T.C. M em o . 2 0 1 8 -1 4 0

UNITED STATES TAX COURT

DANIEL SM ETHERS, Pet i t io n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 7 2 06 -1 6
. Fi l edAu gu s t 2 9 , 2 0 1 8
.

Dan i el Sm et h ers , p ro s e. Ni ch o l as R. Ro s ad o an dM ich ael Sk een , fo r res p o n d en t
.

M EM ORANDUM FINDINGS OF FACT AND OPINION NEGA, Jud g e: By n o t i ce o f d efi ci en cy (n o t i ce) d at edM ay 2 , 2 0 1 6 , res p o n d en t d et erm i neda d efi ci en cy i np et i t io n er’ s 2 0 10 Fed eral i n co m e t ax o f- 2
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[* 2 ] $ 1 0 2 ,2 1 0 an d ad d it i o n s t o t ax o f $ 2 2 , 9 9 7, $ 2 5 ,5 5 3 , an d$ 2 ,1 9 2 u n der s ect i o ns 6 6 5 1 (a)(1 ) an d(2 ) an d6 6 5 4 (a), res p ect iv el y . 1 Aft er co n ces si o ns , 2 th e i s s u es rem ai n i n g fo r d eci s i o nare wh et h er p et i t i o n er: (1 ) i s en t i t ledt o ex cl u d e fro m g ro s s i n co m e an y

can cel l at i o no f d eb ti n co m e (COD i n co m e) recei veddu ri n g 2 0 1 0 p u rs u an tt o the i n s o l v en cy ex cep t i o n p ro v i d edi n
s ect i on 1 0 8 (a)(1 )(B) o r th e qual i fi edp ri n ci p al res i d en ce ex cep t io np ro vi d edi n
s ect i on 1 0 8 (a)(1 )(E) an d(2 ) i s l i ab l e fo r ad d i t i o n s t o t ax fo r fai l u re t o fi l e an d fai l u re t o p ay

u n d er s ect i o n 6 6 5 1 (a)(1 ) an d(2 ).

FINDINGS OF FACT So m e o f t h e fact s h av e b een s ti p u lat ed an dare s o fo u n d. Th e s t ip u l at i o n o f fact s an dth e at t ach ed ex h i b i ts are i n co rp o rat ed h erei nb y th i s referen ce. Atth e t i m e h e fi l edh i s p et i t i o n wi th th i s Co u rt , p et i t i o n er res i ded i nCal i fo rn ia.

1 Al l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an dPro cedu re. Al l s ect i on referen ces are t o th e In t ern al Rev en ue Co de (Co d e) i neffect fo r t h e y ear at i s s u e. Al l am o u n t s are ro u n d ed t o t h e n eares td o l l ar.

2 Pet i t i on er co n ced es thath e fai l edt o fi l e a Fed eral i n co m e t ax retu rn fo r 2 0 1 0 an dth ath e recei v ed an d fai l edt o rep o rt$ 3 6 4,1 7 9 o f can cel l at io no f d eb t i n co m e du ri n g th ats am e y ear. Attri al res p o n d en tco n ced edth atp et i t i o ner was n o tl i ab l e fo r t h e ad d i t io n t o t ax fo r fai l ure t o m ak e es t im at edt ax p aym en t s u n d er s ec. 6 6 54
.- 3
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[* 3 ] I. Ho m es , Lo an s , an dTax Year 2 0 1 0 In 1 9 7 4 p et i t i o n er p u rch as edp ro p ert y o nSt ev en s o nSt reet i nSan t a Ro s a, Cal i fo rn i a (St ev en so n St reet p ro p ert y ), t o b e u s edas h i s p ri m ary res id en ce. Th at p ro p erty s erv edas p et i t i o n er’ s p ri m ary res i d en ce u n t i l 2 0 09 wh enh e m o v edt o a
n ewl y co n st ru ct edh o m e o n Berg es en Dri v e. Pet i t i o n er’ s d au g ht er o ccup i edth e St ev en so n St reet p ro p erty u n t i l i twas s o l di n2 0 1 0 , wh ereu po ns h e m o v edi nwi th p et i t i o n er atth e Berg es en Dri ve h o m e. OnSep t em

