TAX COURT OPINION

Case: Mark Haller Zilberberg
Docket Number: 5823-09
Judge: Wherry
Opinion Type: memo
Filed: 01/05/2011
Pages: 22

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.Ci arguing he.was entitled to a $5,000 moving expense deduction and a $36,250 casualty'loss deduction for his 2005 tax year. P "contested the deficiencies and additions to tax 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, -furtheE, 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. , e , Kimberly A. Higgins and Kenneth A. Hochman, for respondênt. SERVED JAN -5 2011 - 2 - 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: (I) 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 e s t imated tax payment s . IUnless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended and in effect for the yéars at Rules of Practice and Procedure. issue, and all Rule references are 'to the Tax Court - 3 - 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*îiled h'ïs '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 . 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) . Petitioner received taxable income from various sources including Walton Academy, the Monroe County School Board, Innovation, Penco Inc . Socia'l Sécurity Admi*nistration t he School District of Escambia County, the Agency for WoŸkforae , Florida Keys C,ommunity College, and the Petitioner' s 2004 gross income was $35, 588, including a $6,709 Såci~al Security payment of which only $3,354 is taxable. Petitioner' s 2005 gross income was $37, 339, including a $4, 567 Social Security paytnents of which only $3, 179 is, taxable . Petitioner's 2006 gross income was $56,867, Social Security payment of which only $4, 997 is taxable. including a $5,879 - 4 - Additions to Tax Tax Year Deficiency - £6651(a) (1) 6651(a) (2) Sec. Sec. Sec. 6654 (a) 2004 2005 2006 $3,284 $738.90 $673.22 --- 3,610 8,128 723.60 . 1466.32 $127.25 1,791.22 1676.68 375.84 Sec. 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, Flori a, to Key West,. Florida, paying "$5, 000 5 - for [his] materials,- [his] collectioris, everything that 1[he] had to be packed and shipped to Key West" For the claimed casualt'y 10ss deduction, petitioner testified that- in 2005, aftet he moved to Keylest,'hé "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." i According to petitioner:., "Alal of [his] property not only "was" destroyed by the water, but there was a disease factor and everyth-incj was takén out "to the street in dumpsters.'a In evidence presented to this Court, pet·itioner listed the items of property he alleges were lost or destroyed as a result of thea hurricanes and an s 3Petitioner alleges that he suffered from Hurricanes "Key West four hurricanes "struck" Key West. The winds of the hurricanes ranged from Katrina, Wilma, Rita, and Dennis, being "flooded from the east" and "flooded from the west". Petitioner testified th,at was totally inundated. 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 This Court, without discussing the differences between "affected"? and "struck" or determining which specific hurricane (s)s damaged petitioner' s property, caused damage across Florida and will property in Key: West, Florida, suffered damages in the 2005 . hurricane season.s A court may. take judicial notice of appropriate adjudicative facts at any stage in a -proceeding, whether or not R. Evid. 201(c), 600, 601 (6th Cir. 1964) judicial notice suas sponte) . notice of determination by resort reasonably be questioned:a Fed. R. Evid. 201(b) ; see also Evans v. Commissioner, T.C. Memo. 2010-.207. See Fed. (f); see salso United Statess. Harris, 331-F.2d realizes that the 2005'hurricane season - take judicial -notice' that facts athat are capable of accurate and ready the notice is requestedsby the partiës. (explaining "that a court may take In- generar, the -court -may take a to sources whose accuracy cannot - 6 - 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 dide not provide any, proof of rhis sownership of any of the items, of listed property, ñor 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. On Exhibit 10-P petitioner listed the following:- - 1991 fax machine--$3,500; two TVs, Nissan Maxima-r$4,000; kayak with HP. Johnsori outboard motor-- $1,500; English Racer bicycle--$150; English Racer bicycle (se cond) - - $50 ; bedroom, oliving room, dining room furniture , and other household furnishings and accessories--$4,000; computers, monitors, printers, copier, three digital Deckmate recorders--$300; three radios, speakers, all electionic equipment--$750; clothing and personal belongings-- $1,000; $500; Lee -Manella paintings-$3,250; Dean Giola. paintings-$4,250; Hank Fleck paintings--$3,250; Sally Boswell painting--$1;-250; assorted paintings - -$2, 000 ; book collectiona -$3, 000 . that from the original amounts listed on petitioner's -Exhibit 10-P before they were crossed out and-the*new cleaimed values written in by hand. - Petitioner testified he did this to reflect his original cost of each item rather than his estimate of market value when destroyed by the storms . the claimed values for these items are sinnificantly reduced IJivingston Roberts highwayman painting--$3,500; food We note its fair Discussion Petitioner'argues that for his 2005 tax year he is:entitled tîo: (1) A $5, 000 moving expenses deduction- ands (2) a $36, 250 casualty loss deduction I. Burden of Proof Deductions arera matter of legislative grace, and taxpayers bear the burdentof proving entitlement to any.claimed deduction. 