T.C. Memo. 2011-5 

UNITED STATES TAX COURT

MARK HALLER ZILBERBERG, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5823-09. Filed January 5, 2011. 

After P failed to file his 2004, 2005, and 2006 tax

returns, R determined deficiencies in his income tax and

additions to tax under secs. 6651(a)(1) and (2) and 6654(a),

I.R.C. P contested the deficiencies and additions to tax

arguing he was entitled to a $5,000 moving expense deduction

and a $36,250 casualty loss deduction for his 2005 tax year. 

Held: For his 2005 tax year, P is entitled to a moving

expense deduction of $3,000 and a casualty loss deduction of

$15,000.

Held, further, P is liable for the additions to tax 

under secs. 6651(a)(1) and (2) and 6654(a), I.R.C. 

Mark Haller Zilberberg, pro se.

Kimberly A. Higgins and Kenneth A. Hochman, for respondent.
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MEMORANDUM OPINION

WHERRY, Judge: This case is before the Court on a petition

for redetermination of respondent’s determination in a notice of

deficiency that petitioner owes income tax deficiencies and

additions to tax for his 2004, 2005, and 2006 tax years. The

issues for determination are: 

(1) Whether petitioner is entitled to a $5,000 deduction

under section 217 for moving expenses allegedly incurred in

2005;1

(2) whether petitioner is entitled to a $36,250 deduction

under section 165 for a casualty loss allegedly sustained in

2005; 

(3) whether petitioner is liable for additions to tax under

section 6651(a)(1) for failure to file his 2004, 2005, and 2006

tax returns; 

(4) whether petitioner is liable for additions to tax under

section 6651(a)(2) for failure to pay his 2004, 2005, and 2006

taxes; and 

(5) whether petitioner is liable for additions to tax under

section 6654(a) for failure to make required 2005 and 2006

estimated tax payments. 

1Unless otherwise indicated, all section references are to

the Internal Revenue Code of 1986, as amended and in effect for

the years at issue, and all Rule references are to the Tax Court

Rules of Practice and Procedure. 
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Background

Some of the facts have been stipulated. The stipulated

facts and accompanying exhibits are hereby incorporated by this

reference. Petitioner resided in Florida at the time he filed

his petition with this Court. 

For his 2004, 2005, and 2006 tax years, petitioner received

taxable income of $32,233, $35,951, and $55,985, respectively.2

Petitioner did not file a Federal income tax return for 2004,

2005, or 2006. Therefore, respondent prepared substitutes for

returns pursuant to section 6020(b) for petitioner’s 2004, 2005,

and 2006 tax years. On the basis of these substitutes for

returns, respondent mailed to petitioner, on December 1, 2008,

notices of deficiency for petitioner’s 2004, 2005, and 2006 tax

years, showing the following deficiencies, as well as additions

to tax under sections 6651(a)(1) and (2), and for 2005 and 2006,

6654(a). 

2Petitioner received taxable income from various sources

including Walton Academy, the School District of Escambia County,

the Monroe County School Board, the Agency for Workforce

Innovation, Penco Inc., Florida Keys Community College, and the

Social Security Administration. 

Petitioner’s 2004 gross income was $35,588, including a

$6,709 Social Security payment of which only $3,354 is taxable. 

Petitioner’s 2005 gross income was $37,339, including a $4,567

Social Security payment of which only $3,179 is taxable. 

Petitioner’s 2006 gross income was $56,867, including a $5,879

Social Security payment of which only $4,997 is taxable.
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Additions to Tax

Tax Year Deficiency

Sec.

6651(a)(1)

Sec.

6651(a)(2)

Sec.

6654(a)

2004 $3,284 $738.90 1$673.22 ---

2005 3,610 723.60 1466.32 $127.25

2006 8,128 1,791.22 1676.68 375.84

 1Sec. 6651(a)(2) provides for an addition to tax of 0.5

percent per month up to 25 percent for failure to pay the

amount shown on a return. 

Petitioner timely petitioned this Court. In his petition,

petitioner alleged that he did not owe the deficiencies or

additions to tax because his allowable losses, expenses, and

deductions, specifically his travel expenses, theft losses,

moving costs, and “losses due to acts of God/natural disasters”,

exceeded his taxable income. 

