                                                                   [DO NOT PUBLISH]

                        IN THE UNITED STATES COURT OF APPEALS
                                                                           FILED
                              FOR THE ELEVENTH CIRCUIT COURT OF APPEALS
                                                       U.S.
                               ________________________ ELEVENTH CIRCUIT
                                                                       MARCH 24, 2011
                                      No. 10-10932                       JOHN LEY
                                ________________________                   CLERK


                                   Tax Court No. 2617-04L


L. S. VINES,

lllllllllllllllllllll                                          Petitioner - Appellant,

    versus

COMMISSIONER OF THE INTERNAL REVENUE SERVICE,

lllllllllllllllllllll                                          Respondent - Appellee.

                                ________________________

                            Petition for Review of a Decision of the
                                    United States Tax Court
                                 ________________________

                                      (March 24, 2011)

Before DUBINA, Chief Judge, EDMONDSON and WILSON, Circuit Judges.

PER CURIAM:

         L.S. Vines, a veteran attorney, settled a class-action lawsuit that generated

$25 million in attorney’s fees. He received approximately $12 million in
December 1999 and the remainder in January 2000. He then closed his law firm

and began a margin-trading business from home. Despite significant gains early

on, he suffered a net loss of approximately $23 million by mid-April and did not

pay his 1999 federal income taxes. Separate litigation adjudicated the general tax

liability claims. At issue in this appeal is whether the IRS’s assessment of a

failure-to-pay (“FTP”) addition is appropriate. The Tax Court ruled that the IRS

accurately computed and assessed the FTP addition.

       The tax code provides that “[i]n case of failure . . . to pay the amount shown

as tax on any return . . . on or before the date prescribed for payment of such

tax . . . , unless it is shown that such failure is due to reasonable cause and not due

to willful neglect, there shall be added” an FTP addition. 26 U.S.C. § 6651(a)(2).

The regulations describe the “reasonable cause” exception as follows:


             A failure to pay will be considered to be due to reasonable
             cause to the extent that the taxpayer has made a satisfactory
             showing that he exercised ordinary business care and
             prudence in providing for payment of his tax liability and
             was nevertheless . . . unable to pay the tax . . . . Further, a
             taxpayer who invests funds in speculative . . . assets has
             not exercised ordinary business care and prudence in
             providing for the payment of his tax liability unless, at the
             time of the investment, the remainder of the taxpayer’s
             assets and estimated income will be sufficient to pay his
             tax or it can be reasonably foreseen that the speculative or
             illiquid investment made by the taxpayer can be utilized

                                           2
             (by sale or as security for a loan) to realize sufficient funds
             to satisfy the tax liability.

26 C.F.R. § 301.6651-1(c)(1). After review of the record and the parties’ briefs,

and having the benefit of oral argument, we conclude that the Tax Court correctly

concluded that Vines’s actions do not properly fall within the “reasonable cause”

exception and that he is therefore subject to the FTP addition.


AFFIRMED.




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