b er 3 0 , 2 0 1 0 , Sp eci al i zed Lo an Serv i ci n g , LLC (SLS), d i s ch arg ed$ 6 4,0 4 5 o f p et i t i o n er’ s u np ai d d eb t (SLS d eb t). OnOct o b er 1 , 2 0 1 0 , Cen tral M o rt g ag e Co . (CM C) d i s ch arg ed$ 3 0 0,1 3 4 o f p et i t i o n er’ s u np ai dd eb t (CM C d eb t ) rel at edt o the St ev en s o n St reetp ro p ert y . Atth e cl o se o f t he 2 0 1 0 t ax y ear, CM C an dSLS i s s u ed t o p et i t i o n er an d res po n d en tco rres p o n d i ng Fo rm s 1 0 9 9 -C, Can cel l at i o n o f Deb t , rep o rt i n g tho s e am o u n ts as COD i n co m e t o p et i t i o n er. Al th ou g h p et i t i o n er recei v edth o s e Fo rm s 1 0 99 -C, h e ch o s e t o i g n o re th em wh en th e t i m e cam e t o fi l e h is Fed eral i n co m e t ax return (retu rn ) fo r 2 0 1 0
. In s t ead , p et i t io n er d et erm in edth atb ecau s e h e d i dn o t earn wag es thaty ear h e d i d
n o th av e an o b l i g at i o n t o fi l e a ret u rn fo r 2 0 1 0 , an dh e act edacco rd in g l y .- 4
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[* 4 ] II. Th e No t i ce, Pet it i o n , an d Tri al OnFeb ru ary 2 9 , 2 0 1 6, res p o n d en t p rep aredan dm ai l edt o p et i t i o n er a
s ub s t i tu t e fo r retu rn (SFR) b as edo nth e Fo rm s 1 0 9 9 -C. OnM ay 2 , 2 0 16 , o nth e b as i s o f t h atSFR, res p o nd en ti s s u edp et i t i o n er a n ot i ce d et erm i n in g th atp et i t i o n er h ad u n d errep o rt edh i s i n co m e b y $ 3 6 4 ,1 7 9 an d was th ereb y l i ab l e fo r a d efi ci en cy i n t ax o f $ 1 0 2 , 2 1 0 an dv ari o u s ad d i t i o n s t o t ax t ot al i n g $ 5 0 ,7 4 2 fo r 2 0 1 0
. OnAu gu s t3 , 2 0 1 6 , p et i t i o n er fi leda t im el y p et i t i o nwi th th is Co u rts eek i n g red et erm i n at i o n o f res p o n d en t ’ s d et erm in at io n s wi th res pect t o h i s 2 01 0 t ax y ear. In h i s p et i t i o n , as p ert i n en t h ere, p et i t i o n er al l eg edth ath e was u n ab l e t o p ay th e t ax l i ab i l i ty

as s o ci at edwi th th e COD i n co m e d et erm i n edb y res po n den t , wh i ch we
co n st ru edt o m ean th atp et i t i o n er wi sh edt o av ai l h i m s el f o f t h e i ns o l ven cy
ex cep t i o n p ro v i d edi n s ect i o n 10 8 (a)(1 )(B) (i n s o l ven cy cl ai m ). Th i s cas e was cal l edfo r t ri al atth e Co u rt ’ s San Fran ci s co , Cal i fo rn ia, t ri al
s es s i on o n Feb ru ary

1 3, 2 01 8 . Atth attri al , p et i t i o n er t es t i fi edth ath e was
co n fu s edas t o wh i ch p art icu l ar d i s ch arg edd eb t s g av e ri s e t o res p o n d en t ’ s d et erm i n at i o n an dap p eared t o b el i ev e th atth e d eb t s ati ss u e rel at ed t o a m o rt g ag e th ath e h ads i g nedfo r i n h el p i n g h i s d au g h t er p u rch as e h er o wn h o m e. Th ereaft er, p et i t i o n er fam i l iari zedh i m sel f wi th t h e reco rd an dth e s p eci fi c d i s ch arg edd eb t s at i s su e.- 5
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[* 5 ] Pet i t i o ner t es t i fi edth ath e i n cu rredth e CM C d eb ti n2 0 0 5 fo r t h e p u rp o s e o f reh ab i l i t at i n g th e St ev en s o n Street p ro p erty an dcl ai m edth atth e St ev en s o nSt reet p ro p erty was , at th at t i m e, h i s p ri n ci pal res id en ce (p ri n ci p al res i d en ce cl ai m ). Pet i t io n er, h o wev er, was u np rep ared t o p ro v i d e t h e Co u rtwi th an y fu rt h er
ev i d en ce t o s ub st an t i at e h i s p ri n ci p al res i d en ce cl ai m . Pet i t io n er o ffered n o
ex p lan at i o n as t o t h e o ri g i n o r p u rp o s e o f t h e SLS d eb t
. W i th res p ect t o h i s i n s ol v en cy cl ai m , p et i t i o n er en t eredi n to ev i d en ce o n l y a h an dwri t t en t ab l e cl ai m i n g t o rep o rth i s as s et s an dl i ab il i t i es b utd i d n o to ffer an y
o th er d o cu m en t ary

