T.C. Memo. 2010-117

UNITED STATES TAX COURT

ALEXANDER NICHOLAS LUKOVSKY, PATRICIA M. LUKOVSKY, NEXT FRIEND,

Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 22749-08, 22750-08, Filed May 27, 2010.

 22751-08.

P began receiving pension benefits in 1981. He

claimed he was entitled to disability benefits, but his

employer denied that claim. In 2002, 2004, and 2005, P

received pension benefits and incurred medical

expenses. He filed no returns for those years. The

IRS prepared a substitute for return (SFR) for each

year and issued for each year a notice of deficiency

determining a deficiency in tax plus additions to tax

pursuant to I.R.C. secs. 6651(a)(1) and (2) and 6654. 

The IRS’s determination included the pension benefits

in P’s taxable income and allowed P only the standard

deduction pursuant to I.R.C. sec. 63(c). In September

2008 P filed petitions to commence these cases, and the

Court scheduled the cases to be tried a year later in

September 2009. P moved for a continuance, asserting a

need for more time to obtain documents to substantiate

itemized deductions. The Court granted the continuance

and ordered P to produce by December 2009 all the

documents that P relies on to substantiate deductions. 
- 2 -

P requested and was granted an additional 2 months but

did not produce substantiating documents in February

2010. R moved for summary judgment, asserting that P’s

pension income is taxable, that P is entitled only to

the standard deduction, and that P is liable for the

additions to tax. P did not respond to R’s motion for

summary judgment.

Held: P’s pension benefits are taxable and are

not “amounts received under workmen’s compensation acts

as compensation for personal injuries or sickness” for

purposes of I.R.C. sec. 104(a)(1).

Held, further, P is not entitled to itemized

deductions. Where P has the burden to prove his

entitlement to those deductions but fails to produce

substantiation of those deductions in compliance with

the Court’s order, R is entitled to partial summary

judgment on the issue. See Celotex v. Catrett,

477 U.S. 317 (1986).

Held, further, P is liable for the additions to

tax under I.R.C. secs. 6651(a)(1) and 6654 for 2002,

2004, and 2005, and for the addition under I.R.C.

sec. 6651(a)(2) for 2002 and 2005.

Held, further, genuine issues of material fact

preclude summary judgment on the issues of: the

precise amount of P’s pension income in 2004; the

precise amount of the taxable portion of P’s Social

Security benefits in 2004; the number of personal

exemptions to which P is entitled; the amount of the

standard deduction to which P is entitled; and P’s

liability under I.R.C. sec. 6651(a)(2) for the failureto-pay addition to tax for 2004, for which year R has

not shown that the SFR was signed in compliance with

I.R.C. sec. 6020(b)(2).

Patricia M. Lukovsky, for petitioner.

James L. Gessford, for respondent.
- 3 -

1Except as otherwise noted, all section references are to

the Internal Revenue Code (26 U.S.C.), and all Rule references

are to the Tax Court Rules of Practice and Procedure.

MEMORANDUM OPINION

GUSTAFSON, Judge: These cases are before the Court pursuant

to section 6213(a)1 for redetermination of deficiencies in tax

and additions to tax for 2002, 2004, and 2005, which the Internal

Revenue Service (IRS) determined against petitioner Alexander

Nicholas Lukovsky. Mr. Lukovsky’s daughter Patricia Lukovsky

serves in these cases as his “next friend” pursuant to

Rule 60(d), because of Mr. Lukovsky’s extremely poor health. The

cases are currently before the Court on a motion for summary

judgment filed March 25, 2010, by respondent, the Commissioner of

Internal Revenue. Ms. Lukovsky made no response to the

Commissioner’s motion; and for the reasons explained below, we

will grant that motion in part.

Background

The following facts are based on the pleadings, the parties’

partial stipulation filed August 19, 2009, and the exhibits

submitted with the Commissioner’s motion. At the time his

petitions were filed, Mr. Lukovsky resided in Minnesota.
- 4 -

Mr. Lukovsky’s pension dispute

Mr. Lukovsky worked as a police officer in Duluth,

Minnesota, until no later than May 1977, at which time he had

been in active service for 25 years and was over the age of 50. 

