                              T.C. Memo. 2013-259



                        UNITED STATES TAX COURT



                    SHARON NELSON, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 24182-09.                         Filed November 13, 2013.



      Joyce Anne Rebhun, for petitioner.

      Nathan C. Johnston and Linette B. Angelastro, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


      CHIECHI, Judge: Respondent determined deficiencies of $355,403 and

$307,911 in, and accuracy-related penalties under section 6662(a)1 of $71,080.60


      1
       All section references are to the Internal Revenue Code (Code) in effect for
the years at issue. All Rule references are to the Tax Court Rules of Practice and
Procedure.
                                         -2-

[*2] and $61,582.20 on, petitioner’s Federal income tax (tax) for her taxable years

2005 and 2006, respectively.

      The issues remaining for decision for each of the years at issue are:

      (1) Did petitioner engage in the trade or business within the meaning of sec-

tion 162(a) of buying and selling securities for her own account? We hold that she

did not.

      (2) In the light of our holding with respect to issue (1) above, is petitioner

entitled to deduct under section 162(a) certain expenses that remain in dispute

and that petitioner claims she paid in buying and selling securities for her own

account? We hold that she is not.

      (3) Is petitioner liable for the accuracy-related penalty under section

6662(a)? We hold that she is.

                                FINDINGS OF FACT

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

      Petitioner resided in California at the time she filed the petition.

      During 2005 and 2006 until at least the time of the trial in this case, peti-

tioner and John Zabasky (Mr. Zabasky), who were not married, lived together.

      During 2005 and 2006, petitioner was the sole stockholder of Clear Con-

cepts, Inc. (Clear Concepts), a C corporation, that was engaged in the mortgage
                                        -3-

[*3] broker business and that had its place of business in Westlake Village,

California. During those years, Clear Concepts employed petitioner as a mortgage

broker. In return for her services as a mortgage broker, Clear Concepts paid

petitioner wages of $266,458 and $49,065 during 2005 and 2006, respectively.

      During 2005 and 2006, Mr. Zabasky was the chief executive officer and

sole stockholder of SoftEx, Inc. (Mr. Zabasky’s SoftEx), a Delaware corporation,

that had its place of business on De Soto Avenue in Los Angeles (De Soto Avenue

address). At the time of the trial in this case, Mr. Zabasky had been involved in

the trading of stocks, bonds, and currencies for approximately 25 years.

      During 2005 and 2006, petitioner executed certain trades of certain securi-

ties on an investment account that she maintained at TD Ameritrade (petitioner’s

investment account).2 During those years, Mr. Zabasky, who had access to peti-

tioner’s investment account, also executed certain trades of certain securities on

that account. Petitioner had no clients for any of the trades executed on petition-

er’s investment account during 2005 and 2006.




      2
       Our use of terms like “trades”, “trading”, and “trading activity” is not in-
tended to mean or suggest that petitioner was in the trade or business within the
meaning of sec. 162(a) of buying and selling securities for her own account.
                                        -4-

[*4] During 2005, there were a total of 250 available trading days. During that

year, 535 trades were executed on petitioner’s investment account on a total of 121

days, i.e., on 48.4 percent of the total available trading days in 2005. Of the 535

trades made on petitioner’s investment account during 2005, the purchases for 95

of those trades occurred in the one-week period September 27 to October 3. The

holding period for the securities traded on petitioner’s investment account during

2005 ranged from one day to 48 days. During 2005, there were the following

eight periods of at least seven days where no purchases or sales occurred on peti-

tioner’s investment account: (1) January 7 to January 19; (2) February 10 to

February 16; (3) May 19 to May 25; (4) June 3 to June 9; (5) June 17 to June 28;

(6) July 16 to July 25; (7) July 27 to August 8; and (8) November 29 to December

6. The trades executed on petitioner’s investment account during 2005 generated

$470,472.90 of net short-term capital gain for that taxable year.

      During 2006, there were a total of 250 available trading days. During that

year, 235 trades were executed on petitioner’s investment account on a total of 66

days, i.e., on 26.4 percent of the total available trading days in 2006. The holding

period for the securities traded on petitioner’s investment account during 2006

ranged from one day to 101 days. During 2006, there were only two trading days
                                        -5-

[*5] on which trades were executed on petitioner’s investment account during the

period January 27 to May 4. Moreover, there were the following seven periods of

at least seven days where no purchases or sales occurred on petitioner’s invest-

ment account during 2006: (1) January 4 to January 25; (2) July 15 to July 25;

(3) July 29 to August 15; (4) August 19 to September 4; (5) September 16 to

October 4; (6) October 13 to October 23; and (7) December 20 to December 31.

