                   T.C. Summary Opinion 2011-6



                     UNITED STATES TAX COURT



                 DAVID H. PUSHMAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 491-09S.               Filed January 25, 2011.



     David H. Pushman, pro se.

     Anna A. Long, 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 when the petition was filed.    Pursuant to

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

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

precedent for any other case.    Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code in
                                    - 2 -

effect for the years in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.

         Respondent determined deficiencies and additions to tax

with respect to petitioner’s Federal income tax for 2004, 2005,

and 2006.     After concessions,1 the issues for decision are:      (1)

Whether petitioner is liable for additions to tax under section

6651(a)(1) for failure to timely file Federal income tax returns

for 2004, 2005, and 2006; (2) whether petitioner is liable for

additions to tax under section 6651(a)(2) for failure to timely


     1
      On Sept. 29, 2008, respondent issued notices of deficiency
to petitioner for taxable years 2004, 2005, and 2006 determining
deficiencies and additions to tax as follows:

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

 2004       $2,838        $638.55              $553.41          -0-
 2005       33,293       7,490.92             4,494.55       $1,335.45
 2006       11,210       1,529.32               509.77          298.44

     The parties agree that there are deficiencies in
petitioner’s Federal income tax as follows:

                            Year     Deficiency

                            2004          $199
                            2005         9,210
                            2006         2,199

     The $2,199 amount was calculated without regard to payments.
The parties also agree that petitioner has an overpayment for
2006 of $2,214.

The parties also agree that respective additions to tax based on
the deficiencies are likewise reduced; however, petitioner still
disputes the application of the additions, except petitioner
concedes the addition to tax under sec. 6654(a) for 2005.
                                 - 3 -

pay tax for 2004, 2005, and 2006; and (3) whether petitioner is

liable for an addition to tax under section 6654(a) for failure

to pay estimated tax for 2006.

                            Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   At the time the petition

was filed, petitioner resided in California.

     During the years in issue petitioner was a full-time

limousine driver in Boston, Massachusetts.   Petitioner received

nonemployee compensation for his limousine driving services.     In

September 2004 petitioner began experiencing chest pains.

Petitioner was hospitalized on September 6, 2004, and underwent

heart surgery.   Petitioner was discharged on September 10, 2004,

but did not return to work until the second week of January 2005.

Petitioner worked full time from the second week of January 2005

through February 2006.   Petitioner described 2005 as “the best

financial year [he had] had in years and years.”   In February

2006 petitioner accepted an offer to operate one of his son’s

businesses.   Petitioner moved to California to accept the

position.   Petitioner received wage income as an employee from

his son’s business throughout the remainder of 2006.   While he

was in California, petitioner’s records regarding his limousine

services remained in Massachusetts at the home of a friend of
                               - 4 -

petitioner.   In approximately March 2006 petitioner’s friend

discarded the records.

     Petitioner filed Forms 4868, Application for Automatic

Extension of Time to File U.S. Individual Income Tax Return

(application for automatic extension), for 2004 and 2005 but

failed to file a return for either taxable year.   Petitioner did

not file an application for automatic extension for 2006 and also

did not file a return for that year.   On June 17, 2008, the

Internal Revenue Service (IRS) prepared a substitute for return

for each year under section 6020(b).   On September 29, 2008, the

IRS issued a notice of deficiency for each year in issue.

     Petitioner timely filed a petition to dispute the notices of

deficiency.   After the filing of the petition, petitioner

reconstructed some of his records and provided same to the IRS.

At trial the parties stipulated reduced deficiencies.   The agreed

deficiencies reflect that petitioner was able to substantiate

various deductions which are not at issue.   As a result of the

agreement we need consider only the additions to tax.
                               - 5 -

                            Discussion

I.   Section 6651 Additions to Tax

     A.   Failure To Timely File Addition to Tax (2004, 2005,
          and 2006)

     Section 6651(a)(1) imposes an addition to tax for failure to

file a return on the date prescribed (including extensions)

unless the taxpayer can establish that the failure is due to

reasonable cause and not due to willful neglect.2

     Respondent has satisfied his burden of production under

section 7491(c) by establishing, as petitioner acknowledges, that

petitioner did not file his 2004, 2005, and 2006 Federal income

tax returns by their due dates of August 15, 2005; October 15,

2006; and April 16, 2007, respectively.   Therefore, petitioner

bears the burden of proving that his failure to file a return was

due to reasonable cause and not due to willful neglect.   See

Higbee v. Commissioner,   116 T.C. 438, 446 (2001); Ruggeri v.