(Consequently, he had served the requisite number of years to be

entitled to a pension.) He applied for disability benefits, but

his application was eventually denied. He began receiving

pension benefits (not disability benefits) at least as early as

March 1981.

Mr. Lukovsky apparently received no benefits for the period

May 1977 through February 1981. In December 1981 he brought a

lawsuit against the City of Duluth and its Police Department,

alleging that they had wrongly denied him disability benefits. 

He apparently claimed both (1) that his pension benefits should

have been characterized as disability benefits and (2) that he

should have been given benefits before March 1981. Our record

does not show the outcome of that lawsuit and, in particular,

does not show that Mr. Lukovsky ever established his entitlement

to disability benefits. As recently as September 2005 the State

of Minnesota affirmed its denial of Mr. Lukovsky’s claim for pre1981 benefits and for disability benefits.

Mr. Lukovsky’s income and expenses during the years at issue

In the three years at issue, Mr. Lukovsky received from

Minnesota’s Public Employees Retirement Association (PERA)
- 5 -

2The statutory notice of deficiency for 2004 recites that

the 2004 pension payments consisted of two amounts ($21,768 and

$23,079) that total $44,847. However, the exhibits attached to

the Commissioner’s motion include only one Form 1099-R,

“Distributions From Pensions, Annuities, Retirement or

Profit-Sharing Plans, IRAs, Insurance Contracts, etc.”, from PERA

in the amount of $21,768.21 and twelve checks from 2004 that also

total $21,768.21. Under Rule 121, where every inference is drawn

in favor of the non-movant, we hold that there is a genuine issue

of material fact as to the $23,079 that is stated in the notice

of deficiency but that is not substantiated with a Form 1099-R or

canceled checks.

3These amounts are derived from receipts that Ms. Lukovsky

attached (without authentication) to a status report that she

filed February 17, 2010. Although she failed to submit them in

(continued...)

pension benefits totaling $43,599.12 in 2002, $21,768.212 in

2004, and $45,968.88 in 2005. His endorsement of each of the

monthly checks making those payments is preceded by the phrase

“Cashed Under Protest Pending Legal Reconsideration” or words to

the same effect.

Mr. Lukovsky also received the following amounts of income

during the years at issue:

Income 2002 2004 2005

Social Security benefits $3,112 $3,223 $3,313

Mellon Bank dividends 

1-0- 52 26

IRS interest payment --- 89 ---

1Mr. Lukovsky received $26 in dividends from Mellon in 2002,

but the parties have stipulated that it was not taxable.

 

For purposes of summary judgment, we assume that

Mr. Lukovsky spent the following amounts for prescription

medications for himself and his wife: $577.27 in 2002, $1,386.90

in 2004, and $1,283.37 in 2005.3
- 6 -

3(...continued)

response to the Commissioner’s motion, we assume for purposes of

summary judgment that they are authentic, that they substantiate

the expenses reflected thereon, and that those expenses are

deductible. However, as we explain below, they are in amounts

less than the standard deduction to which Mr. Lukovsky is

entitled without any substantiation.

4The SFRs for 2002 and 2005 are signed by an IRS official,

but the SFR for 2004 is not signed. For the significance of this

omission, see part V.B below.

Substitutes for return and notices of deficiency

Mr. Lukovsky filed no Federal tax return for any of the five

years 2001 through 2005--i.e., including the three years at

issue. For the years at issue--2002, 2004, and 2005--he made no

estimated tax payments or other payments of tax. 

Consequently, in March 2008 the IRS prepared a substitute

for return (SFR) for each year.4 On each SFR the IRS included

the income described above (including the pension benefits). 

Each SFR allowed the standard deduction pursuant to section 63(c)

(rather than itemized deductions, which Mr. Lukovsky had never

claimed). Each SFR then computed Mr. Lukovsky’s income tax

liability, as well as additions to tax for failure to file

returns (under section 6651(a)(1)), failure to pay tax shown on a
- 7 -

return (under section 6651(a)(2)), and failure to pay estimated

tax (under section 6654(a)), as follows:

Additions to Tax

Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654

2002 $7,278 $1,637.55 $1,819.50 $243.20

2004 6,443 1,449.67 1,159.74 184.61

2005 6,567 1,477.57 788.04 263.41

On June 16, 2008, the IRS issued to Mr. Lukovsky three

statutory notices of deficiency--one for each of the years 2002,

2004, and 2005--determining in each year the deficiency of tax

and additions to tax set out above.

