T.C. Mem o. 2 01 4- 21 9

UNITED STAT ES TAX COURT

R. JEAN FIS HER, Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 18 29 1- 12
. Fi le d Oct ob er 1 6, 2 01 4.

R. Je anFis he r, pr o s e. Jo hn R. Bam

pf ie ld , for res po nd en t.

MEMORANDUM FINDINGS OF FACT AND OPINION KERRIGAN, Ju dg e: Res po nd en t d et erm in edth e fo ll owi ng de fic ie nc ie s an d ad di ti on s t o t ax with re sp ectto pe ti ti on er’s Fed eral in co m e ta x fo r ta x years 2 00 2 th ro ug h 2 01 0:- 2 -

[* 2] Year Defi ci en cy Add it io ns to tax

Sec. 6 65 1( a)(1 ) Sec. 6 65 1( a)(2 ) Sec. 6 65 4 20 02 $1 43 ,85 2 $3 2,0 66 $3 5,6 29 $4 ,75 8 20 03 16 ,17 6 3,3 90 3,76 7 38 6 20 04 20 ,67 8 4,3 96 4,88 5 55 6 20 05 25 ,97 9 5,5 54 6,17 1 98 4 20 06 50 ,78 8 11 ,29 0 12 ,54 5 2,3 71 20 07 14 ,01 2 3,1 53 ( ) 38 1 20 08 19 ,23 4 4,3 28 ( ) 61 8 1 20 09 16 ,60 5 3,7 36 ( ) 398 1 20 10 12 ,08 0 2,7 18 ( ) 259 1 The sec . 66 51 (a)( 2) ad di ti on to tax for20 07 th ro ug h 2 01 0 h adno t yet 1 reac he d t he 25 % m ax im

um as o f th e m ai li ng da te of t he no ti ce o f de fic ie nc y . Unl es s o th erwi se in di cat ed , all sec ti on refe ren ce ar e to th e In te rn al Rev enue Co de ineffe ctforth e y ears at i ss ue , andall Ru le refe ren ces are t o the Tax C ou rt Ru le s o f Prac ti ce an d P ro cedur e. All m on et ary am ou nt s ar e ro un de d t o t he ne ares t do ll ar. Afte r co nc es si on s the is su es forco ns id erat io n a re wh ethe r am ou nt s p ai d t o pe ti ti on er b y

th e Ri ch ardW . Qui sl in g, M .D., P.C. (Qui sl in g) , intax y ears 20 03 th ro ug h 2 01 0 a re i nc lu di bl e in gro ss in co m e an d wh ethe r pe ti ti on er i s l iabl e fo r ad di ti on s t o t ax purs uantto sec ti on s 6 65 1( a)(1 ) an d (2 ) an d 6 65 4.- 3 -

[* 3] FINDINGS OF FACT So m e o f th e fac ts ha ve be enst ip ul at edan d a re s o fo un d. Pe ti ti on er re si de d in Tenn es se e whe n s he fil edhe r pe ti ti on . Pet it io ne r di d n otfil e in co m e ta x re tu rn s fo r ta x years 2 00 2 t hr ou gh20 10
. Purs ua ntto sec ti on 60 20 (b ) res po nd en t p rep aredan d s ig ne d s ub st itut es forreturns fo r ta x years 2 00 2 t hr ou gh20 10
. Ri ch ardW . Qui sl in g i s the so le sh areh ol de r of Qui sl in g thr ou gh whi chDr. Qui sl in g o pe rat eda m ed ic al pra ct ic e. Qui sl in g p ai d p et it io ne r th e fo ll owi ng
am ount s fo r th e ta x years i n i ss ue : Year Paym en t 20 02 -0 - 20 03 $2 4,7 53 20 04 46 ,59 5 20 05 37 ,50 0 20 06 48 ,00 0 20 07 48 ,00 0 20 08 55 ,00 0 20 09 56 ,19 0 20 10 49 ,83 6- 4 -