The trades executed on petitioner’s investment account during 2006 generated

$36,852.28 of net short-term capital gain for that taxable year.

      Petitioner filed Form 1040, U.S. Individual Income Tax Return, for each

of her taxable years 2005 (2005 return) and 2006 (2006 return). Petitioner in-

cluded Schedule C, Profit or Loss From Business (Schedule C), with each of her

2005 return (2005 Schedule C) and her 2006 return (2006 Schedule C). She

described the “Principal business or profession” in her 2005 Schedule C as “Stock

Trading/Trader Status” and in her 2006 Schedule C as “Securities Trader/Trader

Status”. The address that petitioner showed in both of those schedules was the

De Soto Avenue address of Mr. Zabasky’s SoftEx.

      After petitioner filed her 2005 return and shortly before she filed her 2006

return, she submitted to respondent Form 1040X, Amended U.S. Individual
                                       -6-

[*6] Income Tax Return, for her taxable year 2005 that respondent did not accept

or process (unfiled 2005 amended return). Petitioner included Schedule C (unfiled

2005 Schedule C) with her unfiled 2005 amended return. She described the

“Principal business or profession” in that schedule as “Securities Trader/Trader

Status/R.E. Professional”. The address that petitioner showed in her unfiled 2005

Schedule C was the De Soto Avenue address of Mr. Zabasky’s SoftEx.

      Petitioner claimed in her 2005 Schedule C, her 2005 unfiled Schedule C,

and at trial the following expenses:
                                                -7-

 [*7]                           Amount Claimed          Amount Claimed
                                    in 2005             in Unfiled 2005         Amount Claimed
             Expense              Schedule C              Schedule C               At Trial
 Advertising                             $475                  -0-                      -0-
 Car and truck                         12,620                  -0-                      -0-
 Depreciation and
  sec. 179                              5,262                  -0-                    $26,698
 Interest--other                        -0-                  $13,338                   20,759
 Legal and professional               352,000                143,536                    -0-
                                                                                       1
 Office                                10,150                  25,861                      5,000
 Rent or lease--vehicle                   560                  27,500                   -0-
 Rent or lease--other                  59,000                  38,872                  32,572
 Repairs                                2,500                   5,518                   -0-
 Supplies                              24,200                   -0-                     -0-
 Taxes and licenses                       500                     500                   -0-
 Travel                                 9,700                   5,505                   -0-
 Meals and entertainment                3,850                   2,052                   -0-
                                                                                       2
 Utilities                             23,300                   7,760                      2,500

        1
          The parties agree that if we were to find that during 2005 petitioner engaged in the trade
or business within the meaning of sec. 162(a) of buying and selling securities for her own ac-
count, she would be entitled to $5,000 of “Office” expense.
        2
          The parties agree that if we were to find that during 2005 petitioner engaged in the trade
or business within the meaning of sec. 162(a) of buying and selling securities for her own ac-
count and if we were to sustain her claim that she paid “Rent or lease--other” expenses that are
ordinary and necessary expenses within the meaning of that section, she would be entitled to
$2,500 of “Utilities” expense.

        Petitioner claimed in her 2006 Schedule C and at trial the following ex-

penses:
                                                -8-

 [*8]                                     Amount Claimed
                                              in 2006                      Amount Claimed
            Expense                         Schedule C                        At Trial
 Advertising                                        $570                               -0-
 Car and truck                                    12,179                               -0-
 Insurance                                         -0-                            $5,976
 Interest--other                                   -0-                            15,832
 Legal and professional                          120,000                               -0-
                                                                                   1
 Office                                           10,200                               5,000
 Rent or lease--vehicle                               600                              5,164
 Rent or lease--other                             66,000                          60,500
 Repairs                                           5,000                               -0-
 Supplies                                         27,700                               -0-
                                                                                        2
 Taxes and licenses                                   750                                   740
 Travel                                            9,550                               -0-
 Meals and entertainment                           4,150                               -0-
                                                                                   3
 Utilities                                        46,500                               2,500
 Business use of home                                 711                              -0-

