. It appears that the $28,102 reported on line 16a is
the sum of (1) the disability pension from CFITF of $20,102 and
(2) the annuity distribution from Jackson of $8,000. While it
appears that petitioner reported the $8,000 distribution from
Jackson as taxable income on line 16b, the record does not
contain a schedule of adjustments which would normally be
attached to the notice of deficiency. In his pretrial
memorandum, respondent lists as an issue the question of whether
petitioner received a taxable distribution of $8,000 from
Jackson. Respondent further indicates that the issue was
conceded by petitioner.

     At trial petitioner initially appeared to agree with the
concession. He later explained, however, that he agreed that he
received the $8,000 distribution from Jackson but that he did not
agree that the distribution represented taxable income. Thus, we
consider whether the $8,000 distribution received from Jackson
represents taxable income.
                                - 5 -

respect to any factual issue relevant to ascertaining the tax

liability, then the Commissioner bears the burden of proof with

respect to such issue.    Sec. 7491(a).   Moreover, if a taxpayer

asserts a reasonable dispute with respect to the income reported

on an information return and fully cooperates with the

Commissioner (including providing access to an inspection of all

witnesses, information, and documents within the control of the

taxpayer as reasonably requested by the Commissioner), then the

Commissioner shall have the burden of producing reasonable and

probative information in addition to such information return.

Sec. 6201(d); Tanner v. Commissioner, 117 T.C. 237 (2001), affd.

65 Fed. Appx. 508 (5th Cir. 2003); McQuatters v. Commissioner,

T.C. Memo. 1998-88.   In the present case, petitioner has not

satisfied the requirements of either section 6201(d) or section

7491(a).   Furthermore, to the extent that the distribution of the

disability payment or the annuity involves a legal issue, the

burden of proof does not affect the outcome.     Unless indicated

otherwise, the burden of proof remains on petitioner.

Distribution From CFITF

     Petitioner received $20,102 during 2000 from CFITF as a

disability pension on account of an employment-related injury he

received in 1991.   Petitioner suggests that he has not reported

amounts received from CFITF in prior tax years, and therefore he

should not be taxable for the amount received in 2000.
                               - 6 -

      It is our obligation to apply the law to the facts of this

case, and the fact that the Commissioner may have treated a

taxpayer differently in another year does not change our

obligation.   Malinowski v. Commissioner, 71 T.C. 1120, 1128

(1979); Robinson v. Commissioner, T.C. Memo. 1996-154.

      Section 61(a) provides that, except as otherwise provided,

gross income includes all income from whatever source derived.

The Supreme Court has reiterated the sweeping scope of section

61.   Commissioner v. Banks, 543 U.S. 426 (2005); Commissioner v.

Schleier, 515 U.S. 323, 327 (1995); Commissioner v. Glenshaw

Glass Co., 348 U.S. 426, 429-431 (1955).   Section 104, in

contrast, provides an exclusion with respect to compensation for

injuries or sickness.   Such exclusions are construed narrowly.

Commissioner v. Schleier, supra at 328.    One of the conditions of

excludability, relevant in this case, is that the amounts

received through accident or health insurance for personal

injuries or sickness must not be amounts received by an employee,

to the extent such amounts are either attributable to

contributions of the employer and not includable in income of the

employee or are paid by the employer.   There is no evidence in

this case that petitioner satisfies the conditions of section

104(a)(3).

      Section 105(a) provides that amounts received by an employee

through accident or health insurance for personal injuries or
                                 - 7 -

sickness shall be included in gross income to the extent such

amounts are (1) attributable to contributions by the employer and

not includable in gross income of the employee, or (2) are paid

by the employer.    Section 105(c) provides that gross income does

not include amounts referred to in section 105(a) to the extent

such amounts (1) constitute payment for personal loss of use of a

member or function of the body, or the permanent disfigurement,

of the taxpayer, and (2) are computed with reference to the

nature of the injury without regard to the period the employee is

absent from work.    It is clear that petitioner received the

payments from CFITF so long as he did not return to work.    Since

the payments are contingent on petitioner’s absence from work,

rather than based on the nature of the injury, the payments do

not fit within the exception of includability under section

105(a) and (c).    Respondent’s determination is sustained on this

issue.