Trial was held in Miami, Florida, on January 11, 2010. At

trial petitioner elaborated on his statements in the petition,

specifying that he thought he was entitled to a $5,000 deduction

for moving expenses and a $36,250 deduction for a casualty loss. 

Both deductions pertain only to petitioner’s 2005 tax year. For

the claimed moving expenses deduction, petitioner testified that

he was hired by the Monroe County School District as an

alternative education and GED teacher beginning in July 2005. In

order to take this position, petitioner claimed he moved from

Okaloosa County, Florida, to Key West, Florida, paying “$5,000
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for [his] materials, [his] collections, everything that [he] had

to be packed and shipped to Key West”. 

For the claimed casualty loss deduction, petitioner

testified that in 2005, after he moved to Key West, he “lived in

water for four days” which got up as high as his chest as a

result of Hurricane Wilma. Key West was also affected by

Hurricanes Katrina, Rita, and Dennis during 2005. According to

petitioner: “All of [his] property not only was destroyed by the

water, but there was a disease factor and everything was taken

out to the street in dumpsters.”3 In evidence presented to this

Court, petitioner listed the items of property he alleges were

lost or destroyed as a result of the hurricanes and an

3Petitioner alleges that he suffered from Hurricanes

Katrina, Wilma, Rita, and Dennis, being “flooded from the east”

and “flooded from the west”. Petitioner testified that “Key West

was totally inundated. The winds of the hurricanes ranged from

75 miles per hour to over 120 miles per hour”. Respondent, while

stipulating that Key West was affected by some of the hurricanes,

does not agree that all four hurricanes “struck” Key West. This

Court, without discussing the differences between “affected” and

“struck” or determining which specific hurricane(s) damaged

petitioner’s property, realizes that the 2005 hurricane season

caused damage across Florida and will take judicial notice that

property in Key West, Florida, suffered damages in the 2005

hurricane season. A court may take judicial notice of

appropriate adjudicative facts at any stage in a proceeding,

whether or not the notice is requested by the parties. See Fed.

R. Evid. 201(c), (f); see also United States v. Harris, 331 F.2d

600, 601 (6th Cir. 1964) (explaining that a court may take

judicial notice sua sponte). In general, the court may take

notice of facts that are capable of accurate and ready

determination by resort to sources whose accuracy cannot

reasonably be questioned. Fed. R. Evid. 201(b); see also Evans

v. Commissioner, T.C. Memo. 2010-207. 
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approximate value for each such lost or destroyed item.4 

According to petitioner’s testimony, the total value of the

damaged or destroyed property was $34,000 but the amount claimed

on his Exhibit 10-P was $36,250. Petitioner reached $34,000

because of a computational error; therefore we treat his claimed

casualty loss deduction as being $36,250. Petitioner did not

provide any proof of his ownership of any of the items of listed

property, nor does he substantiate the cost basis or purchase

price of any of those items. Instead, at trial petitioner made a

sweeping statement that he paid for most of the property in cash

and what little documentation he did have of such purchases was

destroyed by the hurricanes. Apparently, no effort was made to

reconstruct the lost records other than the creation of

petitioner’s Exhibit 10-P.

4On Exhibit 10-P petitioner listed the following: 1991

Nissan Maxima--$4,000; kayak with HP Johnson outboard motor--

$1,500; English Racer bicycle--$150; English Racer bicycle

(second)--$50; bedroom, living room, dining room furniture, and

other household furnishings and accessories--$4,000; computers,

monitors, printers, copier, fax machine--$3,500; three digital

Deckmate recorders-–$300; two TVs, three radios, speakers, all

electronic equipment--$750; clothing and personal belongings--

$1,000; food--$500; Lee Manella paintings–$3,250; Dean Giola

paintings–$4,250; Hank Fleck paintings--$3,250; Sally Boswell

painting--$1,250; Livingston Roberts highwayman painting--$3,500;

assorted paintings--$2,000; book collection--$3,000. We note

that the claimed values for these items are significantly reduced

from the original amounts listed on petitioner’s Exhibit 10-P

before they were crossed out and the new claimed values written

in by hand. Petitioner testified he did this to reflect his

original cost of each item rather than his estimate of its fair

market value when destroyed by the storms. 
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Discussion

Petitioner argues that for his 2005 tax year he is entitled

to: (1) A $5,000 moving expenses deduction and (2) a $36,250

casualty loss deduction.5 

I. Burden of Proof

Deductions are a matter of legislative grace, and taxpayers

bear the burden of proving entitlement to any claimed deduction.6

Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84

(1992). Taxpayers are required to identify each deduction they

are claiming and show that they have met all requirements to keep

books or records and otherwise to substantiate all claimed

deductions. Sec. 6001; New Colonial Ice Co. v. Helvering, 292

U.S. 435, 440 (1934); Roberts v. Commissioner, 62 T.C. 834, 836

(1974); sec. 1.6001-1(a), Income Tax Regs. 