[* 4] Qui sl in g d idno t i ss ue pe ti ti on er a Fo rm 10 99 -MI SC, Mi sc el lane ou s In co m e fo r am ou nt s p ai d i n a ny y ear 2 00 3 t hr ou gh 20 10 . Dr. Quis li ng ’s wife, Pa m el a Qui sl in g, h as be enth e b oo kk eep er fo r Qui sl in g s in ce 1 97 7. Beg in ni ng in20 03 pe ti ti on er re cei ve d p aym en ts fro m Qui sl in g. Th e pa ym en ts were i n the form of c he ck s, an d t he date of the fir stch eckwas M arch 15 , 20 03 . From Mar ch20 03 th ro ug h Dec em be r 20 10 Qui sl in g m ad e m on th ly pa ym en ts to pe ti ti on er. Pet it io ne r se ntDr. Qui sl in g am em or an du m en ti tl ed“ Mem or an du m

of Und ers tand in g o n Lo anTerm s an d C on di ti on s” . This m em or an du m st at es : It h as be enrev eal edto m e th atth e act io n o f Bl ue Cro ss Blu e Sh ie ld of Tenn es se e, In c., * * * h as crea te d afin an ci al bu rd enup on y ou r m ed ic al pra ct ic e, be cau se th e m ed ic al servi ces ren de redby y our m ed ic al pra ct ic e rel y

up onpa ym en t(s ) rec ei ve d b y BCBS T. The refo re, I am

wil li ng to de ve lo p alo anpa ck ag e * * * forth e sh ortran ge an d l on g- ran ge im

pa ctup onth e d el iv ery of m ed ic al servi ces by th e “ in -n etwork- pr ov id er” a s wel l as th e “ ou t-o f-n etwork p ro vi de r” * * *. The m em or an du m

furth er s ta te s “ [a] reas on ab le ex pe ct at io n o f th is Mem or an du m of Und ers tand in g o n Lo anTerm s an d C on di ti on s i s tha t the lo anpro ceed in gs wil l be ba se d upo n a ) y ou r ab il ity to lo anan d b ) th e co m

pl et io n o f th e res earc h wh ic h wil l re su ltinpro fitto th e und ers ig ne d i n o rd er tha t the lo ancanbe rep ai d.” 1

The term “un de rs ig ne d” refe rs to pe ti ti on er. 1- 5 -

[* 5] Thi s m em or an du m , dat edApri l 1 , 20 03 , in cl ud es th e si gn atur e o f pe ti ti on er bu t n otth e si gn atur e o f Dr. Qui sl in g. Pe ti ti on er s en t Dr. Qu is li ng a fo ll owup l ette r to th e m em or an du m

reque st in g am em or an du m of a ccep ta nc e. The m em or an du m of acce pt an ce i nc lu de s a s ig na tu re al le ge d t o b e Dr. Qui sl in g’s, b utth is si gn atur e is no t h is
. Pet it io ne r di d n otm ak e p aym en ts to Dr. Qui sl in g. Nei th er Dr. Qu is li ng no r Mrs . Qui sl in g d em an de d p aym en t fr om pe ti ti on er. On Fe brua ry

5, 2 01 1, p et it io ne r fax edDr. Qui sl in g alet te r refe ren ci ng an al le ge d p ur ch as e o f m ed ic al equi pm en t tha t Qu is li ng m ad e fro m pe ti ti on er’s de ceas edhu sb an d. OnFeb ru ary 25 , 20 11 , Dr. Qui sl in g’s at to rn ey an d t he att orne y fo r Qui sl in g, Vi nc en t Zu ccar o, s en t p et it io ne r a l et te r st at in g tha t Qu is li ng ha d n ot pu rch as edan y

equi pm en t fr om

he r hu sb an d o r rec ei ve d agi ft o f pr op erty fro m he r
orhe r hu sb an d. Th atsame day Dr. Qui sl in g a ls o s en t p et it io ne r a l et te r st at in g th athe wou ldno lo ng er s ee h er as a pa ti en t. Pet it io ne r fax edanad di ti on al let te r to Dr. Qui sl in g o n F eb ru ary 28 , 20 11 . Mr. Zuc caro sen t p et it io ne r a l et te r in
res po ns e an d re it erat edth atpe ti ti on er s ho ul d n otco nt actDr. Qui sl in g a ndMrs
. Qui sl in g.- 6 -