Tax Court proceedings

On September 15, 2008, Mr. Lukovsky’s daughter Patricia

Lukovsky filed the petitions in these three cases. She signed

each petition as his “POA” (power of attorney), and to each

petition she attached a statement explaining that she is his

daughter and is the sole care giver for him and her mother. The

Court recognized her as Mr. Lukovsky’s “next friend” pursuant to

Rule 60(d). The petitions assert that Mr. Lukovsky is not

taxable on his pension income and that, even if he is, he has

deductions that would offset the income and reduce or eliminate
- 8 -

5The petitions also allege denial of “credits for

disability”, but we know of no credit to which they refer. 

Because the petition seems to use “credit” and “deduction”

interchangeably, we infer that “credits for disability” means

deductions for disability-related medical expenses.

his tax liability.5 Regarding deductions, the petitions allege

that--

2.) The deductions are standard and do not reflect

credits allowed for medical or dental

expenses.

* * * * * * *

4.) The deductions do not reflect credits for property

loss or casualty loss.

In April 2009 the Court issued notice to the parties that

these cases would be tried at the Court’s trial session beginning

September 14, 2009, in St. Paul, Minnesota. With that notice,

the Court issued its Standing Pretrial Order, which, inter alia,

required as follows:

Any documents or materials which a party expects to

utilize in the event of trial (except solely for

impeachment), but which are not stipulated, shall be

identified in writing and exchanged by the parties at

least 14 days before the first day of the trial session

[i.e., by August 31, 2009].

By motion filed July 16, 2009, and supplemented July 27, 2009,

Ms. Lukovsky requested a continuance of trial, explaining that

health problems--her parents’ and her own--made it difficult for

her to meet the deadline for exchanging documents. The Court

then held a telephone conference with the parties, during which

the Court asked Ms. Lukovsky to state a date by which she would
- 9 -

be able to provide the documents. She agreed that she would be

able, by December 1, 2009, to provide to the IRS all of the

documents on which she would rely to substantiate the deductions

at issue. (She thus requested a three-month extension of the

deadline in the Standing Pretrial Order.) By order of August 14,

2009, the Court granted the continuance that Ms. Lukovsky had

requested, and ordered--

that, on or before December 1, 2009, petitioner shall

provide to the IRS all of the documents on which she

will rely to substantiate the deductions at issue in

this case.

Both at the telephone conference and in the order of August 14,

2009, the Court advised Ms. Lukovsky--

that any request to modify that schedule for medical

reasons would have to be supported by a letter from a

doctor that not only explains the difficulties that she

is experiencing but also the expectation for a schedule

on which the business of this case can be handled.

The parties filed a partial stipulation on August 19, 2009,

that set out facts relevant to the income issues in the

petitions; but Ms. Lukovsky did not otherwise comply with the

Court’s order. Rather, on November 30, 2009, Ms. Lukovsky filed

a motion (dated November 24, 2009) to extend the time within

which she was to comply with the Court’s order and produce her

documents to the Commissioner, explaining that medical issues had

impeded her progress. She asked to be allowed “until the end of

January 2010”--i.e., January 31, 2010. Since January 31 was a

Sunday, the effective date of such an extension would be Monday,
- 10 -

February 1, 2010, a further extension of 62 days (or two months). 

Despite the Court’s prior instruction, Ms. Lukovsky attached no

doctor’s letter to her motion. However, the Commissioner did not

object to the requested extension, and the Court granted it by

order of December 22, 2009, thereby allowing Ms. Lukovsky a total

of five months of additional time, beyond the deadline originally

imposed in the Standing Pretrial Order. The Court’s order

included this warning:

Ms. Lukovsky is warned that, absent extraordinary

circumstances, she should expect that no further

enlargements or continuances will be granted. She

should expect that any motions or requests based on

medical allegations will be disregarded unless they are

supported by a statement from a doctor. This case will

be resolved on a reasonable schedule, with any documentation that Ms. Lukovsky can muster by February 1. 

