                        T.C. Memo. 2002-265



                      UNITED STATES TAX COURT



                 EDWARD T. O’TOOLE, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2235-00.               Filed October 15, 2002.



     Edward T. O’Toole, pro se.

     C. Teddy Li, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COLVIN, Judge:   Respondent determined that petitioner Edward

T. O’Toole is liable for deficiencies and additions to tax as

follows:
                                 - 2 -

                                             Additions to tax
     Year          Deficiency            Sec. 6651      Sec. 6654

     1993           $2,441                $507          $83.05
     1994            1,894                 126.75        18.31
     1995            4,808                 852.50       176.50
     1996            8,307               1,732.75       360.76
     1997            2,786                 364           69.99

     The issues for decision are:

     1.   Whether petitioner bears the burden of proof as to

respondent’s deficiency determinations.       We hold that he does.

     2.   Whether petitioner had unreported income of $21,733 in

1993, $18,252 in 1994, $32,014 in 1995, $44,866 in 1996, and

$24,650 in 1997.   We hold that he did, except we hold that he had

unreported income of $17,430 in 1993.

     3.   Whether petitioner is liable for the additions to tax

for failure to file income tax returns and failure to pay

estimated tax for the years in issue.       We hold that he is.

     Unless otherwise specified, section references are to the

Internal Revenue Code in effect for the years in issue.       Rule

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

                           FINDINGS OF FACT

A.   Petitioner

     Petitioner resided in Glyndon, Maryland, when he filed his

petition in this case.     Petitioner retired in 1986.

B.   Petitioner’s Income

     Petitioner received the following amounts of pension income

during the years in issue:
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          Payer              1993      1994       1995     1996     1997
Maryland State               $766     $1,839     $1,863   $1,914   $1,969
Retirement System
U.S. Office of           12,864       13,107     13,130   12,807   13,260
Personnel & Management
  Total                  13,630       14,946     14,993   14,721   15,229

     Petitioner received the following amounts of dividend income

during the years in issue:

          Payer              1993      1994       1995     1996     1997
ACM Government               $572      $725       $646     $568      --

Spectrum Fund
Avalon Properties              17          108     146      149    $153
Balt. Gas & Elec.              63           66      69       69      72
Baltimore Bancorp               1           10      --       --      --
Capital One Financial          --           --      21       30      30
Corp.
Central Maine Power            62           36      36       36      36
Co.
PSI Energy, Inc.              128          186     186      186     186
SCANA Corp.                   120          126     126      129     135
Signet Banking Corp.           75           96      75       75      60
  Total                  1,038        1,353      1,305    1,242     672

     Petitioner received the following amounts of interest income

during the years in issue:

          Payer              1993      1994       1995     1996     1997
1st Mariner Bank              --            --    $261     $117      --
American National Bank       $11           $15      16        4      --
                                 - 4 -

Baltimore County           426           104   137    43     --

Savings Bank
Bradford Federal            28            32    34    12     --
Savings Bank
Crestar Bank                --            --    --    13     --
Eastern Savings Bank         5             3     8     2     --
Fairfax Savings Bank        --            20    38    16     --
First National Bank         --            --    --     1     --
Garibaldi Federal          567            --    --    --     --
Savings Bank
Hamilton Federal            19            23    31    11     --
Savings & Loan
Household Bank F.S.B.       58            --    --    --     --
Internal Revenue           224            --    --    --     --
Service
Loyola Federal Savings      71            65    73    --     --
Bank
Marylands Bank F.S.B.       --           323    --    --     --
MBNA America                12            17    27     9     --
Mercantile Safe             21            --    --    --     --
Deposit & Trust
Northfield Federal         150            21    20     4     --
Savings
Provident Bank of           55            48    57    20     --
Maryland
Sparks State Bank           23           110    --    --     --
Washington Federal          --            10     6    --     --
Savings Bank
  Total                  1,670           791   708   252     --

     Petitioner received winnings of $1,092 from the Maryland

State Lottery in 1993.   Petitioner received capital gain income
                                 - 5 -

of $1,162 from the sale of stocks and bonds in 1994.   Petitioner

received Social Security benefits of $15,008 in 1995, $8,502 in

1996, and $8,749 in 1997.

C.   Petitioner’s Income Tax Returns

     Petitioner did not file income tax returns for the years in

issue.   He had the following amounts of income tax withheld from

various pension, dividends, and interest payments:   $413 in 1993;

$1,387 in 1994; $1,398 in 1995; $1,376 in 1996; and $1,330 in

1997.

                                OPINION

A.   Whether Petitioner Bears the Burden of Proof

     Petitioner contends that respondent bears the burden of

proof under section 7491(a).1    We disagree.


     1
         Sec. 7491 provides in pertinent part:

     SEC. 7491. BURDEN OF PROOF.