[* 6] Pet it io ne r fax edlet te rs to Mr. Zuc caro on Feb ru ary 28 , Marc h 1 , 2, 1 0, 1 4,
an d 2 5, an d Ap ril 11 , 20 11 . In the se let te rs , pet it io ne r ap pe aredto be trying to
reac h s om e type o f se tt le m en t wi thQui sl in g. Pet it io ne r fo r th e y ears at i ss ue m ad e es ti m at edin co m e ta x p aym en ts or h ad ta x wi th he ldinth e fo ll owi ng am ou nt s: Year Am ou nt 20 02 $1 ,33 6 20 03 1,1 07 20 04 1,1 38 20 05 1,2 93 20 06 60 8 20 07 -0- 20 08 -0- 20 09 -0- 20 10 -0- Res po nd en t co nc ed es th atpe ti ti on er i s n otli ab le foranad di ti on to tax pu rs ua ntto sec ti on 66 54 fortax y ear 2 00 2. OPINION Pet it io ne r ha s the bu rd enof p ro vi ng th atres po nd en t’s d et erm in at io n t ha t the
am ount s i n i ss ue are i nc lu di bl e in gro ss in co m e as co m pe ns at io n fo r se rv ic es is
wro ng . See Ru le 14 2( a); W el chv. Hel ve rin g, 2 90 U.S. 11 1,1 15 (19 33 ). Pet it io ne r- 7 -

[* 7] ha s n otcla im edor s ho wn tha t s he m eet s the requi rem en ts of s ect io n 7 49 1( a) to sh iftth e b ur de n o f pr oo f to res po nd en t as to an y rel ev an t fa ctua l i ss ue . The Co m m is si on er b ears th e in it ia l b ur de n o f pr oduc in g at l eas t m in im al ev id en ce li nk in g t he tax pa y er t o t he tax -g en erat in g a ct iv ity or t he rece ip t o f fu nd s b efo re the ge ne ral pre su m

pt io n o f co rrec tn es s at ta ch es to a de te rm in at io n o f un rep orte d in co m e. Uni te d S ta te s v . W al to n, 9 09 F.2d91 5, 9 19 (6t h C ir. 2 00 7) . Once t he Co m m is si on er m eet s the bu rd enof p ro du ct io n o n t hi s i ss ue , th e b ur de n o f pe rs ua si on sh ift s t o t he tax pa y er t o p ro du ce cr ed ib le ev id en ce tha t h e o r sh e d id
no t ea rnth e al le ge d i nc om e o r of pro vi ng th atth e Co m

m is si on er’s d efi ci en cy cal cu la ti on s wer e n otgro un de d o n am in im al ev id en ti ary fo un da ti on . Id. Res po nd en t’s d et erm in at io ns inth e n ot ic es of d efi ci en cy are b as edin
subs tant iv e ev id en ce l in ki ng pe ti ti on er wi th th e in co m e atis su e. In cl ud edam on g th e st ip ul at edex hi bi ts were 2 00 4 a nd20 05 can cel edch eck s o f pa ym en ts to pe ti ti on er. W e are sat is fie d t ha t re sp on de ntha s ca rri edhi s b ur de n wi th res pe ctto th e unr ep orte d a dd it io na l i nc om e. I. In co m e Rec ei ve d F ro m Qui sl in g Co m pe ns at io n fo r se rv ic es is in cl ud edingro ss in co m e. Sec. 6 1( a)(1 ). Mo ne y rece iv edpurs uantto a lo anis no t i nc lu de d i n g ro ss in co m e b ecau se th ere i s
anob li ga ti on to rep ay . See Co m m is si on er v . Tuft s, 4 61 U.S. 30 0, 3 07 (19 83 ). A- 8 -