        1
          The parties agree that if we were to find that during 2006 petitioner engaged in the trade
or business within the meaning of sec. 162(a) of buying and selling securities for her own ac-
count, she would be entitled to $5,000 of “Office” expense.
        2
          The parties agree that if we were to find that during 2006 petitioner engaged in the trade
or business within the meaning of sec. 162(a) of buying and selling securities for her own ac-
count, she would be entitled to $740 of “Taxes and licenses” expense.
        3
          The parties agree that if we were to find that during 2006 petitioner engaged in the trade
or business within the meaning of sec. 162(a) of buying and selling securities for her own ac-
count and if we were to sustain her claim that she paid “Rent or lease--other” expenses that are
ordinary and necessary expenses within the meaning of that section, she would be entitled to
$2,500 of “Utilities” expense.
                                          -9-

[*9] Respondent issued a notice of deficiency (notice) to petitioner for her tax-

able years 2005 and 2006. In that notice, respondent determined, inter alia, to

disallow all of the expenses totaling $504,217 and $303,910 that petitioner

claimed in her 2005 Schedule C and her 2006 Schedule C, respectively. In the

notice, respondent also determined, inter alia, that petitioner is liable for the

accuracy-related penalty under section 6662(a) for each of her taxable years 2005

and 2006.

                                      OPINION

      Petitioner has the burden of establishing that respondent’s determinations in

the notice that remain at issue are in error. See Rule 142(a); Welch v. Helvering,

290 U.S. 111, 115 (1933). Moreover, deductions are a matter of legislative grace,

and petitioner bears the burden of proving entitlement to any deduction claimed.

See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). The Code and the

regulations thereunder required petitioner to maintain records sufficient to estab-

lish the amount of any deduction claimed. See sec. 6001; sec. 1.6001-1(a), Income

Tax Regs.

      Before turning to the issues that remain for decision, we shall evaluate the

evidence that petitioner adduced at trial in support of her position on each of those
                                        - 10 -

[*10] issues. In support of those positions, petitioner relies on her own testimony,

the testimony of Mr. Zabasky, and certain documentary evidence.

      We found petitioner’s testimony to be in certain material respects general,

conclusory, vague, self-serving, uncorroborated, and/or not credible. We shall not

rely on the testimony of petitioner to establish her position with respect to each of

the issues that remain for decision. See, e.g., Tokarski v. Commissioner, 87 T.C.

74, 77 (1986).

      We found the brief testimony of Mr. Zabasky to be generally credible.

However, that testimony did not enable us to sustain petitioner’s position on the

issue to which that testimony pertained.

      We did not find that the documentary evidence on which petitioner relies

establishes her position with respect to each of the issues that remain for decision.

      We turn now to the issue of whether for each of the years at issue petitioner

was engaged in the trade or business within the meaning of section 162(a) of buy-

ing and selling securities for her own account. A person who purchases and sells

securities may be a trader, a dealer, or an investor. See King v. Commissioner, 89

T.C. 445, 458-459 (1987). Neither party maintains that petitioner is a dealer. The

parties’ dispute is over whether petitioner was a trader, as petitioner maintains, or

an investor, as respondent maintains.
                                        - 11 -

[*11] A trader engages in the trade or business for purposes of section 162(a) of

selling securities for his or her own account.3 See King v. Commissioner, 89 T.C.

at 458-459. The profits of a trader are generated through the acts of trading them-

selves. See Estate of Yaeger v. Commissioner, 889 F.2d 29, 33 (2d Cir. 1989),

aff’g T.C. Memo. 1988-264. Although an investor purchases and sells securities

for his or her own account, an investor, unlike a trader, is not considered to be in

the trade or business within the meaning of section 162(a) of selling securities.

See Endicott v. Commissioner, T.C. Memo. 2013-199, at *11; Kay v. Commis-

sioner, T.C. Memo. 2011-159, 2011 Tax Ct. Memo LEXIS 156, at *6.

      The expenses of a trader that otherwise satisfy the requirements of section

162(a) are deductible under that section. See Endicott v. Commissioner, at *12;

Kay v. Commissioner, 2011 Tax Ct. Memo LEXIS 156, at *6. The expenses of an

investor that otherwise satisfy the requirements of section 212 are deductible

under that section as itemized deductions that are subject to the two-percent floor

imposed by section 67(a). Moreover, section 163(d) limits the deductibility of

investment interest. See Endicott v. Commissioner, at *12; Arberg v. Commis-

sioner, T.C. Memo. 2007-244, 2007 Tax Ct. Memo LEXIS 253, at *33.