5Petitioner stated in his petition that he intended to rely

on travel expenses, theft losses, itemized deductions, moving

costs, and “losses due to acts of God/natural disasters” in

proving he did not owe the deficiencies or additions to tax

because these losses, expenses, and deductions exceeded his

taxable income. However, petitioner introduced evidence

regarding only claimed deductions for his 2005 tax year of $5,000

for moving expenses and $36,250 for casualty losses. Petitioner

failed to introduce any evidence about any expenses, losses, or

deductions he incurred in either his 2004 or 2006 tax years, and

therefore we deem petitioner to have conceded the deficiencies as

to those years. 

6Petitioner did not argue that sec. 7491(a) applied. He did

not produce credible evidence with respect to all factual issues

relevant to his liabilities for tax and did not argue or

establish that he had met the requirements of sec. 7491(a)(2). 

Consequently, sec. 7491(a) does not apply here to shift the

burden of proof to respondent. 
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If a taxpayer’s records are lost or destroyed through

circumstances beyond his control, the taxpayer may still

substantiate the claimed deductions by use of other credible

evidence.7 Lockett v. Commissioner, 306 Fed. Appx. 464, 466-467

(11th Cir. 2009), affg. T.C. Memo. 2008-5. When a taxpayer

establishes a deductible expense but is unable to substantiate

the precise amount, the Court may approximate the amount that is

deductible so long as the taxpayer presents sufficient evidence

to establish a rational basis for making the estimate. Cohan v.

Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930); Vanicek v.

Commissioner, 85 T.C. 731, 742-743 (1985); Villarreal v.

Commissioner, T.C. Memo. 1998-420. 

II. Whether Petitioner Is Entitled to a Moving Expense Deduction

Under Section 217

Moving expenses were ordinarily considered nondeductible

personal expenses before the enactment of section 217. See

Hughes v. Commissioner, 65 T.C. 566, 570 (1975); Jorman v.

Commissioner, T.C. Memo. 1996-297. However, section 217(a)

allows taxpayers, subject to certain conditions, to deduct

“moving expenses paid or incurred during the taxable year in

connection with the commencement of work by the taxpayer as an

7Even though a taxpayer can use evidence other than books or

records to substantiate claimed deductions, we are not bound to

accept a taxpayer’s unverified, undocumented testimony. Hradesky

v. Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d

821 (5th Cir. 1976).
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employee or as a self-employed individual at a new principal

place of work.”8 Section 217(c), as relevant here, specifies the

following two conditions that a taxpayer must satisfy in order to

claim a moving expenses deduction: First, the taxpayer’s new

principal place of work must be “at least 50 miles farther from

his former residence than was his former principal place of

work”; and second, “during the 12-month period immediately

following his arrival in the general location of his new

principal place of work, the taxpayer [must be] a full-time

employee, in such general location, during at least 39 weeks”. 

Petitioner offered sparse evidence regarding his claimed

moving expenses deduction, testifying at trial only that he was

hired by the Monroe County School District to begin teaching in

July 2005 and that he paid $5,000 for “everything [he] had to be

packed and shipped to Key West” from Okaloosa County, Florida. 

Petitioner failed to prove that he was entitled to his

claimed $5,000 section 217 moving expense deduction. Petitioner

failed to substantiate the alleged moving expenses with

documentary evidence such as receipts, credit card statements,

canceled checks, or even a written summary of his expenses. 

Petitioner testified that he paid to have things “packed and

8Sec. 217(b)(1) defines moving expenses as “the reasonable

expenses--(A) of moving household goods and personal effects from

the former residence to the new residence, and (B) of traveling

(including lodging) from the former residence to the new place of

residence.” 
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shipped”. Yet petitioner never provided this Court with specific

information such as the exact days he moved, whether he drove

himself to Key West, or the name of the moving company. 