[* 8] bo nafid e lo anrequi res bo th pa rti es to ha ve anactua l, g oo d- fai th in te ntto
es tabl is h ade bt or -cre di to r rel at io ns hi p wh enth e fu nd s ar e adva nc ed . Fis he r v. Co m m is si on er, 5 4 T.C. 9 05 , 90 9- 91 0 (1 97 0) . An in te ntto est ab li sha de bt or cred it orrel at io ns hi p e xi st s i f th e d eb to r in te nd s t o re pa y th e lo anan d t he cred it or in te nd s t o e nf

or ce the rep aym en t. Bea ve r v. C omm is si on er, 5 5. T.C. 8 5, 9 1 (1 97 0) ; Fi sh er v . Comm is si on er, 5 4 T.C. at90 9- 91 0. Co urts co ns id er v ari ou s fa ct or s t o d et erm in e whe th er p art ie s i nt en de d a bo nafid e lo an ; n o s in gl e fac to r is di sp os it iv e. See Welchv. Co m m is si on er, 2 04 F.3 d 1 22 8, 1 23 0 (9 th Cir . 20 00 ), aff’g T.C. Me m o. 1 99 8- 12 1; Fri erd ic h v
. Co m m is si on er, 9 25 F.2d18 0, 1 82 (7t h C ir. 1 99 1) , aff’g T.C. Mem o. 1 98 9- 39 3; Kaid er v . Comm is si on er, T.C. Mem o. 2 01 1- 17 4, s li p o p. at15 -1 6. We exa m in e th e fo ll owi ng fact or s t o d et erm in e whe th er p aym en ts to pe ti ti on er were lo an s: (1 ) th e ab il ity

of t he bo rro wer t o re pa y ; (2 ) th e ex is te nc e o r no ne xi st en ce o f a d eb t i ns tru m en t; (3 ) se cu rit y , in te res t, a fi xe d re pa ym en t d eb t, an d arep aym en t s ch edul e; (4 ) ho w th e p art ie s’ reco rd s an d c on du ctrefl ectth e tr an sa ct io n; (5 ) whe th er the bo rro wer h as m ad e rep aym en ts ; (6 ) whe th er the len de r ha d d em an de d re pa y m en t;- 9 -

[* 9] (7 ) th e li ke li ho odth atth e lo anwas d is gu is edco m pe ns at io n fo r se rv ic es ;
an d (8 ) th e te st im on y

of t he pu rp orte d b orro wer an d l en de r. See Welc h v . Comm is si on er, 2 04 F.3dat 1 23 0; Kaid er v . Comm is si on er, T.C. Mem o. 2 01 1- 17 4. A. The Abi li ty of th e Bo rro wer To R ep ay If the pa rti es di d n otin te ndth atth e fund s b e rep ai d a fte r th ey were adva nc ed , itsu gg es ts th atth e p art ie s d idno t i nt en d abo nafid e lo an . See Co m m is si on er v . Makran sky , 32 1 F .2d59 8, 6 00 (3dCir . 19 63 ), aff’g 3 6 T.C. 4 46 (1 96 1) . Cou rts ass es s the ab il ity to rep ay by whe th er the re was “ a rea so nabl e
ex pe ct at io n o f rep aym en t i n l ig htof t he eco no m ic real it ie s o f th e si tu at io n.” Fi sh er v . Comm is si on er, 5 4 T.C. at91 0. Pet it io ne r co nt en ds th atpa ym en ts m ad e b y Qui sl in g wer e lo an s. Pet it io ne r te st ifi edth atsh e n eed edth e m on ey to fun d t he res earc h fo r a b oo k t ha t s he was writ in g. Ho wev er, p et it io ne r pr oduc edno ev id en ce o f th e b oo k i nc lu di ng th e po te nt ia l fo r publ is hi ng th e b oo k o r an y ot he r ev id en ce o f he r ab il ity to rep ay . Dr. Qui sl in g t es ti fie d t ha t the pay m en ts were n otlo an s an d t ha t h e d idno t ex pe ctto be rep ai d.- 10 -

[* 10 ] B. The Exi st en ce o r Non ex is te nc e o f a Deb t In st ru m en t The re i s a m em or an du m

da te d Ap ril 1, 2 00 3, en ti tl ed“ Mem or an du m of Und ers tand in g o n Lo anTerm s an d C on di ti on s” whi chdi sc us se s t erm s o f th e al le ge d l oa ns . This m em or an du m is si gn edby pet it io ne r. Ther e is a m em or an du m
en ti tl ed“ Mem or an du m

