                  T.C. Summary Opinion 2010-54



                     UNITED STATES TAX COURT



            ALBERT LAWRENCE BOMER, JR., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 27711-08S.              Filed April 26, 2010.



     Albert Lawrence Bomer, Jr., pro se.

     Alicia A. Mazurek, for respondent.



     ARMEN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1   Pursuant to section

7463(b), the decision to be entered is not reviewable by any




     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for the
year in issue.
                                - 2 -

other court, and this opinion shall not be treated as precedent

for any other case.

     Respondent determined a deficiency in petitioner’s 2007

Federal income tax of $4,667 and an accuracy-related penalty

under section 6662(a) and (b)(1) of $933.40.      The issues for

decision are:   (1) Whether petitioner is entitled to an earned

income credit, and (2) whether petitioner is liable for the

accuracy-related penalty.    We hold that petitioner is not

entitled to an earned income credit and that petitioner is liable

for the accuracy-related penalty.

                             Background

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

found.   We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.    Petitioner resided in the State

of Michigan when the petition was filed.

     Throughout 2007 petitioner was incarcerated at the Standish

Maximum Correctional Facility in Standish, Michigan.      Petitioner

has been incarcerated since 1997 and is serving a 40-year

sentence.

     While incarcerated petitioner filed his 2007 Federal income

tax return reporting wages of $15,640 and claiming an earned

income credit of $4,667.    Respondent’s records do not indicate

that petitioner had wages in 2007.      Petitioner is unable to

disclose how the income reported on his 2007 Federal income tax
                               - 3 -

return was earned, but asserts that the income was not from work

completed within the prison.

      In a notice of deficiency respondent determined that

petitioner is not entitled to an earned income credit.

Respondent also determined that petitioner is liable for the

accuracy-related penalty based on negligence or disregard of

rules or regulations.

                            Discussion

I.   Earned Income Credit

      An eligible individual is allowed an earned income credit

for the taxable year in an amount equal to the credit percentage

of so much of the taxpayer’s earned income as does not exceed the

earned income amount.   Sec. 32(a).    Earned income includes wages,

salaries, tips, and other employee compensation.    Sec.

32(c)(2)(A)(i).   However, section 32(c)(2)(B) excludes certain

items from the definition of earned income.    Specifically,

section 32(c)(2)(B)(iv) provides that “no amount received for

services provided by an individual while the individual is an

inmate at a penal institution shall be taken into account” in

determining a taxpayer’s earned income.

      Petitioner contends that income he reported on his 2007

Federal income tax return was not earned for work completed

within the prison.   Regardless of petitioner’s contention, the

sole inquiry is whether a taxpayer earned income while he was an
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inmate at a penal institution; other factors, such as the source

of the income, are irrelevant.     Rogers v. Commissioner, T.C.

Memo. 2004-245.

      In construing a statute, courts generally seek the plain and

literal meaning of its language.    See United States v. Locke, 471

U.S. 84, 93 (1985); United States v. Am. Trucking Associations,

Inc., 310 U.S. 534, 543 (1940); Wilson v. Commissioner, T.C.

Memo. 2001-139.   Under the plain and literal language of section

32(c)(2)(B)(iv), it makes no difference whether a taxpayer

performed services at a location inside or outside the penal

institution.   Rogers v. Commissioner, supra.

      Because petitioner was an inmate at a penal institution

throughout 2007, all of his income is excluded from the

computation of the earned income credit.    Therefore, we hold that

petitioner is not entitled to the earned income credit.

II.   Section 6662(a) Penalty

      Section 6662(a) and (b)(1) imposes a penalty equal to 20

percent of the amount of any underpayment attributable to

negligence or disregard of rules or regulations.    The term

“negligence” includes any failure to make a reasonable attempt to

comply with tax laws, and “disregard” includes any careless,

reckless, or intentional disregard of rules or regulations.       Sec.

6662(c).   The Commissioner bears the burden of production, sec.

7491(c), but, if satisfied, the taxpayer then bears the ultimate
                                 - 5 -

burden of persuasion, Higbee v. Commissioner, 116 T.C. 438, 446

(2001).   Respondent has met his burden; therefore, the burden is

on petitioner.

     Section 6664 provides an exception to the imposition of the

accuracy-related penalty if the taxpayer establishes that there

was reasonable cause for, and the taxpayer acted in good faith

with respect to, the underpayment.       Sec. 6664(c)(1); sec. 1.6664-

4(a), Income Tax Regs.   The determination of whether the taxpayer

acted with reasonable cause and in good faith is made on a case-

by-case basis, taking into account all pertinent facts and

circumstances.   Sec. 1.6664-4(b)(1), Income Tax Regs.

     After considering the totality of the facts and

circumstances, we are satisfied that petitioner did not have

reasonable cause to believe that he was entitled to the earned

income credit and did not act in good faith within the meaning of

section 6664(c)(1).   Accordingly, we hold that petitioner is

liable for the accuracy-related penalty under section 6662.

                            Conclusion

     We have considered all of the arguments made by petitioner,

and, to the extent that we have not specifically addressed them,

we conclude that they are irrelevant or without merit.

     To reflect the foregoing,


                                              Decision will be entered

                                         for respondent.