However, if a taxpayer establishes a deductible expense but

is unable to substantiate the precise amount, we may, after

“bearing heavily * * * upon the taxpayer whose inexactitude is of

his own making”, estimate the amount, provided we are convinced

that the taxpayer incurred such an expense and we have a basis

upon which to make an estimate. Cohan v. Commissioner, supra at

543-544; Vanicek v. Commissioner, supra at 743. We do not doubt

that petitioner moved to Key West in order to begin his job with

the Monroe County School District. We shall not, however, allow

petitioner a $5,000 moving expense deduction solely on the basis

of his testimony.

Even though the facts do not justify a $5,000 moving expense

deduction, we do determine, on the basis of petitioner’s

testimony and his list of personal property, that petitioner is

entitled to a $3,000 moving expense deduction under section 217.

In doing so, we recognize that even though petitioner failed to

adequately substantiate his claimed $5,000 moving expense

deduction, he had to have incurred expenses including the cost of

the moving truck or U-Haul trailer, packing, movers, boxes, and

gas in moving with at least most of the personal property listed
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in his Exhibit 10-P to Key West.9 See Cohan v. Commissioner,

supra at 543-544; see also Clark v. Commissioner, T.C. Memo.

1989-598 (allowing a $200 moving expense deduction when the

taxpayer claimed $500 but provided no receipts), affd. without

published opinion 951 F.2d 1258 (10th Cir. 1991). 

III. Whether Petitioner Is Entitled to a Casualty Loss Deduction

Under Section 165

Section 165(a) allows as a deduction any loss sustained

during a taxable year and not compensated for by insurance or

otherwise. Section 165(c) limits the allowance of losses in the

case of individuals. Section 165(c)(3) allows as a deduction to

an individual certain losses commonly referred to as casualty

losses. A casualty loss is allowable to a taxpayer for a loss of

property not connected with a trade or business or a transaction

entered into for profit if the loss results from “fire, storm,

shipwreck, or other casualty”. See id. Pursuant to section

165(h), the casualty loss deduction is allowed only to the extent

that the loss from each casualty exceeds $100 and to the extent

that the net casualty loss for the taxable year “exceeds 10

percent of the adjusted gross income” for that taxable year.10 

9Key West is approximately 805 miles from Okaloosa County,

Florida.

10The sec. 165(h) limitations do not apply to losses

described in sec. 165(c)(3) and “(1) which arise in the Hurricane

Katrina disaster area on or after August 25, 2005, and which are

attributable to Hurricane Katrina, (2) which arise in the
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The amount of the casualty loss allowed under section 165 is

the lesser of: (1) The fair market value of the property

immediately before the casualty reduced by the fair market value

of the property immediately after the casualty or (2) “The amount

of the adjusted basis prescribed” in section 1.1011-1, Income Tax

Regs., “for determining the loss from the sale or other

disposition of the property involved.” Sec. 1.165-7(b)(1),

Income Tax Regs. 

The method of valuation for determining a casualty

loss is set forth in section 1.165-7(a)(2)(i), Income Tax Regs.,

which provides as follows:

In determining the amount of loss deductible under 

* * * [section 165], the fair market value of the property

immediately before and immediately after the casualty shall

generally be ascertained by competent appraisal. This

appraisal must recognize the effects of any general market

decline affecting undamaged as well as damaged property

which may occur simultaneously with the casualty, in order

that any deduction under * * * [section 165] shall be

limited to the actual loss resulting from damage to the

property. 

Physical damage to property caused by a hurricane is a

casualty within the purview of section 165(c)(3). See Lamphere

v. Commissioner, 70 T.C. 391, 395 (1978) (holding that damage

Hurricane Rita disaster area on or after September 23, 2005, and

which are attributable to Hurricane Rita, or (3) which arise in

the Hurricane Wilma disaster area on or after October 23, 2005,

and which are attributable to Hurricane Wilma.” Sec. 1400S(b). 

The entire State of Florida is included in both the Hurricane

Katrina and Hurricane Wilma disaster areas. See Rev. Proc. 2006-

32, sec. 2, 2006-2 C.B. 61-62. 
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resulting from Hurricane Agnes was a casualty); see also sec.

1.165-7(b)(3), Example (2), Income Tax Regs. Key West suffered

damages because of the 2005 hurricane season. 

