                        T.C. Memo. 1999-135



                      UNITED STATES TAX COURT



                JESSE S. FREDERICK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6907-96.             Filed April 22, 1999.



     Jesse S. Frederick, pro se.

     G. Michelle Ferreira, for respondent.



                        MEMORANDUM OPINION


     GALE, Judge:   Respondent determined the following

deficiencies in, and additions to, petitioner’s Federal income

taxes:
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                                    Additions to Tax
Year        Deficiency     Sec. 6651(a)(1)           Sec. 6654
1989         $85,477           $21,369                   $808
1990         160,895            40,224                 10,595
1991          20,170             5,043                  1,162
1992          67,450            16,863                  2,940
1993          86,128            21,408                  3,606

       Unless otherwise noted, all section references are to the

Internal Revenue Code in effect for the years in issue, and all

Rule references are to the Tax Court Rules of Practice and

Procedure.

       We must decide whether petitioner is liable for Federal

income taxes and additions to tax.      We hold that he is, to the

extent set out below.

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

incorporate by this reference the stipulation of facts,

supplemental stipulation of facts, second supplemental

stipulation of facts, and attached exhibits.      At the time of

filing the petition, petitioner resided in Soquel, California.

       The facts are not in dispute.    Petitioner failed to report

any income during the years in issue.      Respondent’s

determinations in the notice of deficiency were based on

petitioner’s unreported income comprising the following:

Dividends and interest, wages, self-employment compensation, and

capital gain.    At trial, respondent presented substantial

evidence in support of the determinations.      Petitioner has

admitted to receiving the ordinary income.      With respect to the
                                - 3 -


capital gain, petitioner had not provided evidence of basis to

respondent before the issuance of the notice of deficiency, and

thus respondent’s determinations accounted for gross proceeds

from sales of capital assets.   Before the record in this case was

closed, petitioner presented evidence from which the parties were

able to stipulate petitioner’s cost basis in, and, where

relevant, costs of sale of, almost all of the capital assets.

The parties likewise stipulated that petitioner received capital

gains in various amounts during the years in issue.

     We find that petitioner had income (and loss) in the

following amounts during the years in issue, based on the fact

that petitioner has stipulated, admitted, or failed to dispute

respondent’s evidence with respect to those amounts:
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                         1989     1990     1991      1992     1993

Ordinary Income
Dividends                 $613     $262     $141      $27    ---

Interest                 3,569    5,074       77      ---    ---

Wages                     ---      ---       ---      ---   $15,219

Nonemployee          32,066      22,036   55,443      ---   230,952
  compensation


Capital Gain
Short-term capital         231   20,230     ---       ---    ---
  gain from sales
  of stock/options


Short-term capital       1,191   19,653   1,770       ---    ---
  loss from sales
  of stock/options


Long-term capital         ---      ---      ---       ---    ---
  gain from sales
  of stock/options


Long-term capital         ---    17,139   7,546       460    ---
  loss from sales
  of stock/options

                     1
Short-term capital    64,000     55,351     ---      ---     ---
  gain from sales
  of real property

Long-term capital        ---       ---      ---    59,555    ---
  loss from sales
  of real property

1
  The parties were unable to agree on petitioner’s costs of sale
for this property. Because there is no evidence in the record as
to petitioner’s costs of sale, petitioner’s capital gain is
computed as the difference between the sale price and basis.
                                 - 5 -


     Petitioner failed to file Federal income tax returns, and

failed to make payments of estimated tax, for all the years in

issue.

     Rather than disputing the facts in the case, petitioner

presents various legal arguments, seeking to establish that he is

not liable for Federal income taxes and additions to tax.

Petitioner concedes that Congress has the power to levy taxes and

that the Internal Revenue Service generally has the authority to

enforce the Internal Revenue Code.       However, petitioner argues

that the Secretary has not complied with the laws of Congress in

attempting to enforce the Code in his case.       We address each

argument in turn.

     Petitioner first argues that respondent did not comply with

the laws of Congress in issuing the notice of deficiency in the

instant case.   Petitioner is incorrect.      The Secretary or his

delegate is authorized to issue a notice of deficiency.       See

secs. 6212(a), 7701(a)(11)(B) and (12)(A)(i).       The Secretary’s

authority to issue a notice of deficiency was properly delegated

to the District Director who issued the notice of deficiency in

this case.   See Kellogg v. Commissioner, 88 T.C. 167, 172 (1987);

sec. 301.7701-9(b), Proced. & Admin. Regs.; see also Stamos v.

