* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3.

1 After examining the briefs and appellate record, th is panel has determined unanimously that oral argument would not materiallyassist the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). T he case is therefore ordered submitted without oral argument. 

## F I L E D United States Court of Appeals Tenth Circuit 

### MAR 1 2000 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

JOHN PAUL MASSA,

Petitioner-Appellant,

v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. No. 99-9022 (Tax Court No. 12472-97) (Petition for Review)

ORDER AND JUDGMENT *

Before TACHA , ANDERSON , and LUCERO , Circuit Judges.

This petition for review concerns petitioner’s 1992 tax return. 1 The Commissioner of Internal Revenue (Commissioner) det ermined a deficiency of $5,115 in petitioner’s 1992 tax return and assessedan addition to tax of $1,279 because the return was not timely filed. The defic iency resulted because the-2-

Commissioner disallowed certain trade or business d eductions and medical expense deductions that petitioner claimed to offse t his gross income. Petitioner requested a redetermination of the deficiency, and the Tax Court found that petitioner was not entitled to the claimed deductio ns and upheld the additions to tax for failing to file a timely tax return. We af firm. Petitioner argues that the Tax Court erred in uphol ding the Commissioner’s disallowance of his 1992 claimed deduction under 26 U.S.C. § 162(a). Petitioner argues that he incurred ordinary and necessary expe nses in carrying on a trade or business in connection with his attempts to sell Me laleuca products in the former Soviet Union. The Tax Court found that petitioner was not carrying on a trade or business during 1992, but rather, was only investig ating potential trade opportunities. As support for the ultimate finding , the Tax Court pointed to the lack of evidence that petitioner’s communications w ith and travel to Russia resulted in any completed business transactions. O n review, “we must apply the statutory standard of [26 U.S.C.] § 162 to determin e whether taxpayer[] . . . incurred expenses ‘during the taxable year in carry ing on any trade or business.’” Jackson v. Commissioner , 864 F.2d 1521, 1524 (10th Cir. 1989). This is a mixed question of law and fact. See id. Consequently, we review the Tax Court’s factual findings and the inferences drawn therefromfor clear error, and we review de novo the application of the law to the facts. See id.-3- [E]ven though a taxpayer has made a firm decision t o enter into business and over a considerable period of tim e spent money in preparation for entering that business, he still ha s not engaged in carrying on any trade or business within the intendment of section 162(a) until such time as the business has begun to function as a going concern and performed those activities for wh ich it was organized. Id. at 1525-26 (further quotation omitted). Carrying on a trade or business for purposes of § 162(a) refers to “extensive activity over a substantial period of time during which the [t]axpayer holds himself out as se lling goods or services.” Snyder v. United States , 674 F.2d 1359, 1364 (10th Cir. 1982) (further quo tation omitted). Based on this standard, the record suppo rts the Tax Court’s findings. Not only is there no evidence that the business hadbegun to function as a going concern or performed sales activities, the record s hows that petitioner had not even made a firm decision to enter into any busines s in the former Soviet Union. The evidence indicates that petitioner investigatedpotential trade and sales opportunities but did not carry on a trade or busin ess in 1992. Petitioner also argues that pursuant to 26 U.S.C. § 213(a), he was entitled to deduct the expense of a special diet required to accommodate his medical condition. The Tax Court upheld the Commissioner’s disallowance of the deduction of $2,696 because petitioner failed to es tablish that his special diet was something other than a substitute for a normal diet , nor did he establish the amount by which his actual food expenditures exceed ed the cost of a normal diet.-4-

The cost of a special diet may be deductible under § 213(a) if petitioner shows both that the diet is medically necessary andthe amount by which the cost of the special diet exceeds the cost of a normal diet. See Huff v. Commissioner , T.C.M. 1995-200 (1995); Nehus v. Commissioner , T.C.M. 1994-631 (1994), aff’d, No. 95-70566, 1997 WL75572, at **1 (9th Cir. Feb. 1 8, 1997) (unpublished). We agree with the Tax Court that petitioner is not entitled to the deduction because he did not establish the amount by which hi s special diet exceeded the cost of a normal diet. Finally, petitioner maintains that he should not be held liable for the addition to tax assessed pursuant to 26 U.S.C. § 66 51(a)(1) for failing to timely file his 1992 tax return. The statute provides that the addition to tax should not be imposed if the failure to timely file “is due to reasonable cause and not due to willful neglect.” 26 U.S.C. § 6651(a)(1). It is p etitioner’s burden to show reasonable cause. See United States v. Craddock (In re Craddock) , 149 F.3d 1249, 1254-55 (10th Cir. 1998). “Reasonable cause exists if the taxpayer exercised ordinary business care and prudence and w as nevertheless unable to file the return within the prescribed time.” Id. at 1255 (further quotation omitted). Petitioner testified that he believed he was not re quired to file a tax return in 1992 because his gross income fell below the threshold amount indicated in 26 U.S.C. 6012(a)(1)(A)(i). In calculating his gross income, petitioner mistakenly believed-5-

that his claimed Schedule C business expense deduct ions and his alleged net operating carryover losses from 1990 and 1991 reduc ed his 1992 reported gross income below the threshold level for filing a return. The Tax Court found that, in light of the fact that petitioner is a certified pu blic accountant, his failure to understand the term “gross income” was not reasonab le cause for his untimely filing. This is a mixed question of law and fact; we reviewthe Tax Court’s factual findings for clear error and its legal conclusions de novo

. See In re Craddock , 149 F.3d at 1255. The Tax Court did not err in fin ding that petitioner did not show reasonable cause for his untimely filing. AFF IRMED. The mandate shall issue forthwith.
ENTERED FOR THE COURT

Carlos F. Lucero Circuit Judge