                  T.C. Summary Opinion 2007-85



                     UNITED STATES TAX COURT



                 ANDREW S. CIRBO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2444-06S.               Filed May 24, 2007.


     Andrew S. Cirbo, pro se.

     Robert A. Varra, for respondent.



     DEAN, 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.    Unless otherwise

indicated, subsequent section references are to the Internal

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

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

Pursuant to section 7463(b), the decision to be entered is not
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reviewable by any other court, and this opinion shall not be

treated as precedent for any other case.

     Respondent determined for 2003 a deficiency in petitioner’s

Federal income tax of $11,385 and a section 6662(a) accuracy-

related penalty of $2,277.   The issues for decision are whether

petitioner:   (1) Received unreported nonemployee compensation in

2003, (2) is subject to self-employment tax, and (3) is liable

for a section 6662(a) accuracy-related penalty.

                             Background

     The stipulated facts and the exhibits received into evidence

are incorporated herein by reference.     At the time the petition

in this case was filed, petitioner resided in Centennial,

Colorado.

     During 2003, petitioner was an insurance agent licensed in

Colorado.   In February of 2003, petitioner was approached by

Patrick Donlon (Donlon) who at that time was organizing a

Colorado entity called Secure Investments and Planning, LLC

(Investments).   Investments did not employ a licensed insurance

agent because its primary focus was the mortgage business.

     Donlon asked petitioner whether he would be willing to be

the agent of record at North American Company for Life and Health

Insurance (NACOLAH) for Investments, in the event that

Investments wanted to sell products associated with life or
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health insurance.   Petitioner agreed.   On February 11, 2003,

petitioner signed a Contract Application with NACOLAH on which he

listed his business name as “Secure Investments & Planning”.     The

parties agreed that petitioner was an independent contractor for

Investments.   Petitioner also worked as an assistant agent to a

registered agent for another insurance company during 2003.

     Petitioner and Donlon orally agreed that Investments would

pay to petitioner a fee if an insurance product was sold using

petitioner’s license.   Petitioner and Donlon, however, did not

agree specifically how a fee would be paid or calculated if a

commission were earned from NACOLAH.

     On behalf of Investments, petitioner signed about four or

five applications for policies that were submitted to NACOLAH.

NACOLAH issued to petitioner Agent Commission Statements showing

that two policies, one on March 10 and one on March 11, 2003,

were sold using petitioner’s license, generating total

commissions of $35,061.76.   On March 12, 2003, an Agent Contract

Transmittal Form was submitted to NACOLAH to request a contract

change.   The form indicated that effective March 12, 2003, there

was an “assignment of comm[issions]” from petitioner to

Investments.
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     Immediately thereafter, NACOLAH issued two checks totaling

$35,061.76, dated March 12 and 13, 2003, made payable to

petitioner for commissions earned.      The checks were sent to

Investments’ business address and were deposited by Donlon into

an account maintained by Investments.      Investments subsequently

paid the taxes on the commissions.

     Petitioner filed a 2003 Form 1040, U.S. Individual Income

Tax Return, reporting wages of $7,194, unemployment compensation

of $7,610, taxable refunds of $401, and adjusted gross income of

$15,205.   Respondent received from NACOLAH a Form 1099-MISC,

Miscellaneous Income, reporting that commissions of $35,061 were

paid to petitioner in 2003.    On November 7, 2005, respondent

issued to petitioner a statutory notice of deficiency determining

that petitioner had unreported income of $35,061 in 2003.

                              Discussion

     The Commissioner’s determinations are presumed correct, and

generally taxpayers bear the burden of proving otherwise.      Rule

142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).

     Under section 6201(d), the burden of production may shift to

the Commissioner where an information return, such as a Form

1099, serves as the basis for the determination of a deficiency.

If a taxpayer asserts a reasonable dispute with respect to any

item of income reported on a third-party information return and
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the taxpayer has fully cooperated with the Secretary, the

Secretary shall have the burden of producing reasonable and

probative information concerning that deficiency in addition to

the information return.

     Petitioner has asserted a reasonable dispute with respect to

the income reported by NACOLAH on the Form 1099-MISC and has

cooperated with the Secretary.    Petitioner asserts that he is not

liable for the deficiency and the section 6662(a) accuracy-

related penalty because he did not receive the commissions

reported on the Form 1099-MISC in 2003.   Petitioner offered his

oral testimony as evidence.   Petitioner’s testimony was

corroborated by Donlon’s admission at trial and by canceled

checks from NACOLAH that were deposited into an account

maintained by Investments in 2003.

     There is no suggestion that petitioner failed to cooperate

fully with respondent.    The Court concludes that respondent has

the burden of producing reasonable and probative information

concerning the deficiency and the Form 1099-MISC.

     Respondent concedes that petitioner did not receive the

checks from NACOLAH.   Respondent nevertheless determined that

petitioner had unreported income, around $2,000 to $3,000, which

respondent asserts was the amount petitioner received from

Investments for the use of his license in selling the insurance

policies that generated the commissions reported by NACOLAH.
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Petitioner claims that he “did not receive a dime of commission”,

from Investments or Donlon, in connection with the policies.

     At trial, respondent called Donlon as a witness.       Other than

Donlon’s belief that petitioner would not have agreed to

Investments’ using his insurance license for free, there is no

evidence that petitioner actually received a fee from Investments

for the use of his license in the sale of policies for NACOLAH.

     Even if petitioner did receive a fee from Investments, the

amount that was actually paid is unknown because Investments did

not issue to petitioner a Form 1099 for 2003.       Donlon testified

that he did not remember how petitioner was paid, and he

“estimated” that petitioner was paid a fee between $2,000 to

$3,000 for the use of his insurance license.       Donlon’s testimony,

however, was not supported by any documentation.

     Accordingly, the Court finds that petitioner is not liable

for the 2003 deficiency and section 6662(a) accuracy-related

penalty because respondent has failed to satisfy his burden of

production with respect to the deficiency and the Form 1099-MISC

under section 6201(d).

     To reflect the foregoing,



                                              Decision will be entered

                                         for petitioner.