Commissioner, 95 T.C. 624 (1990), affd. without published opinion

956 F.2d 1168 (9th Cir. 1992).
                                 - 6 -


     Petitioner next argues that respondent acted in a quasi-

judicial manner in determining deficiencies and additions to tax

against him and that respondent did not comply with all laws

before issuing the notice of deficiency.      This argument must also

fail.     In general, we do not look behind the notice of

deficiency, see Greenberg’s Express, Inc. v. Commissioner, 62

T.C. 324, 327-328 (1974), and there is no reason to do so here.

Petitioner makes a vague claim that the notice of deficiency was

arbitrary or erroneous.     But the notice was not arbitrary or

erroneous, since petitioner does not dispute the facts upon which

the determinations were based.     See, e.g., Weimerskirch v.

Commissioner, 596 F.2d 358 (9th Cir. 1979), revg. 67 T.C. 672

(1977).     Moreover, it is well established that the Commissioner

need not give a taxpayer the opportunity to appeal at the

administrative level before issuing a notice of deficiency.       See

Estate of Barrett v. Commissioner, T.C. Memo. 1994-535, affd.

without published opinion 87 F.3d 1318 (9th Cir. 1996).

        Next, petitioner argues that any Treasury regulation that

does not cite the statute under which the regulation was issued

is invalid.     Petitioner bases this argument on a provision from

the Code of Federal Regulations, which states:      “Each section in

a document subject to codification must include, or be covered

by, a complete citation of the authority under which the section

is issued”.     1 C.F.R. sec. 21.40 (1999).   A “document” for this
                                  - 7 -


purpose includes a regulation.     1 C.F.R. sec. 1.1 (1999).

Petitioner points out that the regulations under title 27 of the

Code of Federal Regulations, containing regulations pertaining to

the Bureau of Alcohol, Tobacco, and Firearms, comply with this

provision, but the regulations under title 26 of the Code of

Federal Regulations, containing regulations pertaining to the

Internal Revenue Service and the Internal Revenue Code, do not.

However, the Code of Federal Regulations specifically provides

that the rules governing citations of authority, and similar

matters of form, are not intended to affect the validity of

regulations filed and published under law.     See 1 C.F.R. sec. 5.1

(1999).   Thus, the Treasury regulations are valid irrespective of

any failure to include citations of authority.     Moreover,

1 C.F.R. sec. 21.40 provides that each section of a document

“must include, or be covered by, a complete citation of

authority”.   (Emphasis added.)    The regulations under which

respondent issued the notice of deficiency generally cross-

reference a Treasury Decision which itself cites the statutory

authority upon which the regulation is based.1

     Next, petitioner argues that Form 1040 is invalid.     This

argument has no merit.   See McDougall v. Commissioner, T.C. Memo.

1992-683 (citing United States v. Hicks, 947 F.2d 1356 (9th Cir.


     1
        Moreover, in general the numbering of the regulations
makes it obvious under which statute each is issued.
                                - 8 -


1991)), affd. without published opinion 15 F.3d 1087 (9th Cir.

1993); see also Aldrich v. Commissioner, T.C. Memo. 1993-290,

n.3.

       Finally, petitioner argues that the Court does not have

jurisdiction over additions to tax.     Petitioner is incorrect.

Our jurisdiction in this case is based on the valid notice of

deficiency issued by respondent and the timely filed petition.

See Rule 13(a), (c); Normac, Inc. v. Commissioner, 90 T.C. 142,

147 (1988).    Section 6214(a) gives the Court “jurisdiction to

redetermine the correct amount of the deficiency * * * and to

determine whether any additional amount, or any addition to the

tax should be assessed”.    Further, section 6665(a) provides that

in general additions to tax are to be paid, assessed, and

collected in the same manner as taxes.     There is an exception to

section 6665(a) in section 6665(b), but the exception does not

apply in the two situations present in the instant case; namely,

the portion of the addition to tax under section 6651(a) that is

attributable to the deficiency, and the entire addition to tax

under section 6654 where no return is filed.     See sec. 6665(b)(1)

and (2); Estate of DiRezza v. Commissioner, 78 T.C. 19 (1982);

Reese v. Commissioner, T.C. Memo. 1997-346.

       Petitioner has the burden of proof.   See Rule 142(a); Welch

v. Helvering, 290 U.S. 111, 115 (1933).      As noted, petitioner

does not dispute the facts in this case.     Thus, we find that
                                 - 9 -


petitioner is liable for the deficiencies resulting from

unreported ordinary income as determined by respondent and from

unreported capital gain in accordance with our findings.    In

addition, we find that petitioner is liable for self-employment

taxes as determined by respondent and for additions to tax for

failure to file and failure to pay estimated tax in accordance

with our findings.

     To reflect the foregoing,

                                         Decision will be entered

                                   under Rule 155.