ev i d en ce o r t es t i m o ny

t o co rro b orat e t h atd ocu m en to r
o th erwi s e s ub s t an ti at e h i s cl ai m . Atth e cl o s e o f t ri al , reco g n i zi n g p et i ti o n er’ s i n i t i al co n fu si on an di no rd er t o p ro v i d e p et i t i on er an o p p o rtu n i ty t o es tab l is h h is p ri n ci p al res i d en ce cl ai m , we
s i gn al edth atwe m ig h tb e am en ab l e t o a jo i n t m o t i o n t o reo pen th e reco rdo r t h e fi li n g o f fu rt h er s ti p u l at io ns o r co n ces s i o n s. On M arch 3 0, 2 0 18 , we i s s u eda
co rres p o n d i n g o rd er d irect i n g p et i t i o ner t o p ro v i de res po n d en t wi th an y d o cu m en t s rel ev an tt o h i s p ri n ci p al res i d en ce cl ai m b y M ay 1 4 , 2 0 1 8 , an d d i rect i n g res p o n d en tt o fi l e an y rel at edm o t i o n s o r a s t atu s rep o rtb y J u n e 1 4 , 2 0 1 8
.- 6
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[* 6 ] OnJ u ne 1 4 , 2 01 8 , res p o n d en tfi leda s tatu s rep o rti n d icat in g t h atp et i t i o n er fai l edt o co rres p o n d wi th , o r p ro v id e an y d o cu m en t at i o n t o , res po n d en td es p i t e h i s rep eat edat t em

p t s t o en g ag e p et i t i o n er. Acco rd i n g l y , we d eci de t hi s cas e o nth e b as i s o f t h e reco rd as s ubm i t t ed
. OPINION I. Gen eral Th e Co m m is s i o n er’ s d et erm i n at i o n s are p res u m edco rrect , an da t ax p ay er b ears th e b urd en o f p ro vi ng o therwi s e. Ru l e 1 4 2(a); W el ch v . Hel v eri n g , 2 9 0 U.S. 1 1 1 , 1 1 5 (1 9 3 3). A t ax p ay er i s req u i redt o k eep al l b o o k s an dreco rd s n eces s ary t o
s ub s t an t i at e o r p ro v e en ti t l em en tt o an y cl ai m ed d edu ct i on o r o th er ex cl u s i o nfro m i n co m e. Sec. 6 0 0 1 ; s ec. 1 .6 0 0 1 -1 (a), In co m e Tax Reg s . In o rd er t o refl ecteco n o m i c real i ty , a t ax p ay er’ s g ro s s i nco m e g en eral l y i n cl u d es an y

i nco m e fro m

th e d i s ch arg e o f i n d eb ted n es s . Sec. 6 1 (a)(1 2 ); Un i t ed St at es v . Ki rb y

Lu m b er Co ., 2 84 U.S. 1 (1 9 3 1 ). A t ax pay er i s req u i redt o
reco g n ize COD i n co m e fo r t h e y ear t h e can cel l at io no ccu rs , M o n t g om ery v . Co m m i s s i o n er, 6 5 T.C. 5 11 , 5 2 0 (1 9 7 5 ), i nan am o u n tequal t o th e d i fferen ce b et ween th e face v al u e o f t h e d eb t an dth e am o un tp ai di ns at i s fact i o no f th e d eb t , Bab in v . Co m