          (a) Burden Shifts Where Taxpayer Produces Credible
     Evidence.--

          (1) General Rule.--If, in any court proceeding, a
     taxpayer introduces credible evidence with respect to
     any factual issue relevant to ascertaining the
     liability of the taxpayer for any tax imposed by
     subtitle A or B, the Secretary shall have the burden of
     proof with respect to such issue.

          (2) Limitations.--Paragraph (1) shall apply with
     respect to an issue only if--

                (A) the taxpayer has complied with the
           requirements under this title to substantiate any
                                                    (continued...)
                                 - 6 -

     Taxpayers bear the burden of proving that section 7491

applies.   H. Conf. Rept. 105-599, at 239 (1998), 1998-3 C.B. 747,

993; S. Rept. 105-174, at 45 (1998), 1998-3 C.B. 537, 581.

Section 7491 applies to court proceedings arising in connection

with examinations beginning after July 22, 1998.     Internal

Revenue Service Restructuring and Reform Act of 1998, Pub. L.

105-206, sec. 3001(a), 112 Stat. 726.     On September 11, 1996,

respondent requested transcripts of reports from third parties

showing amounts paid to petitioner.      Absent contrary evidence, we

infer from this fact that the examination in this case began

before July 22, 1998.    Thus, section 7491 does not apply, the

notice of deficiency is presumed to be correct, and petitioner

bears the burden of proving that respondent’s determination is

incorrect.    Sec. 7491(a); Rule 142(a)(1); Welch v. Helvering, 290

U.S. 111, 115 (1933).2




     1
      (...continued)
          item;

                  (B) the taxpayer has maintained all records
             required under this title and has cooperated with
             reasonable requests by the Secretary for
             witnesses, information, documents, meetings, and
             interviews; * * *.

     2
        However, at par. B-3, below, we conclude that respondent
bears the burden of producing evidence that petitioner received
wage income in 1993.
                                 - 7 -

     Petitioner contends that respondent bears the burden of

proof on the grounds that he is innocent until proven guilty.

Petitioner incorrectly relies on the burden of proof that applies

to a criminal case.

B.   Whether Petitioner Had Unreported Income in the Amounts
     Determined by Respondent

     Petitioner contests respondent’s determination that

petitioner had unreported income of $21,733 in 1993, $18,252 in

1994, $32,014 in 1995, $44,866 in 1996, and $24,650 in 1997.     We

disagree with petitioner for reasons discussed next.

     1.      Petitioner’s Contentions Regarding All Years in Issue

     Petitioner contends that respondent erroneously determined

that petitioner is taxable on income reported on several Forms

1099 which misspelled or failed to include an apostrophe in his

name.     We disagree because petitioner’s Social Security number

appears on all of the Forms 1099 at issue.

     Petitioner points out that respondent withdrew or did not

offer into evidence all of the exhibits identified in

respondent’s pretrial memorandum.    Petitioner contends that this

shows that respondent’s determination is incorrect.     We disagree.

Respondent’s decision not to offer documents into evidence does

not benefit petitioner because petitioner bears the burden of

proof.
                                 - 8 -

     Petitioner contends that he has no deficiencies in income

tax because he deposited more funds with respondent than the

amount of taxes respondent contends he owes for the years in

issue.    We disagree.   First, petitioner has not shown that he

deposited funds with respondent.     Second, the term “deficiency”

is generally defined by statute as the difference between the

total amount of tax that the Commissioner determines should have

been reported on the return and the amount that the taxpayer

reported on the return.     Sec. 6211(a).   The amount of a

deficiency is not reduced by amounts of tax deposited by or

withheld from the taxpayer.

     Petitioner testified that the payments he received from the

Federal Government were nontaxable disability payments.       His

testimony was uncorroborated.     We are not convinced that

petitioner was paid on account of disability in any of the years

in issue.

     2.     Whether Petitioner Had $1,092 in Income From Lottery
            Winnings in 1993

     Petitioner contends that he is not taxable on the $1,092

that he won in the lottery in 1993 because he and another

individual shared the winnings.     Petitioner’s claim is

unconvincing because he did not identify the other alleged

lottery winner or otherwise corroborate his claim.
                                 - 9 -

     3.      Whether Petitioner Received Wage Income in 1993

     Respondent determined that petitioner received wages of

$4,303 in 1993, consisting of $1,867 from Linda Diamon (not

otherwise identified in the record) and $2,436 from the State of

Maryland - Central Payroll.

     Respondent determined that petitioner received wage income

in 1993 based on Forms W-2, Wage and Tax Statement, from “Linda

Diamon” and the “State of Maryland - Central Payroll”.     However,

petitioner retired in 1986 and denied receiving any wage income

in 1993.     There is no evidence in the record that petitioner

received wages in 1993 from Linda Diamon or the State of

Maryland, or that petitioner was employed or received wages in

1993.     The Forms W-2 to which respondent refers are not in the

record.     There are no entries on petitioner’s IRS transcripts for

1993 that refer to Forms W-2 from Linda Diamon or the State of

Maryland - Central Payroll.     Respondent called no witness to

describe how respondent made the determination that petitioner

received wages in 1993, and we believe (or leave no reason to

doubt) petitioner’s denial that he received wages in 1993.     Cf.