However, petitioner has failed to fully substantiate the

claimed $36,250 in losses. In deciding whether a taxpayer has

substantiated his deductions, we ordinarily look at the proof he

offers in the form of documentation and testimony. Obot v.

Commissioner, T.C. Memo. 2005-195. Petitioner argues that he is

entitled to a casualty loss deduction of $36,250 for his 2005 tax

year, stating at trial:

The only item at issue * * * is what I lost during the

four hurricanes that I suffered in Key West in 2005, during

which I lost everything. I walked out the hurricanes with

my shirt on my back * * *. I lived in water for four days. 

I lost everything in 60 plus years, and that is all that is

at issue.[11] 

Petitioner arrived at the $36,250 figure not by competent

appraisal but by his own estimate of “what somebody would pick 

* * * [the destroyed property] up for in a drive sale on the

street on the value I came up with”. Petitioner was not

11Petitioner’s trial testimony included additional

statements that emphasized the totality of his loss. He

testified that he lost “All [his] books, all [his] paintings,

everything that [he had] collected, all [his] furniture,

pineapple beds, everything was lost. * * * [He] lost [his] car”. 

Later, petitioner claimed “[he] lost all bedroom, living room,

dining room furniture, and all other house furnishings and

accessories, computers, monitors, printers, copier, fax machines,

three digital DEC made recorders, two TVs, three radios,

speakers, all electronic equipment, all clothing and personal

belongings, and all food, refrigerator, freezer, canned and

stored, everything, zero”.
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consistent in the values he assigned to the property he claims

was destroyed. For example, at trial petitioner testified that

he lost a 1991 Nissan Maxima, a Hobie fishing kayak, and a

Johnson 5-horsepower motor to which he assigned values of $3,000,

$1,100, and $500, respectively. Yet in the exhibit presented to

this Court, petitioner assigned a value to the Nissan Maxima of

$4,000 and a value to the kayak and the Johnson 5-horsepower

motor together of $1,500. Petitioner further testified about a

Livingston Roberts painting worth between $8,000 and $10,000 for

which he paid $3,500. In his Exhibit 10-P presented to this

Court, he originally listed the value of the Livingston Roberts

painting as $10,000 but had crossed that out and put $3,500.12

 Despite the noted circumstances, which we attribute to loss

of memory with the passage of time and petitioner’s attempt on

Exhibit 10-P to mark destroyed items down from fair market value

to cost, we found petitioner’s testimony to be candid and

forthright. We do not believe petitioner was attempting to

mislead this Court; rather, we believe petitioner had no

documentation for the property. However, petitioner’s testimony

and the handwritten list do not fully satisfy petitioner’s burden

of substantiation. See Lockett v. Commissioner, T.C. Memo. 2008-

5 (not allowing a casualty loss deduction when the taxpayer

12Petitioner assigned a value of $3,000 in Exhibit 10-P to

his book collection and testified to the same effect. 
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failed to prove the fair market value of the property or the

adjusted basis of the property or to produce evidence that would

allow a reasonable estimate).

The only evidence this Court has is petitioner’s testimony

and a list of items of property he claims he lost during the 2005

hurricane season. Petitioner did not produce any other

documentation, photographs, or witnesses. Because petitioner did

not provide all of the evidence required by section 1.165-

7(b)(1), Income Tax Regs., in order to fully substantiate his

loss, petitioner is not entitled to the entire casualty loss

deduction of $36,250 that he claims for his 2005 tax year. 

Petitioner asserts that what little documentation he did

have about the damaged or destroyed property was itself destroyed

by the hurricanes. If a taxpayer’s records are lost or destroyed

through circumstances beyond his control, he is entitled to

substantiate the claimed deductions by use of other credible

evidence. Lockett v. Commissioner, 306 Fed. Appx. at 466-467;

Villareal v. Commissioner, T.C. Memo. 1998-420. But petitioner’s

unverified, undocumented testimony is not sufficient to support a

$36,250 casualty loss deduction. However, this Court may

approximate the deductible amount if the taxpayer establishes a

deductible expense but is unable to substantiate the precise

amount. Cohan v. Commissioner, 39 F.2d at 543-544. 
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The Court concludes that petitioner suffered damages to his

property as a result of the 2005 hurricane season. We believe

that a lot of petitioner’s property was lost or damaged. And

even though petitioner failed to meet substantiation requirements

to be allowed the full $36,250 deduction, he has presented

sufficient evidence to justify some relief under the Cohan rule.