Commissioner, T.C. Memo. 2008-300.

     B.   Failure To Timely Pay Addition to Tax (2004, 2005, and
          2006)

     Section 6651(a)(2) imposes an addition to tax for failure to

pay the amount shown as tax on the taxpayer’s return on or before


     2
      If the Secretary makes a return for the taxpayer under sec.
6020(b), it is disregarded for purposes of determining the amount
of the addition to tax under sec. 6651(a)(1), but it is treated
as a return filed by the taxpayer for purposes of determining the
amount of the addition to tax under sec. 6651(a)(2). Sec.
6651(g).
                                 - 6 -

the date prescribed unless the taxpayer can establish that the

failure is due to reasonable cause and not due to willful

neglect.3

     Respondent has satisfied his burden of production under

section 7491(c) by establishing, as petitioner acknowledges, that

petitioner did not pay the taxes due for 2004, 2005, and 2006 by

their due dates of April 15, 2005, April 17, 2006, and April 16,

2007, respectively.    Therefore, petitioner bears the burden of

proving that his failure to timely pay tax was due to reasonable

cause and not due to willful neglect.     See Higbee v.

Commissioner, supra at 446; Ruggeri v. Commissioner, supra.

     C.      Exceptions to Section 6651 Additions to Tax

     Reasonable cause is a defense to the section 6651(a)(1) and

(2) additions to tax.     To prove reasonable cause for a failure to

timely file, the taxpayer must show that he exercised ordinary

business care and prudence and was nevertheless unable to file

the return within the prescribed time.     Crocker v. Commissioner,

92 T.C. 899, 913 (1989); sec. 301.6651-1(c)(1), Proced. & Admin.

Regs.     To prove reasonable cause for failure to timely pay the

amount shown as tax on a return, the taxpayer must show that he

exercised ordinary business care and prudence in providing for


     3
      The amount of the addition to tax under sec. 6651(a)(2)
reduces the amount of the addition to tax under sec. 6651(a)(1)
for any month to which an addition to tax applies under both
paragraphs. Sec. 6651(c)(1).
                                - 7 -

payment of his tax liability and nevertheless was either unable

to timely pay the tax or would suffer undue hardship if he paid

the tax on the due date.    Sec. 301.6651-1(c)(1), Proced. & Admin.

Regs.    The determination of whether reasonable cause exists is

based on all the facts and circumstances.    Estate of Hartsell v.

Commissioner, T.C. Memo. 2004-211; Merriam v. Commissioner, T.C.

Memo. 1995-432, affd. without published opinion 107 F.3d 877 (9th

Cir. 1997).

     Petitioner contends that his heart condition, attention

deficit disorder,4 and decreased earnings constituted reasonable

cause for his failure to timely file returns and pay taxes.

Petitioner provided medical records reflecting his hospital stay

from September 6 to 10, 2004.    Petitioner stipulated that he

worked full time before his hospital stay and resumed work in the

second week of January 2005.    We conclude that petitioner had

sufficient opportunity to access his records and file his return

for each year.

     The Court has consistently held that if a taxpayer is able

to continue his business affairs despite an incapacity, then the

incapacity does not establish reasonable cause.    Ruggeri v.

Commissioner, supra (and cases cited therein); Hazel v.

Commissioner, T.C. Memo. 2008-134; Jordan v. Commissioner, T.C.

     4
      While petitioner may have been diagnosed with attention
deficit disorder, he indicated that the disorder did not hinder
his recordkeeping or his employment activities.
                               - 8 -

Memo. 2005-266 (and cases cited therein).     Similarly, the Court

has also held that a taxpayer’s inability to meet his tax

obligations when he can conduct normal business activities does

not establish reasonable cause.   Jordan v. Commissioner, supra;

Wright v. Commissioner, T.C. Memo. 1998-224, affd. without

published opinion 173 F.3d 848 (2d Cir. 1999); Tabbi v.

Commissioner, T.C. Memo. 1995-463.

      Willful neglect is defined as a “conscious, intentional

failure or reckless indifference.”      United States v. Boyle, 469

U.S. 241, 245 (1985).   Petitioner admitted that he did not file

tax returns for 2004, 2005, and 2006 because he knew he could not

pay the taxes due.   Although petitioner described 2005 as his

best year, he did not pay any income tax due for 2004 or 2005.