m i s si o ner, 2 3 F.3 d1 0 3 2 , 1 0 3 4 (6 th Ci r. 1 9 9 4 ), aff’ g T.C. M em o .- 7
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[* 7 ] 1 9 9 2 -6 73 ; s ee M erk el v . Co m m is s io n er, 1 9 2 F.3 d8 4 4 , 8 4 9 (9 th Ci r. 1 9 9 9 ), aff’ g 1 0 9 T.C. 4 6 3 (1 9 9 7 ). Th e Co d e, h o wev er, p ro v i d es an ex cep t i o nt o th e g en eral ru l e o f i n cl u s i o n
an d wi l l al lo w a t ax p ay er t o p res en t l y ex cl u d e COD i n co m e fro m h i s o r h er g ro s s i n co m e i f t h e d i sch arg e o f i n deb t ed n es s o ccu rs wh en th e t ax pay er i s i n so l v en to r i f th e d eb td i s ch arg ed i s “ qu al i fi edp ri nci p al res i d en ce i nd eb t ed n es s ”. Sec. 1 0 8 (a)(1 )(B), (E). II. In s o lv en cy

Ex cep t i on Sect io n 1 0 8 (a)(1 )(B) p ro v i d es an el i g i b l e t ax p ay er an ex cl u s io nfro m g ro s s i n co m e fo r COD i n co m e t h atari s es fro m a d i s ch arg e o f i n d eb t ed nes s o ccu rri n g wh en h e o r s h e i s i ns o l v en t . A t ax p ay er i s co n s i dered i ns o lv en tt o th e ex t en th i s o r h er l i ab i l i t i es ex ceed th e v al u e o f h i s o r h er as s et s i m m ed i at el y b efo re t h e d i s ch arg e. Sec. 1 0 8 (d )(3 ). Th e am ou n to f COD i n co m e t hata t ax p ay er m ay
ex cl u d e, h o wev er, can n o tex ceed th e am o u n tb y wh i ch the t ax p ay er i s i n s o l v en t
. Sec. 1 0 8(a)(3 ). In s o l v en cy , an dth e ex t en tt o wh i ch a t ax p ay er i s co ns i d ered i n s o l v en t , i s a fact u al d et erm in at i o n . M erk el v . Co m m i s s i o n er, 1 9 2 F.3 dat8 5 2
. Wh i l e p et i t i o n er t es t i fi edas t o h i s eco n o m i c m i s fo rtu n e an den t eredi n t o
ev i d en ce a h an dwri t t en do cu m en tl is t i n g p u rp o rt edas s et s an dl i ab i l i t i es , the reco rd l ack s an y fu rt h er s ub s tan t i v e ev i d en ce, d o cu m en t ary o r o th erwi se, t o co rro b o rat e- 8
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[* 8 ] h i s i n so l v en cy cl ai m . On th e reco rdb efo re u s , we fi n dth atp et i t i o n er h as fai l edt o carry h i s b u rd en o f p ro v i n g th ath e was i n s o l v en tatth e t i m e th e d eb t s at i s su e were d i s ch arg ed , an d we acco rd i n g l y h o l dth ath e i s i n el i g i b l e fo r th e i n s o l v en cy ex cep t i o n . III. Qu al i fi ed Pri n ci p al Res i d en ce Ex cep t i o n Sect io n 1 0 8 (a)(1 )(E) p ro v i d es an el i g i b l e t ax pay er an ex cl us i o n fro m g ro s s i n co m e fo r an y

COD i nco m e t h atari s es fro m th e can cel l at i o no f qu al i fi ed p ri n ci p al res i d en ce i n d eb t ed nes s . Th e Co d e d efi n es qu al i fi ed p ri nci p al res i d en ce i n d eb t ed n es s as , g en eral ly , an y d eb ts i n cu rredb y

a t ax p ay er i no rd er t o faci l i t at e th e acq u is i t i o n , co n s tru ct i o n , o r s ub st an t ial i m p ro vem en t o f a t ax p ay er’ s “p ri n ci p al
res i den ce”, wh i ch are t h en s ecu redb y th atres i d en ce. See s ecs . 1 0 8(h )(2 ), (5 ), 1 2 1 , 1 6 3 (h )(3 )(B)(i ). W e d et erm i n e wh et her t he res i den ce ati ss u e co n st i tu t es th e t ax p ay er’ s p ri n ci p al res i d en ce b y ex am i ni n g al l o f t h e u n d erl y i n g fact s an d ci rcu m s t an ces . Sec. 1 .1 2 1-1 (b ), In co m e Tax Reg s . Pet i t i o ner, h o wev er, h as fai l edt o p ro v i d e u s wi th an y cred i b l e ev i d en ce t o
co rro b o rat e h i s cl ai m