      3
       Our use hereinafter of the term “trader” refers to a trader who, as discussed
below, engages in the trade or business within the meaning of sec. 162(a) of sell-
ing securities for his or her own account.
                                        - 12 -

[*12] In the brief that petitioner’s counsel of record signed and filed on peti-

tioner’s behalf, petitioner and that counsel rely on the Web site of the Internal

Revenue Service (IRS), i.e., www.irs.gov, to support petitioner’s position that she

was a trader for each of her taxable years 2005 and 2006. That Web site, like IRS

publications, is not an authoritative source of tax law. See Zimmerman v. Com-

missioner, 71 T.C. 367, 371 (1978), aff’d without published opinion, 614 F.2d

1294 (2d Cir. 1979). We found petitioner’s brief, like her testimony, to be un-

reliable.

       The Code does not define the term “trade or business” for purposes of

section 162(a). See Commissioner v. Groetzinger, 480 U.S. 23, 27 (1987). The

determination of whether a taxpayer’s activities qualify as a trade or business is a

question of fact. See Higgins v. Commissioner, 312 U.S. 212, 217 (1941). In

determining whether a taxpayer is a trader, we shall consider, inter alia, the fol-

lowing factors: (1) the taxpayer’s intent, (2) the nature of the income to be derived

from the activity, and (3) the frequency, extent, and regularity of the taxpayer’s

transactions. See Moller v. United States, 721 F.2d 810, 813 (Fed. Cir. 1983);

Endicott v. Commissioner, at *13.

       For a taxpayer to be a trader, the trading activity must be substantial. In

other words, the trading activity must be frequent, regular, and continuous enough
                                        - 13 -

[*13] to qualify as a trade or business within the meaning of section 162(a). See

Endicott v. Commissioner, at *13; Ball v. Commissioner, T.C. Memo. 2000-245,

2000 Tax Ct. Memo LEXIS 289, at *4.

      A taxpayer’s trading activities constitute a trade or business within the

meaning of section 162(a) where both of the following requirements are satisfied:

(1) the taxpayer’s trading is substantial, and (2) the taxpayer seeks to catch the

swings in the daily market movements and to profit from those short-term changes

rather than to profit from the long-term holding of investments. See Endicott v.

Commissioner, at *13-*14; Holsinger v. Commissioner, T.C. Memo. 2008-191,

2008 Tax Ct. Memo LEXIS 187, at *7.

      We have found that during each of the years 2005 and 2006 both petitioner

and Mr. Zabasky executed trades on petitioner’s investment account. On the

record before us, we find that petitioner has failed to carry her burden of estab-

lishing, and the record does not otherwise establish, how many of the (1) 535

trades executed on petitioner’s investment account during 2005 and (2) 235 trades

executed on that account during 2006 were executed by petitioner and how many

of those respective trades were executed by Mr. Zabasky. As a result, we do not

know which of the total trades executed on petitioner’s investment account during

each of the years 2005 and 2006 we should use as petitioner’s trades in analyzing
                                        - 14 -

[*14] whether (1) the trading activity of petitioner during each of those years was

substantial and (2) whether petitioner sought in her trading activity during each of

the years 2005 and 2006 to catch the swings in the daily market movements and to

profit from those short-term changes.

      Assuming arguendo that petitioner had established that she executed all of

the trades executed on petitioner’s investment account during each of the years

2005 and 2006, we nonetheless would find on the record before us that she has

failed to carry her burden of establishing that she was a trader for each of her tax-

able years 2005 and 2006. That is because, inter alia, petitioner has failed to carry

her burden of establishing that her trading activity during each of those years was

substantial.

      In determining whether a taxpayer’s trading activity is substantial, we con-

sider the number of trades executed in a year, the amount of money involved in

those trades, and the number of days on which trades were executed.4 See

Endicott v. Commissioner, at *14; Kay v. Commissioner, 2011 Tax Ct. Memo

LEXIS 156, at *7-*9.




