T.C. Summary Opinion 2015-10

UNITED STATES TAX COURT

JOSHUA J. STEBBINS, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 25708-13S. Filed February 11, 2015.

Joshua J. Stebbins, pro se.

Richard J. Hassebrock, for respondent.

SUMMARY OPINION

FOLEY, Judge: This case was heard pursuant to the provisions of section

7463 of the Internal Revenue Code in effect when the petition was filed. 

1

Unless otherwise indicated, all section references are to the Internal 1

Revenue Code in effect relating to the years in issue, and all Rule references are to

the Tax Court Rules of Practice and Procedure.
-2-

Pursuant to section 7463(b), the decision to be entered is not reviewable by any

other court, and this opinion shall not be treated as precedent for any other case. 

After concessions, the issues for decision are whether petitioner may offset his net

self-employment earnings with a net operating loss (NOL) carryover and whether

petitioner is liable for additions to tax pursuant to section 6651(a)(1). 

Background

During 2007, 2008, and 2009 petitioner operated “Aslan Worldwide”

(Aslan), a sole proprietorship. Petitioner incurred an $81,957 NOL relating to

2007 and reported a $91,812 net loss from self-employment relating to 2008.

Petitioner untimely filed his 2008 and 2009 Forms 1040, U.S. Individual Income

Tax Returns.

On August 1, 2013, respondent sent petitioner a notice of deficiency relating

to 2008. Respondent determined that petitioner was liable for a $37,219 income

tax deficiency, a $16,228 self-employment tax deficiency, and a $9,305 section

6651(a)(1) addition to tax. Respondent further determined that petitioner

underreported gross receipts, underreported net self-employment earnings, and

was not entitled to certain deductions.

On August 1, 2013, respondent sent petitioner and his spouse a notice of

deficiency relating to 2009. Respondent determined that they were liable for a
-3-

$25,033 income tax deficiency and a $1,125 section 6651(a)(1) addition to tax.

Petitioner, while residing in Ohio, timely filed a petition with the Court. 

Discussion

An NOL is the excess of allowable deductions over gross income. See sec.

172(c). Section 172(a) allows an NOL deduction for the aggregate of NOL

carrybacks and carryovers. Petitioner contends that his NOL carryover relating to

2007 may offset his 2008 net self-employment earnings. We disagree. Section

1402(a)(4) provides that in determining net self-employment earnings, the

deduction for net operating losses provided in section 172 shall not be allowed.

See sec. 1402(a); secs. 1.1402(a)-1, 1.1402(a)-7, Income Tax Regs. 

Section 6651(a)(1) provides that a taxpayer shall be subject to an addition to

tax for failure to timely file a return unless such failure was due to reasonable

cause and not willful neglect. Respondent bears, and has met, the burden of

production relating to the section 6651(a)(1) additions to tax and has established

that petitioner failed to timely file his 2008 and 2009 returns. See sec. 7491(c);

Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Petitioner’s failure to timely

file returns was the result of willful neglect and not reasonable cause.

Accordingly, petitioner is liable for section 6651(a)(1) additions to tax relating to

2008 and 2009. 
-4-

Contentions we have not addressed are irrelevant, moot, or meritless.

To reflect the foregoing,

Decision will be entered

under Rule 155.