The Court’s unwillingness to allow indefinite delays is

not based on impatience or a desire to disadvantage the

petitioner, but rather is based both on the Court’s

need and obligation to resolve its business efficiently

and on the fact that, as time passes, information

becomes less and less available, as memories fade and

documents scatter.

Thereafter, the Court received from Ms. Lukovsky various

submissions explaining the hardships of her situation, including

a February 17, 2010, filing that argued:

The information that is available at this stage * * *

is sitting in our home. * * * Even if institutions may

no longer have records of those years there are

probably those or others safely tucked away at our

home.

Still, Ms. Lukovsky had not identified those records nor provided

them to the Commissioner.
- 11 -

On February 16, 2010, the Commissioner filed a motion to

preclude Ms. Lukovsky from offering into evidence any documents

in support of Mr. Lukovsky’s claimed deductions, as a sanction

for her non-compliance with the Court’s order of December 22,

2009. The motion stated the Commissioner’s intention to move for

summary judgment. By order of February 24, 2010, the Court took

under advisement the Commissioner’s motion for sanctions and set

a deadline for a motion for summary judgment. 

The Commissioner served a motion for summary judgment on

March 24, 2010. On March 29, 2010, the Court ordered

Ms. Lukovsky as follows:

If petitioner disputes the motion [for summary

judgment], then pursuant to Rule 121 the opposition to

the motion should include affidavits and other evidence

to show that there are disputes of fact that make

summary judgment inappropriate and require a trial. 

The Court observes that, generally speaking, there

appear to be three sets of issues in the case:

(1) income issues (as to which the parties filed a

stipulation of facts on August 19, 2009), (2) deduction

issues (as to which respondent asserts that petitioner

has not substantiated the deductions), and

(3) additions to tax and penalties. Petitioner should

respond as to each of these three sets of issues.

The deduction issues appear to implicate to [sic]

the Court’s prior orders in this case requiring

petitioner to produce to the IRS the documents on which

petitioner relies to dispute the deficiency that the

IRS determined. If petitioner possesses documents that

substantiate any deductions claimed, then certified

copies of those documents should be included with the

opposition to respondent’s motion. Petitioner should

expect that no deduction will be allowed in this case

if it is not substantiated in petitioner’s opposition.
- 12 -

The Court then ordered Ms. Lukovsky to respond to the motion for

summary judgment by no later than April 19, 2010. As of the date

of this opinion--almost nine months after her original deadline

(i.e., August 31, 2009) to disclose her documents to the

Commissioner pursuant to the Standing Pretrial Order--

Ms. Lukovsky has made no response to the Commissioner’s motion

for summary judgment.

Discussion

I. Summary judgment standards

Where the pertinent facts are not in dispute, a party may

move for summary judgment to expedite the litigation and avoid an

unnecessary trial. Fla. Peach Corp. v. Commissioner, 90 T.C.

678, 681 (1988). Summary judgment may be granted where there is

no genuine issue as to any material fact and a decision may be

rendered as a matter of law. Rule 121(a) and (b); see Sundstrand

Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965

(7th Cir. 1994).

The party moving for summary judgment bears the burden of

showing that there is no genuine issue as to any material fact,

and factual inferences will be drawn in the manner most favorable

to the party opposing summary judgment. Dahlstrom v.

Commissioner, 85 T.C. 812, 821 (1985). Most of the facts

pertinent to the income issues are stipulated, and no material

factual disputes keep us from deciding whether the pension income

is taxable. Where the issue is substantiation of deductions, the
- 13 -

Commissioner carries his burden as movant by showing that,

despite the Court’s orders, Ms. Lukovsky has failed to produce

substantiating documents and that she thereby shows that she

cannot state a prima facie case. The Supreme Court has held that

where the party who does not have the burden of proof has

attempted discovery, but the party with the burden of proof has

not responded with evidence sufficient to carry its burden of

proof, summary judgment may be granted in favor of the party who

shows that discovery yielded no evidence. Celotex v. Catrett,

477 U.S. 317 (1986).

As a general rule, the petitioner in a deficiency case bears

the burden of proof, see Rule 142(a), and there is nothing in the

record to suggest any reason that the burden would shift in this

case. Thus, Ms. Lukovsky has the burden to substantiate

Mr. Lukovsky’s entitlement to any deductions. However, apart

from the prescription medicine expenses described above, she has

not come forward with any evidence to carry that burden--despite

her general obligation under Rule 70(a)(1) to cooperate with

informal discovery, despite the Standing Pretrial Order, and

despite the Court’s orders of August 14 and December 22, 2009,

requiring her to “provide to the IRS all of the documents on

which she will rely to substantiate the deductions at issue in

this case.”