of Ac cep ta nc e” wh ic h i s n otdate d andwhi chin cl ud es a si gn atur e fo r Dr. Qui sl in g. Bo th Dr. Qui sl in g a ndMrs . Qui sl in g t es ti fie d tha t the si gn atur e o n t he “ Mem or an du m of Ac cep ta nc e” i s n othi s s ig na tu re. Dr. Qui sl in g te st ifi edth athe ha d n ev er s eenth e d oc um en t b efo re re sp on de nt ’s cou ns el sh owe d itto hi m . C. Secu rity , Int eres t, a Fi xe d R ep aym en t Dat e, an d aRep aym en t Sch edul e The m em or an du m

ou tl in in g t he term s o f th e al le ge d l oan s ta te s: Thi s C reat iv e Rev ers al Ins ta ll m en t Lo anis ba se d upo n a1.5 % in te res t an d/ or th e fedrat e as di ct at edby the Fed eral Res erv e Bo ard , W as hi ng to n, D.C. an d t he refo re, act iv at edwhen ev er the in te res t ra te @1 .5% an d/ or

th e fedrat e is lo wer. Paybackof t he lo anis pre di cat ed up on th e co m

pl et io n o f to pi cs withi n t he m ed ic al sci en ce re se arch an d on ly acti va te d upo n a ny com pl et io n ares earc h p ro

ject i n wh ic h a rev enue stream

is crea te d. The re i s n o fi xe d re pa ym en t d at e o r sc he du le . The p ro vi si on s d o n otsh ow the in te ntto est ab li shbo nafid e lo an s. Fu rth erm or e, th es e p ro vi si on s ar e ina do cu m en t s ig ne d o nl y

by pet it io ne r. Dr. Qui sl in g t es ti fie d t ha t h e h adno t s eenth e- 11 -

[* 11 ] m em or an du m

of u nd ers tand in g u nt il res po nd en t’s co un se l s ho wedhi m th e do cu m en t. D. How the Part ie s’ Reco rd s an d C on du ctRefl ectth e Tran sa ct io n Pet it io ne r te st ifi edth atth e p aym en ts were l oa ns for a bo ok , bu t the re was no
ev id en ce t o s up po rt t hi s co nt en ti on . Peti ti on er’s rec or ds of l oans were n ot cred ib le . Peti ti on er d idno t s ub m ita lo anag reem en t s ig ne d b y Dr. Qui sl in g. Dr. Qui sl in g a ndMrs . Qui sl in g wer e cre di bl e wit ne ss es . They co nt en de d t he pa ym en ts were fo r se rv ic es pe ti ti on er p erfo rm edrel at edto pa ti en t b il li ng an d ot he r fi na nc ia l as pe ct s o f m ed ic al pra ct ic e. Qui sl in g d idno t i ss ue pe ti ti on er Fo rm s 1 09 9- MIS C. Howev er, Qu is li ng ha d n o d oc um en ta ti on to supp ort l oa ns to pe ti ti on er. E. Whe th er the Bo rro wer Has Mad e Rep aym en t If the bo rro wer h as m ad e rep aym en t, i t s ug ge st s tha t the parti es in te nd eda bo nafid e lo an . W el chv. Co m m is si on er, 2 04 F.3dat 1 23 1. Pe ti ti on er h adno t
m ad e an y pa ym en ts . F. Whe th er the Lend er Has Dem an de d R ep aym en t A dem an d fo r rep aym en t s ug ge st s tha t the pa rti es in te nda bo nafid e lo an . See Es ta te of R os env. Co m m is si on er, T.C. Mem o. 2 00 6- 11 5. Qu is li ng ha s n ot de m an de d re paym en t.- 12 -

[* 12 ] G. The Lik el ih oo d Th atth e Loans W ere Di sg ui se d C om pe ns at io n fo r Serv ic es Pet it io ne r co nt en ds th atth e p aym en ts were l oa ns to fin an ce the co stof
res earc h fo r he r bo ok . Dr. Quis li ng an d M rs . Qui sl in g p ro vi de d c red ib le te st im on y th atth e p aym en ts were m ad e fo r se rv ic es . The m em or an du m de sc rib in g th e al le ge d l oa ns di sc us se s the de ve lo pm en t o f a m ic ro eco no m ic an d
m acro eco no m ic m od el th atwil l i m pa ctth e sh ort-r an ge an d l on g- ran ge de li ve ry of
m ed ic al servi ces . Dr. Qui sl in g andMrs . Qui sl in g t es ti fie d t ha t p et it io ne r as si st edwith aBlu e Cro ss Blu e Sh ie ldau di t, b il li ng is su es , andlea se ag reem en ts . Dr. Quis li ng te st ifi edth atpe ti ti on er was “ di sc ha rg ed ” inFeb ru ary 20 11 be cau se sh e as ke d fo r do cu m en ta ti on to buy