      4
       The following discussion assumes arguendo that during each of the years
2005 and 2006 petitioner executed all of the trades on petitioner’s investment ac-
count.
                                       - 15 -

[*15] With respect to the number of trades executed in a year, (1) 535 trades

were executed during 2005 on petitioner’s investment account and (2) 235 trades

were executed during 2006 on that account. We have held in Endicott v. Commis-

sioner, at *14-*15, that 204 trades and 303 trades were not substantial and that

1,543 trades were substantial. See also Kay v. Commissioner, 2011 Tax Ct. Memo

LEXIS 156, at *9-*10 (313 executed trades were not substantial); Holsinger v.

Commissioner, 2008 Tax Ct. Memo LEXIS 187, at *8 (372 executed trades were

not substantial); cf. Mayer v. Commissioner, T.C. Memo. 1994-209, 1994 Tax Ct.

Memo LEXIS 216, at *11, *17 (1,136 executed trades were substantial).

      On the record before us, we find that the total number of trades on peti-

tioner’s investment account during each of the years 2005 and 2006 was not

substantial for each of petitioner’s taxable years 2005 and 2006.

      With respect to the amount of money involved in the trades during a year,

there were on petitioner’s investment account (1) during 2005 purchases of

approximately $32.5 million and sales of approximately $32.9 million, and

(2) during 2006 purchases of approximately $24.2 million and sales of approx-

imately $24.3 million. We acknowledge that the respective amounts of purchases

and sales during each of those years are considerable. However, those amounts
                                       - 16 -

[*16] are not determinative of whether petitioner’s securities trading activity was

substantial for each of her taxable years 2005 and 2006. See Moller, 721 F.2d at

814; Kay v. Commissioner, 2011 Tax Ct. Memo LEXIS 156, at *10.

      With respect to the number of days in a year on which trades were executed,

trades were executed on petitioner’s investment account on (1) 121 days during

2005 (i.e., on 48.4 percent of the 250 available trading days in 2005) and (2) 66

days during 2006 (i.e., on 26.4 percent of the 250 available trading days in 2006).

In cases in which taxpayers have been found to have been traders, the number of a

taxpayer’s transactions evidenced that the taxpayer was engaged in market trans-

actions on an almost daily basis. See Moller, 721 F.2d at 813-814; see also Chen

v. Commissioner, T.C. Memo. 2004-132, 2004 Tax Ct. Memo LEXIS 131, at *11-

*12.5 With respect to the 535 trades executed on petitioner’s investment account

on 121 days during 2005, the purchases for 95 of those trades occurred in the one-

week period September 27 to October 3. Moreover, there were the following eight

periods during 2005 of at least seven days where no purchases or sales occurred

on petitioner’s investment account: (1) January 7 to January 19; (2) February 10

      5
        Moreover, we have held that executing trades on (1) 110 days, see
Holsinger v. Commissioner, T.C. Memo. 2008-191, 2008 Tax Ct. Memo LEXIS
187, at *8, and (2) 73 days, see Kay v. Commissioner, T.C. Memo. 2011-159,
2011 Tax Ct. Memo LEXIS 156, at *2, *8-*10, was not frequent, continuous, or
regular enough to qualify as a trade or business within the meaning of sec. 162(a).
                                        - 17 -

[*17] to February 16; (3) May 19 to May 25; (4) June 3 to June 9; (5) June 17 to

June 28; (6) July 16 to July 25; (7) July 27 to August 8; and (8) November 29 to

December 6. With respect to the 235 trades executed on petitioner’s investment

account on 66 days during 2006, the purchases for only two of those trades oc-

curred during the period January 27 to May 4. Moreover, there were the following

seven periods during 2006 of at least seven days where no purchases or sales oc-

curred on petitioner’s investment account: (1) January 4 to January 25; (2) July 15

to July 25; (3) July 29 to August 15; (4) August 19 to September 4; (5) September

16 to October 4; (6) October 13 to October 23; and (7) December 20 to December

31.

        On the record before us, we find that the total number of days on which

trades were executed on petitioner’s investment account during each of the years

2005 and 2006 was not substantial for each of petitioner’s taxable years 2005 and

2006.