The Commissioner has therefore made an adequate showing to

support a motion for summary judgment on the issue of
- 14 -

Mr. Lukovsky’s deductions in the years at issue, and it was

incumbent on Ms. Lukovsky to respond to that motion. Rule 121(d)

requires:

When a motion for summary judgment is made and

supported as provided in this Rule, an adverse party

may not rest upon the mere allegations or denials of

such party’s pleading, but such party’s response, by

affidavits or as otherwise provided in this Rule, must

set forth specific facts showing that there is a

genuine issue for trial. If the adverse party does not

so respond, then a decision, if appropriate, may be

entered against such party.

Ms. Lukovsky was therefore not entitled to rely on her

allegations in the petitions that Mr. Lukovsky had incurred

“Medical or dental expenses” or “casualty loss” but rather was

obliged to bring forward any evidence she has to substantiate

these or any other claimed deductions. She did not do so.

II. Income issues

The facts relevant to most of the income issues are

adequately set out in the parties’ stipulation filed August 19,

2009. That income is taxable, and the Commissioner is entitled

to partial summary judgment, as we now show.

A. Pension income

The petitions allege that “[t]he income comes from a

lifetime, non-taxable disability annuity.” We infer that

Ms. Lukovsky contends that her father’s pension benefits were

“amounts received under workmen’s compensation acts as

compensation for personal injuries or sickness”, which are
- 15 -

6The regulations make clear that this income exclusion does

extend to amounts received “under a statute in the nature of a

workmen’s compensation act”, but not to “a retirement pension or

annuity to the extent that it is determined by reference to the

employee’s age or length of service, * * * even though the

employee’s retirement is occasioned by an occupational injury or

sickness.” 26 C.F.R. sec. 1.104-1(b), Income Tax Regs. (emphasis

added). We do not analyze whether Mr. Lukovsky’s pension

benefits, even if they had been ostensibly paid as disability

payments, would qualify for exclusion under these principles,

since his argument stumbles at the starting gate as a factual

matter. His pension payments were never characterized as

disability payments.

excluded from income pursuant to section 104(a)(1).6 However,

Mr. Lukovsky never received disability payments. He received a

pension. He contended with his former employer on the subject

and urged that he should be given disability, but the contention

did not prevail. Consequently, the record shows no basis for

excluding Mr. Lukovsky’s pension benefits from income.

The petitions allege: “Previous Tax Court Appeals have been

entered into and have been resolved in the petitioner’s favor.” 

If this is an argument that the outcome in this case should be

bound by the outcome of previous Tax Court cases, that argument

cannot succeed. The relevant doctrine is collateral estoppel,

which the Supreme Court has summarized thus:

Under collateral estoppel, once a court has decided an

issue of fact or law necessary to its judgment, that

decision may preclude relitigation of the issue in a

suit on a different cause of action * * *.

Allen v. McCurry, 449 U.S. 90, 94 (1980). Thus, if the Tax Court

had previously decided that Mr. Lukovsky’s pension income is not

taxable, then Ms. Lukovsky could invoke that doctrine to attempt
- 16 -

7Mr. Lukovsky filed three petitions that ended in stipulated

decisions of no deficiency and no overpayment: Lukovsky v.

Commissioner, docket No. 26717-91 (involving 1985, 1987, and

1988; stipulated decision entered June 30, 1993); Lukovsky v.