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 tookeep books or, records and otherwise to.substantiate all claimed deductions. Sec. 6001; New Colonial Ice Co. v: Helvering, 292 U.S. 435·,7 440 (1934) ; Rober,ts V: Commissioner, 62 T.C. 834, 836 (1974); sec. 1.6001-1(a), Income Tax Regs. 3Petitionèr stated in his petition that'he intended to rely theft losses, itemized deductions, moving on travel expenses, 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, 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: losses, or 'Pet-itioner did not argue that secs 7491(a) applied. factual to his liabilities "for tax and did not argue or not produce credible evidence with respect relevant establishathat he had met Consequently, sec. 7491(a) does not apply here to shift the burden of proof the requirements of ,sec. 7491(a) (2) . to respondent. to all "He did issues - 8 - 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.? 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 thegamount that is deductible so long as the taxpayer presents sufficient evidence to establish a rational basis for-makind 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. Memos 1998-420. II. .WhetherePetitioner 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 Even 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). - 9 - employee or as a self-employed individual at:aanew principal place of work."i Section 217 (c) as relevant hene, specifies the following two conditions that a taxpáÿer must satisfy in order to claim a moving expenses deductioni First, the taxpayer's new principäl place of work-mustibe "at least 50 miles farther from his former residence than-was his former principal place~of work"; and second, "during the 12-month period inmediately following his arrival in the general -lacation of his new pfincipal pláce öf 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 deductiòn, e testifying at trial only that- he was hired by the Monroe County School"Districts 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 hes was entitled to his claimed $5, 000 section 217 moving iexpense deduction. Petitioner failed to substantiate the alleged moving expenses with documentary evidence such as receipté,,'credit card statements,a canceled checks, or even a written summary of his "expenses. Petitioner testified that -he paid ato have things "packed and "Sec. 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) residence." from the former residence to the new place of 10 - shipped". Yet petitioner never provided this Court with specific information such as the exact days hermoved,,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 tosKey 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 movsing 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 peti-tioner 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 leáát mos6 of thè personal property listed - 11 - in his a Exhibit 10 - P to Keys West . 9 See Cohan V . Commis s-ioner , supra at 543,544; see.also-Clark-v. Commissioner, T.C." Memo. 1989--598 (allowing a.$200amoving expense deduction when the taxpayer claimed $500, but provided no receipts)-, affd. -without published opinion 9 51, F . 2d 1258 (10 th Cir . 19 91) . 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 166 (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 at transaction entered into for profit if the loss results from "fire, storm, shipwreck, or other casualty". See id. Pursuant toisection 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- thet taxable year "exceeds 10 percent of the adjusted gross income"E for thats taxable year.1° "Key West is approximately 805 miles from Okaloosa County, Florida. 1°The sec. 165:(h) limitations do not apply to losses described in sec. 165(c) (3) and "(1) which arise in the Hurricane Katriria edisaster area on or after August 2'5, 2005, and ,which are attributable to Hurricane Katrina, (2) which arise in the . (continued. . . ) - 12 - The amount of the casualty loss allòwed 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 détermining the loss*frod 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: * * loss deductible under the property [section 165]-,4the fair market value of In determining the amount of * 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 asidamaged property which "may occur simultaneously with the casualty, that any deduction under * limited to the actual property. loss resulting from damage to the [section 165] shall bel in order * * Physical damage to property,caused by a hurficane is a casualty within the purview of sectioni l65(c) (3). See Lamphere v. Commissioner, 70 T-.C'. 