equi pm en t fr om

he r an d s he refu se d t o p ro vi de in fo rm at io n
su chas h er fu ll nam e an d S oc ia l Se cu rit y nu m be r. Pet it io ne r co nt en ds th atsh e
m us t b e “ m ag ic al ” if

sh e was ab le to pe rfo rm

th e se rv ic es de sc rib edby D r. Qui sl in g a ndMrs . Qui sl in g. H. Test im on y

of t he Purp orte d B orro wer an d Len de r Pet it io ne r te st ifi edth e p aym en ts were l oa ns , bu t s he ha d n o c red ib le
supp orti ng do cum en ta ti on . Peti ti on er t es ti fie d t ha t s he sen t Dr. Qu is li ng a le tt er da te d Ap ril 1, 2 00 3, p ro vi di ng gu id an ce fo r th e au di t wi th Blu e Cro ss Blu e Sh ie ld
.- 13 -

[* 13 ] Pet it io ne r te st ifi edth atth e In te rn al Rev enue Serv ic e au di te d Qu is li ng ’s returns in20 10 an d n otun ti l the n was th ere areque stforhe r to fil l o uta Fo rm W -9 , Reque stforTaxp ay er Id en ti fic at io n Nu m be r an d C ert ifi cat io n. Dr. Qui sl in g andMrs . Qui sl in g t es ti fie d t he pa ym en ts were fo r se rv ic es , and th ey pro vi de d c red ib le tes ti m on y . Dr. Quis li ng tes ti fie d t ha t p et it io ne r was pa id $1 0,0 00 in20 03 to ass is t wi th Blu e Cro ss Blu e Sh ie ldof Ten ne ss ee. He fu rth er te st ifi edth ataft er the su cces sf ul ou tc om e o f th e au di t, p et it io ne r res ol ve d o th er in su ran ce d is pu te s, as si st edwith c red en ti al in g c omm it te es , pro du cedid eas for adve rti si ng an d b us in es s d ev el op m en t, n eg ot ia te d adi sp ut e wit h S umm itHos pi ta l,
res ol ve d adi sp ut e wit h ane w lan dl or d, an d c on fro nt edHum an a In su ran ce i n Lex in gt on , Kentuc ky. Mrs . Qui sl in g t es ti fie d t ha t p et it io ne r was pa id$3 ,00 0 a
m on th forhe r se rv ic es an d t he pa ym en ts in crea se d t o $ 4,0 00 a m on th
. Dr. Qui sl in g t es ti fie d t ha t h e as ke d p et it io ne r to pro vi de he r So ci al Secu rit y
nu m be r in lat e 2 01 0 a ndsh e ref us ed . Dr. Quis li ng st op pe d p ay in g p et it io ne r in Decem be r of 20 10 . On Feb ru ary 18 , 20 11 , Dr. Qui sl in g t erm in at edpe ti ti on er as a pa ti en t. Dr. Qui sl in g andMrs . Qui sl in g t es ti fie d t ha t Qu is li ng di d n otpu rch as e an y equi pm en t fr om

pe ti ti on er’s d ecea se d h us ba ndan d tha t p et it io ne r reque st ed in fo rm at io n abo utth e al le ge d p ur ch as es inFeb ru ary of 20 11
.- 14 -