Commissioner, docket No. 12018-92 (involving 1989; stipulated

decision entered June 30, 1993); and Lukovsky v. Commissioner,

docket No. 12315-95 (involving 1991 and 1992; stipulated decision

entered Oct. 8, 1996). Mr. Lukovsky’s income tax liabilities for

1995 and 1996 were involved in Lukovsky v. Commissioner, docket

No. 11936-99, and that case was dismissed for lack of prosecution

on May 18, 2001, in an order that sustained deficiencies in tax

and additions to tax. The collection of those 1995 and 1996

liabilities was put at issue in Lukovsky v. Commissioner, docket

No. 3546-04S, which was dismissed for mootness on April 13, 2005. 

We take notice of our records in these cases pursuant to Rule 201

of the Federal Rules of Evidence.

to bar the IRS from relitigating the matter in this case. 

However, Ms. Lukovsky has not pointed to any Tax Court decision

that addresses this issue. Our records show that Mr. Lukovsky

has previously filed suit in the Tax Court, but none of his cases

has resulted in any decision of this or any other specific

issue.7

We therefore hold that Mr. Lukovsky’s pension income is

taxable. However, there is a genuine issue of material fact as

to the amount of that income in 2004 (i.e., whether or not to

include $23,079 for which our record includes no Form 1099 or

canceled checks; see supra note 2). We will therefore grant

partial summary judgment on the pension income issue.

B. Other income

The parties have stipulated that Mr. Lukovsky received the

interest and dividends at issue, and section 61(a)(4) and (7)

provides that interest and dividends are generally taxable. The
- 17 -

petitions do not suggest that, and Ms. Lukovsky has not given any

reason that, this income is not taxable to Mr. Lukovsky.

Likewise, Ms. Lukovsky has suggested no reason that her

father’s Social Security benefits are not taxable to the extent

provided in section 86, and we hold that they are taxable to that

extent. The notice of deficiency for each year includes in

Mr. Lukovsky’s income 85 percent of his Social Security benefits,

consistent with section 86(a)(2)(B). This appears to be correct

for 2002 and 2005, and Ms. Lukovsky has shown no error in this

percentage.

However, as to 2004--for which we have held that there is a

genuine issue of material fact as to the inclusion of $23,079 in

Mr. Lukovsky’s income (see supra note 2)--we cannot yet determine

his modified adjusted gross income (as defined in

section 86(b)(2)), and it is therefore not clear whether the

taxable portion of his benefits is 85 percent (as in

section 86(a)(2)(B)) or is instead a lesser percentage (as in

section 86(a)(1)). For that reason, we hold that a portion of

Mr. Lukovsky’s Social Security benefits for 2004 is taxable but

that there is a genuine issue of material fact as to the taxable

amount.

III. Deduction issues

Mr. Lukovsky filed no returns--and thus claimed no itemized

deductions pursuant to section 161--for the three years at issue. 

Consequently, in its notices of determination, the IRS allowed
- 18 -

him the standard deduction pursuant to section 63(c). The

petitions allege that--

2.) The deductions are standard and do not reflect

credits allowed for medical or dental

expenses.

* * * * * * *

4.) The deductions do not reflect credits for property

loss or casualty loss.

In this litigation the Commissioner attempted to learn the

amounts of these alleged deductions and to obtain Ms. Lukovsky’s

substantiation for them, but she did not cooperate. The Court

ordered her to provide her substantiation for them, but the only

substantiation she supplied was for prescription medicine

expenses in amounts that, in each year, were less than the

standard deduction that was already allowed in the notice of

deficiency. The Commissioner moved for summary judgment, and

Ms. Lukovsky did not respond.

Under Celotex v. Catrett, 477 U.S. 317 (1986), it was

incumbent on Ms. Lukovsky to respond with substantiating evidence

in order to raise a genuine issue of material fact, and the Court

explained this obligation to her in its order of March 29, 2010. 

She has substantiated expenses (prescription medicine) only in

amounts less than the standard deduction that the IRS already

allowed in the notices of deficiency. In the absence of

substantiation of any further amounts, we now hold that there is

no genuine issue on the matter of itemized deductions, and that
- 19 -

8However, the precise amount of the standard deduction

remains unresolved because of issues, discussed in part IV below,

that may affect the computations under section 63(c)(2), (c)(3),

and (f). Because the Commissioner made no argument or showing in

support of the amounts stated (but not explained) in the notices

of deficiency, we do not grant summary judgment on this issue.