th at th e CM C d eb tco n s t i tu t edqu al i fi edp ri n ci p al res i d en ce i n d eb t ed n es s . Acco rd i n gl y , o n th e reco rdb efo re u s , we fi n d t h atp et i t i o n er h as fai l edt o carry h i s b u rd en o f p ro v i n g th atth e CM C d eb t was qu al i fi edp ri n ci p al- 9
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[* 9 ] res i den ce i n deb t ed n es s an dh o l dth ath e i s i n el ig i b le fo r t h e qu al i fi ed p ri n ci p al res i d en ce ex cep t i o n . IV. Sect io n 6 6 5 1 (a)(1 ) an d(2 ) Ad d i t i on s t o Tax A. Bu rd en s Th e Co m m is s i o n er, g en eral l y , b ears the b u rd en o f p ro du ct i o n wi th res p ect t o ad d it i o n s t o t ax . Sec. 7 4 9 1(c). To m eeth is b urd en o f p ro du ct io n , th e Co m m i s s i o n er m

u s tp ro du ce ev i d en ce s u ffi ci en tt o es t ab l is h a p ri m a faci e cas e fo r th e i m p o si t i o n o f t he ad d i ti o n s t o t ax . Hi g b ee v . Co m m i s s i on er, 1 1 6 T.C. 4 3 8 , 4 4 6 -4 4 7 (2 0 0 1 ). On ce t h e Co m m i s s i o n er m eet s h i s b u rd en o f p ro du ct i o n , th e t ax p ay er t h en b ears th e b u rd en o f es t ab li sh i n g t h atthe p en al t i es o r ad di t io n s t o t ax are i n ap p ro p ri at e. Id . at 4 4 9
. B. Fai l u re To Ti m el y

Fi l e Sect io n 6 6 5 1 (a)(1 ) i m

p o s es up o n a t ax p ay er an ad d i t io nt o t ax fo r fai l u re t o fi le a t i m el y

retu rn . Th e ad di t i o nt o t ax wi l l n otap p l y i f t h e t ax p ay er s h o ws h i s o r h er fai l u re was du e t o reas o n ab l e cau s e an d n o t wi ll fu l n eg l ect
. Id . A t ax p ay er d em o n s trat es reas o nab l e cau s e wh en h e o r s h e s ho ws th at , d es p i t e ex erci si ng
o rd i n ary b u s i n es s care an dp ru d en ce, h e o r s h e was u n ab l e t o fi l e t he ret u rn o n t i m e. Sec. 3 0 1 .6 6 5 1 -1 (c)(1 ), Pro ced . & Adm i n . Reg s . A t ax p ay er d em on s trat es wi l l fu l n eg l ect wh en h i s o r h er act i o n s ex hi b i ta “ co ns ci o u s , i n t en t i o nal fai l u re o r- 1 0 -

[* 1 0 ] reck l es s i n d i fferen ce” t o w ard s co m pl i an ce wi th h i s o r h er o bl i g at i o ns u n d er th e Co d e. Un i t ed St at es v . Bo y l e, 4 6 9 U.S. 2 4 1, 2 4 5 (1 9 8 5 ). Pet i t i o ner co n ced es th ath e fai l edt o fi l e a return fo r 2 0 1 0 an d ack no wl ed g es h i s recei pto f an dco n s ci o u s d eci s i o nt o i g n ore t he Fo rm s 1 0 9 9 -C i s s u edb y SLS
an d CM C t h ati nfo rm edh i m o f h i s 2 0 1 0 COD i n co m e. Pet it i o n er s t at edth ath i s fai l u re t o fi l e was b as edo n h i s d et erm i n at io nth at , b ecau se h e d i dn o tearn wag es th aty ear, h e d i dn o th av e an o bl i g at i o nt o fi l e a ret u rn fo r 2 0 1 0 . Pet i t i o n er’ s
m i s t ak e as t o , o r i g no ran ce o f, th e l aw d o es n o t am o u n t t o reas o n ab l e cau se an d th u s wi l l n o trel i ev e p et i t io ner o f t h e ad d it i on t o t ax p u rs u an tt o s ect i on 6 6 5 1 (a)(1 ). See Rayh il l v . Co m m i s s i o n er, T.C. M em o . 2 0 1 3 -1 8 1 , at* 8
. Co n s equ en t l y , we fi n dp et i t i o ner’ s act i o n s ex h i b i t eda l acko f o rd i n ary b u s i n es s
care an dp ru d en ce, an dwe s u s t ai n res p on d en t ’ s d et erm i n at i o n as t o t h e s ect i o n 6 6 5 1 (a)(1 ) ad d i t i o n t o t ax . C. Fai l u re t o Ti m el y