391, 395 (1978) (holding that damage "( . . . continued) 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. 32, sec. 2, 2006-2 C.B. 61-62. See Rev. Proc. 2006- - -13 - resulting from Hurricane Agnes was a casua·lty) ; see also sec. 1. 165 4 (b) -(3 ) Example (.2 ) , Income Tax Regs . Key West suf f ered damages because-of the 2005 hurricane season. However, petitioner has failed to fullyt 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 formsof documentation and testimony.3 Obot v. Commiäsioner, 'T.C. Memo. 2005-1952 Petitioner argues that he is entitled to a Tcasualty loss deduction of $36, 250 for-his 2005 tax year stating at trial: issue * The only item at I four hurricanes that I suffered in Key West which I lostleverything. my shirt on my back * I lost everything in 60 plus-years, and thata is all at issue. I-walked out'the hurricanes with I lived in water for four days. is lost during the in 2005, during * s*, is what that * *. 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 Petitionei-' s trial testimony i cluded additional [he had] collected, all [his] books, all "[his] paintings, statements that emphasized the totality of his .loss . téstifiéd that he lost "All everything that pineapple beds, everything was lost . Later, petitioner claimed " [hel dining room furniture, and' all other hbuse furnishings a'nd accessories three digital DEC made recorders, speakers, all electronic.equipment, all clothing anci personal belongings, and allefood,a refrigerator, stored, everything, azero" computers, monitors, printers, copier, freezer,tcanned ànd lost all bedroom, three radios, furniture, [his] * [He] two. TVs, * * He lost [his] car" . li:ving room, fax machines, - 14 - consistent in the values he assigned to the property he claims was destroyed. For example, at trial petitioner testified that he lóst a 1991 Nissan Maxima, la Hobie fishing kayak, sand 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 Ni'ssan Maxima of $4,2000 and a value to the kayak and the Johnson 35-horsepower motor together of $1,500.- Petitioner further testified about a Livingston Robert s paint ing wor th between $8 , O O O and $10 , O O O f or 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. Despites 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 förthright. We do not believe petitioner was attempting to mislead this Court; rather, we believe petitioner had no documentation for the property. However, petit:ioner's testimony and the handwritten list do not fully satisfy petitioner's burden of substantiation. See Lockett v. Commissioner, TiC. Memo. 2008- 5 (not alló ing a casualty loss deduction when the taxpayer "Petitioner assigned a value of $3;000 in Exhibit 10-P tö his book collection and testified to the same effect. - 15 - failed to prove the fair market value of the' property or"the adjusted -basis of the pfopefty or to p·eodude evidehce that would allow a reasonable estimate) . The ónly evidence 'this Court has is petitioner' s tiestimony and a list òf items of property he claims he "lost dužing the'2005 hurricane season. Petitiorier did not éroduce any otlîer documentation, þhotographs of witnesses.- Because petitioner did not providenall df the evideñáe réquired by se~ction 1.165- 7 (b) (1) , Income Tax Regs . , i'n'ordef to fully substantiate his loss, petitioner is not entitledtto the entire "casual'ty loss deduction "of $36, 250 thatshe claims' for his 2005 ta'x year. Petitlioner asserts that what littile 'dócumentation he did 1 ave about: the damaged är destroyed property'was itself destroyed by the hurricanes . If a taxpayer' s records are löst or destròyed through circumstances beyond his control, he is entit-led- to substantiate ,the claimed deductions by use of other credible evidence.« Lockett v. Commissioner, 306 Fed. Appx. at 466-467; illareal v Commissioner , T . C . Memo . 1998 -4 20 . But petitioner' s unverified, undocuinented test inony is not sufficient to ,support a $36, 250 casualty loss deduction. However, this Court may approximate the deductible amount if t 1 e taxhaÿer estaÚishes a deductible expense but is unable to subâtantiate the precise amount. Cohan v. Commissioner, 39 F.2d at 543-544. 4. - - e - 16 - 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 deductiân 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 sof the property. Sec. 1.16577(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. See Popa v. Commissioner, 73 T.C. 130, "Petitioner admits that he received approximately $500 from FEMA during 2005 and therefore this -amount "shoeld bè offset against his $15,500 casualty loss deduction. Accordingly, petitioner will be entitled to a $15,000 deduction after offsetting the $500 he received from FEMA. limitations do not apply in this -case. See supra note 10. We come up with $15,500 on the basis of petitioner's See sec. 165(a). The sec. 165(h) losing his car, kayak and outboard motor, paintings, and t~estimony and his Exhibit 10-P. Petitioner ekténsively testified about book collection. • This Court also notes