The general rule is that the amount of a casualty loss

deduction is the lesser of: (1) The fair market value of the

property immediately before the casualty reduced by the fair

market value of the property immediately after the casualty or

(2) the adjusted cost basis of the property. Sec. 1.165-7(b),

Income Tax Regs. On the evidence in front of us, we believe that

petitioner’s allowable casualty loss deduction should be $15,500

for his 2005 tax year.13 See Popa v. Commissioner, 73 T.C. 130,

13Petitioner admits that he received approximately $500 from

FEMA during 2005 and therefore this amount should be offset

against his $15,500 casualty loss deduction. See sec. 165(a). 

Accordingly, petitioner will be entitled to a $15,000 deduction

after offsetting the $500 he received from FEMA. The sec. 165(h)

limitations do not apply in this case. See supra note 10. 

We come up with $15,500 on the basis of petitioner’s

testimony and his Exhibit 10-P. Petitioner extensively testified

about losing his car, kayak and outboard motor, paintings, and

book collection. This Court also notes that even though

petitioner did not specifically testify about them, he naturally

lost the personal items such as clothing and furniture listed on

his Exhibit 10-P. For the items petitioner both testified about

and listed on Exhibit 10-P, we allow petitioner the lowest value

attributed to that item. For the personal items not elaborated

on in his testimony at trial, we allow petitioner half of the

value listed on his Exhibit 10-P. Specifically, we give

petitioner $3,000 for his car, $1,500 for the kayak and outboard

(continued...)
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134 (1979) (holding that the taxpayer sustained a casualty loss

but had not adequately documented the deductible amount and

therefore was entitled to only 75 percent of the claimed loss);

Heyn v. Commissioner, 46 T.C. 302, 309-310 (1966) (allowing the

taxpayer a casualty loss deduction of $7,500 because it was clear

that the taxpayer had sustained some loss as a result of the

casualty even though the taxpayer had failed to clearly or

precisely substantiate the amount); Clapp v. Commissioner, 36

T.C. 905, 908 (1961) (rejecting the taxpayer’s contention that

the casualty loss was $4,000 but using the Court’s best judgment

to find that the loss due to the casualty was $800), affd. 321

F.2d 12 (9th Cir. 1963).

IV. Additions to Tax

Respondent bears the burden of production with regard to 

the additions to tax. See sec. 7491(c); see Higbee v.

Commissioner, 116 T.C. 438, 446-447 (2001). To meet his burden,

respondent must produce sufficient evidence establishing that it

is appropriate to impose the determined additions to tax. See

Higbee v. Commissioner, supra at 446. However, respondent does

not have to produce evidence of reasonable cause, substantial

authority, or lack of willful neglect. Id.

13(...continued)

motor, $3,500 for the Livingston Roberts highwayman painting,

$2,000 for the other listed paintings, $3,000 for his book

collection, $2,000 for his furniture, and $500 for clothing. 
- 18 -

A. Section 6651(a)(1)

Generally, “any person made liable for any tax * * * shall

make a return or statement according to the forms and regulations

prescribed by the Secretary.” Sec. 6011(a). Section 6651(a)(1),

in the case of a failure to file a return on time, imposes an

addition to tax of 5 percent of the tax required to be shown on

the return for each month or fraction thereof for which there is

a failure to file, not to exceed 25 percent in the aggregate. 

The penalty will not apply if it is shown that such failure is

due to reasonable cause and not due to willful neglect. 

Petitioner did not file his 2004, 2005, or 2006 tax return. 

Further, petitioner has not presented any evidence that his

failure to file was due to reasonable cause and not willful

neglect. Respondent has met his burden of production, and

accordingly, we sustain the additions to tax under section

6651(a)(1) for petitioner’s 2004, 2005, and 2006 tax years. See

Wheeler v. Commissioner, 127 T.C. 200, 207-208 (2006) (evidence

that the taxpayer did not file his income tax return was

sufficient to satisfy the IRS’ burden of production for the

section 6651(a)(1) addition to tax), affd. 521 F.3d 1289 (10th

Cir. 2008). 