9Although section 151 provides that the personal exemptions

“shall be allowed as deductions”, they are distinct from the

itemized deductions allowed in section 161, which “allow[s] as

deductions the items specified in this part” (emphasis added)--

i.e., part VI, consisting of sections 161 through 199. We assume

that Ms. Lukovsky, like many taxpayers, thinks of “deductions” as

itemized deductions and considers “exemptions” to be a distinct

matter. We therefore assume that, when the Commissioner sought

and the Court ordered Ms. Lukovsky to provide substantiation for

“deduction issues”, she did not think that she was being called

on to demonstrate Mr. Lukovsky’s entitlement to exemptions for

his wife and other dependents.

Mr. Lukovsky is entitled only to the standard deduction of

section 63(c).8

IV. Personal exemption issues

The petitions allege that “Petitioner received no credit for

his own disability and related costs for himself and other

disabled family members that he has assumed”. We construe

broadly the petition of a pro se litigant, see Rule 31(d); 

Haines v. Kerner, 404 U.S. 519, 520 (1972), and we understand the

petitions in these cases to raise the issue of personal

exemptions under sections 151 and 152.9 The Commissioner did not

move for summary judgment on this issue, and we do not resolve it

in this opinion.
- 20 -

V. Additions to tax

Under section 7491(c), “the Secretary shall have the burden

of production in any court proceeding with respect to the

liability of any individual for any penalty, addition to tax, or

additional amount imposed by this title.” With the minor

exception noted below, the Commissioner has met that burden of

production, and we sustain most of the additions to tax.

A. Section 6651(a)(1)

Section 6651(a)(1) authorizes the imposition of an addition

to tax for failure to file a timely return. See also United

States v. Boyle, 469 U.S. 241, 245 (1985). The parties have

stipulated that Mr. Lukovsky received his pension benefits but

failed to file returns for 2002, 2004, and 2005; and with that

stipulation the Commissioner has satisfied his burden of

production under section 7491(c).

Section 6651(a)(1) provides for the addition “unless it is

shown that such failure is due to reasonable cause and not due to

willful neglect”. The petitions made no allegation that can be

construed as pleading such “reasonable cause”; and Ms. Lukovsky

made no showing of reasonable cause--indeed, no response at all--

to oppose the Commissioner’s motion for summary judgment. We

therefore hold that Mr. Lukovsky is liable for the failure-tofile addition.
- 21 -

B. Section 6651(a)(2)

Section 6651(a)(2) imposes an addition to tax for failure to

pay the amount of tax shown on a return. The addition to tax

under section 6651(a)(2) applies only when an amount of tax is

shown on a return. Cabirac v. Commissioner, 120 T.C. 163, 170

(2003). The Commissioner’s burden of production with respect to

the section 6651(a)(2) addition to tax requires him to introduce

evidence that a return showing the taxpayer’s tax liability was

filed for each of the years at issue. Wheeler v. Commissioner,

127 T.C. 200, 210 (2006), affd. 521 F.3d 1289 (10th Cir. 2008). 

In cases such as these, where the taxpayer did not timely

file returns for the years at issue, the Commissioner must

introduce evidence that a valid substitute for return was made

for each year pursuant to section 6020(b). Cf. sec. 6651(g)(2). 

The Commissioner submitted with his motion for summary judgment

copies of the SFRs for the three years at issue. To constitute a

valid substitute for return under section 6020(b), “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. 

All three SFRs “contain sufficient information”; and the

SFRs for 2002 and 2005 are subscribed as required by section

6020(b)(2); but the SFR for 2004 is not subscribed. As a result,

the 2004 SFR does not satisfy section 6020(b), and the
- 22 -

Commissioner has therefore so far failed to satisfy his burden of

production under section 7491(c) with respect to the section

6651(a)(2) addition to tax for that year; but he did meet his

burden as to 2002 and 2005.