Petitioner had income tax withheld from his wages in California

but also had income tax due in 2006 and failed to pay the

remaining tax due.

      We conclude petitioner has not shown his failure to file

returns or pay taxes was due to reasonable cause.     Additionally,

petitioner has shown willful neglect in failing to timely file

tax returns and failing to timely pay the tax due for each year.

II.   Section 6654(a) Addition to Tax

      A.   Failure To Pay Estimated Tax Addition to Tax (2005 and
           2006)

      Section 6654(a) imposes an addition to tax on an

underpayment of estimated income tax unless an exception applies.
                                 - 9 -

See sec. 6654(e).    The section 6654(a) addition to tax is

determined by applying the underpayment rate established under

section 6621 to the amount of the underpayment5 for the period of

the underpayment.6    The addition to tax is also calculated with

reference to four required installment payments of the taxpayer’s

estimated income tax.    Sec. 6654(c)(1); Wheeler v. Commissioner,

127 T.C. 200, 210 (2006), affd. 521 F.3d 1289 (10th Cir. 2008).

Each required installment of estimated income tax is equal to 25

percent of the “required annual payment.”     Sec. 6654(d)(1)(A).

The required annual payment is generally equal to the lesser of:

(1) 90 percent of the tax shown on the taxpayer’s return for the

year (or 90 percent of the taxpayer’s tax for the year if no

return is filed); or (2) 100 percent of the tax shown on the

return if the taxpayer filed a return for the immediately

preceding taxable year.     Sec. 6654(d)(1)(B); Wheeler v.

Commissioner, supra at 210-211.     If the taxpayer did not file a

return for the preceding year, then clause (2) does not apply.

Sec. 6654(d)(1)(B).     A taxpayer has an obligation to pay



     5
      “[A]mount of the underpayment” means the excess of the
required installment over the amount, if any, of the installment
paid on or before the due date for the installment. Sec.
6654(b)(1).
     6
      The period of the underpayment runs from the due date for
the installment to the earlier of the 15th day of the 4th month
following the close of the taxable year or with respect to any
portion of the underpayment, the date on which such portion is
paid. Sec. 6654(b)(2).
                              - 10 -

estimated income tax for a particular year only if he had a

“required annual payment” for that year.    Wheeler v.

Commissioner, supra at 211.

     Respondent determined additions to tax under section 6654(a)

for both 2005 and 2006.   At trial petitioner conceded that he is

liable for the estimated tax addition to tax for 2005.

Respondent’s burden of production under section 7491(c) with

respect to the section 6654(a) addition to tax has been satisfied

by proof at trial that petitioner has a Federal income tax

liability for 2006 and that petitioner made no estimated payments

for that year.   Thus, the addition to tax applies under section

6654(a) unless petitioner establishes that an exception applies.

     B.   Exceptions to the Section 6654(a) Addition to Tax

     Generally, no reasonable cause exception exists for the

section 6654(a) addition to tax.   Sec. 1.6654-1(a)(1), Income Tax

Regs.; see also Bray v. Commissioner, T.C. Memo. 2008-113.     No

addition to tax is imposed under section 6654(a) with respect

to any underpayment if the Secretary determines that the taxpayer

became disabled in either the taxable year for which estimated

income tax payments were required or in the preceding taxable

year and the underpayment was due to reasonable cause and not

willful neglect.   Sec. 6654(e)(3)(B).   Additionally, no addition

to tax is imposed under section 6654(a) with respect to any

underpayment to the extent the Secretary determines that by
                              - 11 -

reason of casualty, disaster, or other unusual circumstances the

imposition of the addition to tax would be against equity or good

conscience.   Sec. 6654(e)(3)(A).

     Petitioner has not established a disability within the

meaning of section 6654(e)(3)(B).    See Thomas v. Commissioner,

T.C. Memo. 2005-258 (no disability when taxpayer is employed and

running his own business, despite both mental and physical

afflictions).   He also has not established any casualty,

disaster, or other unusual circumstances by reason of which the

imposition of the section 6654(a) addition to tax would be

against equity or good conscience.     Consequently, respondent’s

determination is sustained.

     We have considered all of petitioner’s contentions and

arguments that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.

     To reflect the foregoing,7


                                           Decision will be entered

                                     under Rule 155.




     7
      As indicated, the parties have stipulated the deficiencies
for 2004, 2005, and 2006. The Court leaves it to the parties to
compute the additions to tax based on these stipulated
deficiencies.