[* 14 ] Pet it io ne r te st ifi edth atsh e rec ei ve d l oa ns fro m Dr. Qui sl in g t o wri te a bo ok . Her tes ti m on y

was i nc on si st en t an d s he subm it te d alet te r refe ren ci ng th at Dr. Qui sl in g p ur ch as edequi pm en t fr om he r de ceas edhu sb an d. II. Co nc lu si on W e co nc lu de th atth e p aym en ts Qui sl in g m ad e to pe ti ti on er i n t ax y ears 20 03 th ro ug h 2 01 0 a re i nc lu de d i n p et it io ne r’s gr os s i nc om e as co m pe ns at io n fo r
se rv ic es . There is no ev id en ce o f anactua l, g oo d- fai th in te ntto est ab li sh a de bt or cred itrel at io ns hi p. Dr. Qu is li ng di d n otha ve a go od -fai th in te ntto en te r a l oa n ag reem en t. III. Add it io ns to Tax A. Sect io n 6 65 1( a)(1 ) Sect io n 6 65 1( a)(1 ) au th or iz es th e im po si ti on of a n a dd it io n t o t ax for fai lu re to fil e a t im el y

return u nl es s the tax pa y er p ro ve s tha t s uc h fa il ur e is du e to
reas on ab le cau se an d i s n otdu e to wil lfu l n eg le ct . See Un it edSta te s v . Boyle, 4 69 U.S. 24 1, 2 45 (19 85 ); Harri s v . Commis si on er, T.C. Mem o. 1 99 8- 33 2. Th e p art ie s st ip ul at edth atpe ti ti on er d idno t fi le in co m e ta x re tu rn s fo r ta x years 2 00 2 thr ou gh 20 10 . This st ip ul at io n i s s uf fic ie ntto sat is fy

res po nd en t’s b ur de n o f pr oduc ti on
un de r se ct io n 7 49 1( c). Pet it io ne r di d n otsh ow re as on ab le cau se for he r fai lu re t o- 15 -

[* 15 ] fil e ta x re turn s. Th eref or e, pe ti ti on er i s l iabl e fo r th e ad di ti on to tax un de r
se ct io n 6 65 1( a) fo r eac h o f th os e y ears . B. Sect io n 6 65 1( a)(2 ) Sect io n 6 65 1( a)(2 ) im

po se s an ad di ti on to tax forfai lure t o t im el y pa y th e
am ountsh own on a return. Ina cas e su chas t hi s wh ere t he tax pay er d idno t t im el y fil e returns forth e ta x years a t i ss ue , th e Co m m is si on er m

us t i nt ro du ce ev id en ce th ata va li d s ub st itut e fo r return was m ad e p ur su an t t o s ect io n 6 02 0( b) . Sec. 66 51 (g )(2 ). The p art ie s s ti pu la te d t ha t s ub st itut es forreturns were p rep aredin
acco rd an ce wi th sec ti on 60 20 (b ). Pet it io ne r di d n otsh ow re as on ab le cau se forhe r fai lu re t o fi le tax returns . W e h ol d t ha t p et it io ne r is li ab le forth e ad di ti on to tax un de r 66 51 (a)( 2) for each of t ax y ears 20 02 th ro ug h 2 01 0. C. Sect io n 6 65 4 Sect io n 6 65 4 i m

po se s an ad di ti on to tax onanin di vi du al tax pa y er wh o
un de rp ay s h is or h er es ti m at edtax . A taxpa y er h as anob li ga ti on to pa y est im at ed ta x fo r a p art ic ul ar y ear i f he or s he ha s a “ requi redannu al pa ym en t” for th aty ear. Sec. 6 65 4( d) . Becau se pe ti ti on er fa il edto fil e a return fo r eac h year in is su e fro m 20 03 th ro ug h 2 01 0, s he was re qu ire d t o p ay est im at edtax equa l t o 9 0% o f th e ta x
owe d fo r eac h o f th os e y ears . See s ec. 6 65 4( d) (1 )(B) . Peti ti on er fa il edto m ak e- 16 -

[* 16 ] th os e p aym en ts , andno ex cep ti on to th e ad di ti onto tax un de r se ct io n 6 65 4 ap pl ie s. See Gros sh an dl er v . Commis si on er, 7 5 T.C. 1 , 20 -2 1 (1 98 0)
. W e h ol d p et it io ne r is li ab le for th e ad di ti on to tax un de r se ct io n 6 65 4 fo r each of t ax y ears 20 03 th ro ug h 2 01 0. Any con te nt io ns we ha ve no t ad dr es se d a re i rrel ev an t, m oo t, o r m eri tl es s. To re fle ctth e fo reg oi ng , Deci si on wil l b e en te red
un de r Ru le 15 5.