Cebollero v. Commissioner, 967 F.2d 986 (4th Cir. 1992), affg.

T.C. Memo. 1990-618.     We conclude that petitioner did not receive

wage income in 1993 of $1,867 from Linda Diamon and $2,436 from

the State of Maryland - Central Payroll.
                               - 10 -

     4.     Whether Petitioner Had Capital Gains in 1994

     First Fidelity Bank N.A. New Jersey issued four Forms 1099-

B, Proceeds From Broker and Barter Exchange Transactions, showing

that it paid petitioner capital gains of $1,162 from the sale of

stocks and bonds in 1994.    Petitioner contends that the amounts

identified as capital gains in the Forms 1099-B were loans.     We

disagree.    Petitioner’s uncorroborated testimony that these

amounts were loans was unconvincing.

     5.     Whether $20,169 That Petitioner Deposited in a Bank
            Account in 1997 Was Income to Petitioner

     Respondent determined that petitioner’s cash deposit of

$20,169 to an FNB Bank of Maryland account in 1997 was income to

petitioner.    Petitioner does not dispute that the $20,169 was

deposited in his bank account in 1997.

     A bank deposit is prima facie evidence of income.     Tokarski

v. Commissioner, 87 T.C. 74, 77 (1986).    In O’Dwyer v.

Commissioner, 266 F.2d 575, 588 (4th Cir. 1959), affg. 28 T.C.

698 (1957), the U.S. Court of Appeals for the Fourth Circuit held

that the taxpayers had the burden of overcoming the presumption

of correctness that a bank deposit was unreported income.    There

was no evidence in the record as to the source of the deposit,

and the Fourth Circuit found that the taxpayers failed to

overcome the presumption because they offered no evidence or

testimony about the deposit.    Id.   Thus, petitioner bears the
                                - 11 -

burden of proving that the $20,169 deposit was not taxable

income.     Petitioner testified that the $20,169 deposit was a

nontaxable transfer from another account.     Petitioner’s testimony

was vague, and he offered no other evidence about the $20,169

bank deposit.     We are not convinced that the deposit was not

income.     We conclude that the $20,169 deposit was taxable income,

and that petitioner had unreported income of $17,430 in 1993,

$18,252 in 1994, $32,014 in 1995, $44,866 in 1996, and $24,650 in

1997.

C.   Whether Petitioner Is Liable for the Addition to Tax for
     Failure To File Returns

        A taxpayer is liable for an addition to tax of up to 25

percent for failure to file a Federal income tax return unless

the failure was due to reasonable cause and not willful neglect.

Sec. 6651(a)(1).

        Respondent determined that petitioner is liable for the

addition to tax under section 6651(a)(1) for failure to file

returns for the years in issue.     Petitioner contends that he is

not liable because he had reasonable cause for not filing

returns.     Petitioner points out that the names on some of the

Forms 1999, 1098, Mortgage and Interest Statement, and W-2 on

which his Social Security number appears include Otoole, O Toole,
                              - 12 -

and O. Toole.   Petitioner contends that his failure to report

those amounts in income was due to reasonable cause.   We

disagree.

     It should have been obvious to petitioner that the amounts

were taxable to him because his Social Security number appears on

the Forms 1099, 1098, and W-2.   Petitioner has not shown that his

failure to file was due to reasonable cause and not willful

neglect.

D.   Whether Petitioner Is Liable for the Addition to Tax for
     Failure To Pay Estimated Tax

     Respondent determined that petitioner is liable for the

addition to tax under section 6654 for failure to pay estimated

tax for the years in issue.   We have jurisdiction to review this

determination because petitioner did not file a return for any of

the years in issue.   Sec. 6665(b)(2); Meyer v. Commissioner, 97

T.C. 555, 562 (1991).   A taxpayer is liable for the addition to

tax for failure to pay estimated tax unless the taxpayer shows

that he or she meets one of the exceptions provided in section

6654(e), none of which apply here.

     Petitioner contends that he had deposited enough money to

pay any tax liability he may have for 1993, 1994, 1995, 1996, and

1997.   He contends that he maintained a $5,000 “‘estimated tax

applied’ fund” with respondent and that the dividends he received

were subject to “31% backup tax” withholding.   However,
                             - 13 -

petitioner did not show that he deposited funds in addition to

the taxes withheld from him in those years, that respondent’s

determinations with respect to the section 6654 addition were

erroneous, or that any exception applies in the years in issue.

     We conclude that petitioner is liable for the addition to

tax for failure to pay estimated tax under section 6654 for the

years in issue.

                                             Decision will be

                                        entered under Rule 155.