        Based upon our examination of the entire record before us, we find that

petitioner has failed to carry her burden of establishing that for each of her taxable

years 2005 and 2006 she engaged in the trade or business within the meaning of

section 162(a) of buying and selling securities for her own account. As a result,
                                        - 18 -

[*18] we further find that petitioner is not entitled to deduct under section 162(a)

any of the expenses that petitioner is claiming here as Schedule C expenses.6

      We turn finally to whether petitioner is liable for each of her taxable years

2005 and 2006 for the accuracy-related penalty under section 6662(a). That sec-

tion imposes an accuracy-related penalty of 20 percent of the underpayment to

which section 6662 applies. Section 6662 applies to the portion of any under-

payment which is attributable to, inter alia, (1) negligence or disregard of rules or

regulations, sec. 6662(b)(1), or (2) a substantial understatement of tax, sec.

6662(b)(2).

      The term “negligence” in section 6662(b)(1) includes any failure to make a

reasonable attempt to comply with the Code. Sec. 6662(c). Negligence has also


      6
        Assuming arguendo that petitioner had carried her burden of establishing
that for each of her taxable years 2005 and 2006 she engaged in the trade or
business within the meaning of sec. 162(a) of buying and selling securities for her
own account, we would nonetheless find that, except for $5,000 of “Office”
expenses and $2,500 of “Utilities” expenses that respondent concedes for each of
those years and $740 of “Taxes and licenses” expenses that respondent concedes
for her taxable year 2006, petitioner is not entitled to deduct under that section any
of the expenses that she is claiming here as Schedule C expenses. That is because
we find on the record before us that petitioner has failed to carry her burden of
establishing (1) that the respective payments that she made during the years 2005
and 2006 were made for the expenses remaining at issue for which she claims
those payments were made and (2) that any such expenses are ordinary and neces-
sary expenses within the meaning of sec. 162(a) in carrying on a securities trading
business.
                                        - 19 -

[*19] been defined as a failure to do what a reasonable person would do under the

circumstances. Leuhsler v. Commissioner, 963 F.2d 907, 910 (6th Cir. 1992), affg

T.C. Memo. 1991-179; Antonides v. Commissioner, 91 T.C. 686, 699 (1988),

aff’d, 893 F.2d 656 (4th Cir. 1990). The term “negligence” also includes any

failure by the taxpayer to keep adequate books and records or to substantiate items

properly. Sec. 1.6662-3(b)(1), Income Tax Regs. The term “disregard” includes

any careless, reckless, or intentional disregard. Sec. 6662(c).

      For purposes of section 6662(b)(2), an understatement is equal to the excess

of the amount of tax required to be shown in the tax return over the amount of tax

shown in the return. Sec. 6662(d)(2)(A). An understatement is substantial in the

case of an individual if the amount of the understatement for the taxable year ex-

ceeds the greater of 10 percent of the tax required to be shown in the tax return for

that year or $5,000. Sec. 6662(d)(1)(A).

      The accuracy-related penalty under section 6662(a) does not apply to any

portion of an underpayment if it is shown that there was reasonable cause for, and

that the taxpayer acted in good faith with respect to, such portion. Sec.

6664(c)(1). The determination of whether the taxpayer acted with reasonable

cause and in good faith depends on all the pertinent facts and circumstances,

including the taxpayer’s efforts to assess the taxpayer’s proper tax liability, the
                                        - 20 -

[*20] knowledge and experience of the taxpayer, and the reliance on the advice of

a professional, such as an accountant. Sec. 1.6664-4(b)(1), Income Tax Regs.

Reliance on the advice of a professional may demonstrate reasonable cause and

good faith if, under all the circumstances, such reliance was reasonable and the

taxpayer acted in good faith. Id. In this connection, a taxpayer must demonstrate

that the taxpayer’s reliance on the advice of a professional concerning substantive

tax law was objectively reasonable. Goldman v. Commissioner, 39 F.3d 402, 408

(2d Cir. 1994), aff’g T.C. Memo. 1993-480. A taxpayer’s reliance on the advice

of a professional will be objectively reasonable only if the taxpayer has provided

necessary and accurate information to the professional. Neonatology Assocs.,

P.A. v. Commissioner, 115 T.C. 43, 99 (2000), aff’d, 299 F.3d 221 (3d Cir. 2002);

see also Ma-Tran Corp. v. Commissioner, 70 T.C. 158, 173 (1978).