Pay Sect io n 6 6 5 1 (a)(2 ) i m

p o s es up o n a t ax p ay er an ad d i t io nt o t ax fo r fai l i n g t o p ay t ax es wh en du e. Th i s ad d i t i o nt o t ax ap p l i es wh et h er t h e t ax pay er fi l es a retu rn o r t h e Co m

m i s s i o n er p rep ares an SFR fo r t h e t ax p ay er. Sec. 6 6 5 1 (g )(2 ). 3

3 Pet i t i on er’ s u np ai dt ax res u l t ed fro m an SFR p rep aredb y

res p o n d en t
. Acco rd in g ly , as p arto f res p o nd en t ’ s b u rd eno f p ro duct i o nwi th res pect t o th e s ec. (co n ti n u ed ...)- 1 1 -

[* 1 1 ] Li k e t h e ad d i t i o n fo r fai lu re t o fi l e t i m el y , th i s ad d i t i o nwi l l n o t b e ap p l i ed wh en a t ax p ay er d em o n st rat es th ath i s o r h er fai l ure t o p ay res u l tedfro m
reas on ab l e cau s e an dn o twi l lfu l n eg l ect . Sec. 6 6 5 1 (a)(2 ). A fai l u re t o p ay m ay b e
co n si d ereddu e t o reas o nab l e cau s e t o th e ex t en tth e t ax p ay er h as ex erci s ed
o rd i n ary b u s i n es s care an dp ru d en ce i n p ro v i d in g fo r p aym en to f h i s o r h er t ax l i ab i l i ty bu twas n ev ert h el es s u n ab l e t o p ay th e t ax o n t h e d at e du e o r wo ul d
o th erwi s e s u ffer an u n du e h ard s h i p . Sec. 3 0 1
. 6 6 5 1 -1 (c)(1 ), Pro ced . & Adm i n . Reg s. Res p o n d en tp rep aredan SFR fo r p et i t io n er i n fo rm i n g h i m th ath i s COD i n co m e res u l t ed i n a t ax l i ab il i ty fo r 2 0 10 . Pet i t i o n er d idn o t rem i tt im el y p aym en t fo r t h att ax l iab i l i ty . Pet i t i o n er ad v an cedn o arg um en t th at h i s fai l u re t o p ay was du e t o reas on ab l e cau se an dfai l edt o i n tro duce an y cred i b l e ev i d en ce es t ab l i s h i n g th at , d es p i te act i n g wi th o rd i n ary b u s i n es s care an d p ru d en ce, p aym en t o f h i s 2 0 1 0 t ax l i ab i l i ty

p o s edan u n due h ard s h ip . Acco rd in g l y , we fi n dth atp et i t i o n er h as fai l edt o es t ab l i s h th ath i s fai l ure t o p ay res u l tedfro m

reas o n ab l e cau s e rat h er t h an

3 (...co n t in u ed ) 6 6 5 1 (a)(2 ) ad d i t i o n t o t ax , res p o n d en tm u s ti nt ro duce ev i d en ce s u ffi ci en tt o s h o w th atth is SFR s at i sfi es th e req u i rem en t s o f s ec. 6 0 2 0(b ). See Wheel er v . Co m m i s s i o n er, 1 2 7 T.C. 2 0 0 , 2 0 8 -2 1 0 (2 0 0 6), aff’ d , 5 21 F.3 d 1 28 9 (1 0t h Ci r. 2 0 0 8 ). Th e reco rdco n t ai n s th e SFR i s s u edt o p et i t i o ner, an dwe h o l dth atth i s SFR s at i sfi es th e req ui rem en t s o f s ec. 6 0 2 0 (b ) an dthatres po n d en th as m eth i s b u rd eno f p ro du ct i o n i n thi s res p ect
.- 1 2 -

[* 1 2 ] wi ll fu l n eg l ect , an dwe s u s t ai nres p on d en t ’ s d et erm i n at i o nas t o t h e s ect i o n 6 6 5 1 (a)(2 ) ad d i t i o n t o t ax . To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t ered
u n der Ru l e 1 5 5
.