Dependency Exemption

     As indicated petitioner claimed a dependency exemption for

his girlfriend, Lupe Chitwood.     A taxpayer may be allowed a

deduction for a dependent over half of whose support is provided

by the taxpayer.    Secs. 151(c)(1), 152(a).   A dependent includes

an individual who, for the taxable year, has as her principal

place of abode the home of the taxpayer and is a member of the

taxpayer’s household.   Sec. 152(a)(9).   It is necessary that the
                                   - 8 -

taxpayer both maintain and occupy the household.      Sec. 1.152-

1(b), Income Tax Regs.   It is not necessary that the dependent be

related to the taxpayer.     Id.    The term “support” includes food,

shelter, clothing, medical and dental care, education, and the

like.   Sec. 1.152-1(a)(2)(i), Income Tax Regs.     The amount of

support that the claimed dependent received from the taxpayer is

compared to the total amount of support the claimed dependent

received from all sources.     Id.    The total amount of support for

each claimed dependent furnished by all sources during the year

in issue must be established by competent evidence.       Blanco v.

Commissioner, 56 T.C. 512, 514 (1971).

     Petitioner presented virtually no testimony or documentary

evidence to establish that he met the support test for Ms.

Chitwood.   There is no evidence as to the amount of her

disability pension, the amount of her gambling winnings and

losses, nor the arrangement between petitioner and Ms. Chitwood

as to the allocation of living expenses.      Given this lack of

evidence, we sustain respondent’s determination as to this issue.

Distribution From Jackson

     Section 61(a) defines gross income as “all income from

whatever source derived”.    Annuities are specifically included in

gross income.   Sec. 61(a)(9).     The burden is on petitioner to

demonstrate that the payment in question falls into a specific
                               - 9 -

statutory exclusion.   Commissioner v. Glenshaw Glass Co., supra

at 429-431.

     In general, section 72 deals with the income tax treatment

of annuities.   Section 72 prescribes rules regarding the

inclusion in gross income of amounts received under a life

insurance, endowment, or annuity contract except where such

amounts are specifically excluded from gross income under other

provisions of chapter 1 of the Code.   These rules provide that,

in general, the amounts subject to the provisions of section 72

are includable in the gross income of the recipient except to the

extent that they are considered to represent a reduction or

return of premiums or other consideration paid.    Sec. 1.72-1(a),

Income Tax Regs.   Amounts are considered to be paid as an annuity

if they are received after the annuity starting date, they are

paid in periodic installments at regular intervals over a period

of more than one full year from the annuity starting date, and

the total of amounts payable can be determined at the annuity

starting date (subject to certain exceptions).    Sec. 1.72-

2(b)(2), Income Tax Regs.   As a general rule, payments received

on or after the annuity starting date are treated as payments not

received as an annuity and are taxable.   Sec. 72(e)(2)(A).

     There is simply not sufficient information in this record to

reach a conclusion whether some portion of the $8,000 payment is

not includable in income.   The Court and respondent encouraged
                                - 10 -

petitioner to provide sufficient information as to the facts

surrounding the distribution from Jackson.     Petitioner did not

provide information, nor did he authorize Jackson to provide such

information to respondent.     In this connection, the copy of the

policy from Jackson provided some relevant information.      However,

given the complex rules relating to the taxation of annuities

under section 72, the Court required facts surrounding the

distribution, which were not forthcoming.     Respondent’s

determination is sustained on this issue.

Addition to Tax Under Section 6651(a)(1)

     If a Federal income tax return is not timely filed, an

addition to tax will be assessed “unless it is shown that such

failure is due to reasonable cause and not due to willful

neglect”.   Sec. 6651(a)(1).    A delay is due to reasonable cause

if “the taxpayer exercised ordinary business care and prudence

and was nevertheless unable to file the return within the

prescribed time”.   Sec. 301.6651-1(c)(1), Proced. & Admin. Regs.;

see also United States v. Boyle, 469 U.S. 241, 243 (1985).        The

Commissioner has the burden of production with respect to the

liability of any individual for an addition to tax under section

6651(a)(1).   Sec. 7491(c).    The burden of showing reasonable

cause under section 6651(a) remains on petitioner.     Higbee v.

Commissioner, 116 T.C. 438, 446-448 (2001).
                              - 11 -

     In the present case, respondent met his burden of production

with respect to the addition to tax under section 6651(a)(1).

Petitioner did not provide any evidence as to the reasons for the

late filing for the 2000 taxable year.   Nor did petitioner

provide any evidence to establish he had reasonable cause for the

failure to timely file.   Respondent’s determination as to this

issue is sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,


                                          Decision will be entered

                                    under Rule 155.4




     4
        As previously indicated, the Court was not provided with
a complete copy of the notice of deficiency, which would
presumably contain a copy of the adjustments. Accordingly, we
assume that the mutual concessions made by the parties, as stated
supra note 3, related to adjustments in the notice of deficiency
and that the amount of the deficiency and addition to tax will be
less than that determined as a result of concessions.