      Respondent argues that petitioner is liable for each of her taxable years

2005 and 2006 for the accuracy-related penalty under section 6662(a) because of

her negligence or disregard of rules or regulations under section 6662(b)(1).7 On

      7
         Respondent also argues: “In the event that petitioner is found not to have
been negligent, the Court should still consider whether petitioner has shown
reasonable cause or good faith on the likelihood that there will still be a substan-
tial understatement in [sic] both the 2005 and 2006 tax years.” According to re-
spondent, “[g]iven the substantial dollar amounts of the adjustments settled prior
to trial, a Tax Court Rule 155 computation will be necessary before a determina-
tion of a substantial understatement can be made.”
                                       - 21 -

[*21] the record before us, we find that respondent has satisfied respondent’s

burden of production under section 7491(c) with respect to the accuracy-related

penalty under section 6662(a).8

      It is petitioners’ position on brief that she “made a reasonable attempt to

comply with the provision of the Internal Revenue Code to report her sources of

income.[9] She acted in good faith and with reasonable cause. Therefore, the

Section 6662 penalty imposed on her has been asserted against her in error.” Like

petitioner’s testimony, her above-quoted position on brief is general, conclusory,

vague, self-serving, uncorroborated, and/or not credible. Except for claiming



      8
        For example, petitioner did not keep adequate books and records or sub-
stantiate properly the respective expenses that she claimed in her 2005 Schedule
C and her 2006 Schedule C. Indeed, she conceded before the trial in this case
(1) $416,688 of the $504,217 of expenses that she claimed in her 2005 Schedule
C and (2) $208,198 of the $303,910 of expenses that she claimed in her 2006
Schedule C. Moreover, assuming arguendo that petitioner had carried her burden
of establishing that for each of her taxable years 2005 and 2006 she engaged in the
trade or business within the meaning of sec. 162(a) of buying and selling securities
for her own account, we would nonetheless find that, except for $5,000 of “Of-
fice” expenses and $2,500 of “Utilities” expenses that respondent concedes for
each of those years and $740 of “Taxes and licenses” expenses that respondent
concedes for her taxable year 2006, petitioner is not entitled to deduct under that
section any of the expenses that she is claiming here as Schedule C expenses for
each of the years at issue. See supra note 6.
      9
      We do not understand what petitioner means when she claims to have
“made a reasonable attempt to comply with the provision of the Internal Revenue
Code to report her sources of income.” (Emphasis added.)
                                         - 22 -

[*22] during her testimony that she “talked to a friend of mine who is an

accountant”, and who allegedly told her that she “need[ed] to file a Schedule C,

sole proprietor, as a trader”, petitioner offered no evidence that she made any

attempts to ascertain whether she should take the position in each of her 2005

return and her 2006 return that she was a trader for each of her taxable years 2005

and 2006.

      As for petitioner’s claim that she “talked to a friend of mine who is an ac-

countant”, the record is devoid of evidence regarding what, if any, information she

gave her so-called friend/accountant when she allegedly talked to him.10 As dis-

cussed above, a taxpayer must demonstrate that the taxpayer’s reliance on the ad-

vice of a professional concerning substantive tax law was objectively reasonable.

Goldman v. Commissioner, 39 F.3d at 408. A taxpayer’s reliance on the advice of

a professional will be objectively reasonable only if the taxpayer has provided

necessary and accurate information to the professional. NeonatologyAssocs.,




      10
        Petitioner did not call as a witness at the trial in this case her “friend” who
she claims is an “accountant”. Nor did petitioner explain why she failed to call
that person to testify. We presume that the testimony of petitioner’s so-called
friend/accountant would not have been favorable to her position that she was a
trader for each of her taxable years 2005 and 2006. See Wichita Terminal Ele-
vator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), aff’d, 162 F.2d 513 (10th
Cir. 1947).
                                         - 23 -

[*23] P.A. v. Commissioner, 115 T.C. at 99; see also Ma-Tran Corp. v. Commis-

sioner, 70 T.C. at 173.

        On the record before us, we find that petitioner has failed to carry her bur-

den of establishing that there was reasonable cause for, and that she acted in good

faith with respect to, the respective underpayments for her taxable years 2005 and

2006.

        Based upon our examination of the entire record before us, we find that

petitioner has failed to carry her burden of establishing that she is not liable for

each of her taxable years 2005 and 2006 for the accuracy-related penalty under

section 6662(a).

        We have considered all of the contentions and arguments of the parties that

are not discussed herein, and we find them to be without merit, irrelevant, and/or

moot.

        To reflect the foregoing and respondent’s concession,


                                                  Decision will be entered under Rule

                                         155.