B. Section 6651(a)(2) 

Section 6651(a)(2) provides for an addition to tax of 0.5

percent per month up to 25 percent for failure to pay the amount
- 19 -

shown on a return unless it is shown that such failure is due to

reasonable cause and not due to willful neglect.14 

The Commissioner’s burden of production with respect to

the section 6651(a)(2) addition to tax requires that the

Commissioner introduce evidence showing that a return

showing the taxpayer’s tax liability was filed for the year

in question. In a case such as this where the taxpayer did

not file a return, the Commissioner must introduce evidence

that an SFR [substitute for return] satisfying the

requirements of section 6020(b) was made. See Cabirac v.

Commissioner, * * * [120 T.C. 163 (2003)]. * * * 

Wheeler v. Commissioner, supra at 210.

Under section 6651(g)(2), a return prepared by the Secretary

pursuant to section 6020(b) is treated as a return filed by the

taxpayer for the purpose of determining the amount of an addition

to tax under section 6651(a)(2). To constitute a section 6020(b)

return, “the return must be subscribed, it must contain

sufficient information from which to compute the taxpayer’s tax

liability, and the return form and any attachments must purport

to be a ‘return’.” Spurlock v. Commissioner, T.C. Memo. 2003-

124. 

Respondent and petitioner stipulated that substitutes for

returns were filed on petitioner’s behalf for his 2004, 2005, and

2006 tax years. Petitioner did not pay his tax for his 2004,

2005, or 2006 tax year. Respondent has met his burden of

14The sec. 6651(a)(1) addition to tax is reduced by the

amount of the sec. 6651(a)(2) addition to tax for any month (or

fraction thereof) to which an addition to tax applies under both

sec. 6651(a)(1) and (2). See sec. 6651(c)(1).
- 20 -

production with respect to the section 6651(a)(2) additions to

tax. Further, petitioner did not present any evidence that his

failure to pay was due to reasonable cause and not willful

neglect. Therefore, we will sustain the additions to tax under

section 6651(a)(2) for petitioner’s 2004, 2005, and 2006 tax

years. 

C. Section 6654(a) Additions to Tax

Respondent determined that petitioner was liable for

additions to tax under section 6654(a) for petitioner’s 2005 and

2006 tax years. Section 6654(a) imposes an addition to tax where

prepayments of tax, either through withholding or by making

estimated quarterly tax payments during the course of the year,

do not equal the percentage of total liability required under the

statute. However, the addition to tax will not apply if

petitioner shows that one of the several statutory exemptions

applies. See Grosshandler v. Commissioner, 75 T.C. 1, 20-21

(1980). 

“[R]equired installments” of estimated tax are due at four

times during the year and each is 25 percent of the “required

annual payment.” Sec. 6654(c)(1), (d)(1)(A). For an individual

taxpayer whose adjusted gross income for the taxable year is

$150,000 or less, a “required annual payment” is equal to 
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the lesser of--

(i) 90 percent of the tax shown on the return for 

the taxable year (or, if no return is filed, 90 percent 

of the tax for such year), or 

(ii) 100 percent of the tax shown on the return of

the individual for the preceding taxable year. 

Clause (ii) shall not apply if the preceding taxable year

was not a taxable year of 12 months or if the individual did

not file a return for such preceding taxable year. 

Sec. 6654(d)(1)(B). 

To meet his burden of production with regard to the section

6654(a) addition to tax, respondent must at a minimum produce

evidence necessary to enable the Court to conclude that

petitioner had a required annual payment for 2005 and 2006. See

Wheeler v. Commissioner, supra at 211. 

Respondent has met the burden of production with respect to

the section 6654(a) additions to tax. Petitioner did not make

his required estimated tax payments for either 2005 or 2006. He

also does not qualify for any of the exceptions listed in section

6654(e). Because petitioner failed to file Federal income tax

returns for 2004 and 2005, petitioner’s required annual payment

of estimated tax was 90 percent of his tax for each year. See

Wheeler v. Commissioner, supra at 211-212; see also Rivera v.

Commissioner, T.C. Memo. 2009-215; Walzer v. Commissioner, T.C.

Memo. 2009-200. We therefore sustain respondent’s additions to

tax under section 6654(a) for petitioner’s 2005 and 2006 tax

years. 
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The Court has considered all of petitioner’s contentions,

arguments, requests, and statements. To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

To reflect the foregoing,

Decision will be entered

under Rule 155.