As with the section 6651(a)(1) failure-to-file addition,

section 6651(a)(2) provides for the failure-to-pay addition

“unless it is shown that such failure is due to reasonable cause

and not due to willful neglect”. Again, Ms. Lukovsky made no

response at all to the Commissioner’s motion for summary

judgment. Accordingly, we will grant summary judgment in favor

of the Commissioner as to Mr. Lukovsky’s liabilities for the

addition to tax under section 6651(a)(2) for the 2002 and 2005

tax years, but we hold that for the 2004 tax year a genuine issue

of material fact as to the sufficiency of the SFR precludes

summary judgment as to the section 6651(a)(2) addition to tax.

C. Section 6654

For the years at issue Mr. Lukovsky made no payments of

estimated tax--indeed, no tax payments of any kind. Section 6654

imposes an addition to tax on an individual taxpayer who

underpays his estimated tax. A taxpayer has an obligation to pay

estimated tax for a particular year if he has a “required annual

payment” for that year. Sec. 6654(d). A “required annual

payment” is defined in section 6654(d)(1)(B) as:
- 23 -

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 individual did

not file a return for such preceding taxable year.

Thus, the Commissioner’s burden of production under section

7491(c) requires him to produce, for each of the years at issue,

evidence that the taxpayer had a required annual payment under

section 6654(d); and in order to do so he must demonstrate the

tax shown on the taxpayer’s return for the preceding year, unless

he can show that the taxpayer did not file a return for that

preceding year. See Wheeler v. Commissioner, supra at 210-212. 

The years at issue are 2002, 2004, and 2005, for which the

“preceding taxable year[s]” are 2001, 2003, and 2004. For one of

these preceding years (2004), the parties stipulated that

Mr. Lukovsky filed no return. For the other two preceding years

(2001 and 2003), the Commissioner submitted Forms 4340,

“Certificate of Assessments, Payments, and Other Specified

Matters”, showing that no returns were filed. The Commissioner

has thus carried his burden of production under section 7491(c)

with respect to the section 6654 additions for the years at

issue. 
- 24 -

The section 6654 addition to tax is mandatory (i.e., it says

that the addition “shall be added”, and it provides no

“reasonable cause” exception) unless the taxpayer can place

himself within one of the computational exceptions provided for

in subsection (e) thereof. Grosshandler v. Commissioner, 75 T.C.

1, 20-21 (1980). Ms. Lukovsky has not made any argument about

section 6654, and there is no showing that any of the exceptions

applies. Accordingly, we hold that Mr. Lukovsky is liable for

the addition to tax under section 6654 for the 2002, 2004, and

2005 tax years.

Conclusion

We find that there is no genuine issue of material fact, and

that the Commissioner is entitled to judgment as a matter of law,

on the following issues:

• Mr. Lukovsky’s interest and dividend income in the

amounts stipulated is taxable.

• Mr. Lukovsky’s pension benefits constitute taxable

income in the amounts of $43,599.12 in 2002 and

$45,968.88 in 2005 and in a not-yet-determined amount

of no less than $21,768.21 in 2004.

• Mr. Lukovsky’s Social Security benefits (which he

received in the amounts stipulated) is taxable to the

extent of 85 percent in the years 2002 and 2005 and to

an undetermined extent in 2004.
- 25 -

• Mr. Lukovsky has not substantiated itemized deductions

in amounts greater than the standard deduction and is

limited to the standard deduction (in amounts not yet

determined).

• For all three years, Mr. Lukovsky is liable for the

failure-to-file addition to tax under section

6651(a)(1) and the addition under section 6654 for

failure to pay estimated tax; and for 2002 and 2005 he

is liable under section 6651(a)(2) for the failure-topay addition to tax.

However, we find that genuine issues of material fact remain as

to--

• whether Mr. Lukovsky’s pension income was limited to

$21,768.21 in 2004 or included additional amounts;

• whether the taxable portion of Mr. Lukovsky’s Social

Security benefits in 2004 is other than as reflected in

the notice of deficiency;

• whether, for any or all of the years at issue,

Mr. Lukovsky is entitled to more personal exemptions

than are reflected in the notices of deficiency;

• whether the standard deduction to which Mr. Lukovsky is

entitled is, for any or all of the years at issue,

greater than as reflected in the notices of deficiency;

and 
- 26 -

• whether Mr. Lukovsky is liable under section 6651(a)(2)

for the failure-to-pay addition to tax for 2004.

To reflect the foregoing,

An appropriate order will be

issued.