tha't-even though them, he naturally petitioner did not specifically testify about items such'as clothing andsfurniture listed on lost the personal For the items petitioner both testified about his Exhibit 10-P. and listed on Exhibit 10-É, we allow petitioner the lowest value attributed to that on in his testimony at trial,'we allow pefittioner half of value listed on his Exhibit 10-P. Specifically, we give petitioner $3,000 for his car, $1,500 for the kayak and outboard (continued...) items not elaborated For the personal item. the 17 - 134 (1979) (holding that the taxpayeresustained-a cåsualty'loss büt had not' adequately documented the dëductiblë amount and therefores wast entitled tolonly 75 percent of the claimed loss) ; Heynov. Commissioner, 46 TeC:. 302 309-310: (1966) (alloning the taxpayer a casualty loss deduction of $7, 500 becau'sè it was alear that the taxpayer had-sustained some loss as - a- result of the " casualty evenithough the-taxpáýer had-faitled to cleai-ly or precisely substantiate the amoùnt).; Clapp v.? Commissioner, 36 T . C . 9 0 5 , 4 9 08 (1961*) (re.j ectinè 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 casüâlty vasu$800) affd: 321 F -2d 112 - (-9th?Cir. 1965) IV. Additions to;Tax Respondent bears the burden of production with regard to the additions to taxo See sec. 7491(c) ; see Higbee v. Coinmissionern 116 T'. C R438T2446 447s (200il.)r Too meets his: burden, respondent mus~t- produce sufficient evidence establishing that it is appropriate to imposë the determined additions to -taxt - See - Higbee v. Commissioner .supra at. 446." However,' respondent does not h'ave to produce* evidence of reasonablE cause, substantial authority, or lack of willful neglect. Id. "(...coritinued) motor, $3,.500 for the Livingston Roberts highwayman painting $2, 000 for the other listed paint ings, $3, 000 for liis book collection, $2, 000 for his furniture, and $500 for clothing. A. Section 6651(a) (1) 18 - 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,simposes an addition too 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. Ther 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 2006stax return. Further, petitioner has not presented any evidence_ that his , failure to file was due to reasonable cause and not willfu-1 neglect. Respondent.has-met his burden of produc:tion, 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-didanot.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 showne that such« failure is due to reasonable cause and not due to willful neglect." * The Commissioner's burden of production with respect to the section 6651(a) (2) addition to tax requires that Commissioner introduce evidence showing that a return showing the taxpayer's tax liability was filed for the year In a case such asa this where the taxpayer did in question. not file a return, introduce evidence that an SFR [substitute for return] satisfying the requirements of section 6020(b)"was made. [120 T.C.. 163 (20.03)] Commissioner, See Cabirac v. * the Commissioner must the * * * * ' * Wheeler v. Commissioner, supra atu210 . Under section 6651(g) (2) , a return prepared by the Secretary pursuant to section 6020 (b)e is treatéd as a returnefiled by the taxpayer for the purpose of determining the- amount of an addition to tax under section 6651(a) (2) .c . To constitute a section 6020 (b) - return, "the returry must be subscri-bed,s its must contain sufficient information from which toscompute the taxpayer's tax liability, and the return form and any attachments must purport to be a ' re turn' . " Spurlock v - Commis s ioner T . C . Memo . 20 0 3 - 124. Respondent and.petitioner stipulated athat substitutes for returns were filed on petitioner's beha-lf for his 2004, 2005, and 2006 stax years. Petitionei did not pay his tax forshis 2004, 2005, or 2006 tax -year. Respondent has met his burden of "The sec. 6651(a) (1) addition to tax is reduced by the amount of fraction thereof) sec. 6651(a) (1) and (2). the sec. 6651(a) (2) addition to tax for any month (or to which an addition to tax applies under both See sec. 6651(c) (1). - 20 - production withfrespect - tô thessection- 6651 (a) (2) addit!ïoris to tax. s Further, petitioner; did not spresent any*evidende that his failu e toepay was-due to reasonable cause and not willful neglect Therefore, we, will sustain the additions sto tax under section 665 (a) (2) for petitioner's 2004, 2005,. and 2006 tax * years. C. Section 6654 (a) Additions to Tax Respondent determined that petit-ioner was liable fog additions to taxyunder section 6654-(a) for petitioner's 2005 and 2006 tax* years. Sections 6654 (a) imposes anyaddition to tax where prepaymentstof tax, either through withholding or by: making êstimatede quarterly taxapayments durin'g' the course of the year, do nót equal:.the percentage oft totaal liability required under the statute However, the addition to tax will not apply if petit-ioner showssthat one -of the several statutory exemptions applies. Eee Grösshandl'er v.1 Commissioner, 75 T.C. 1s, 20 -21- (19$0 ) . "3[R] equieed iristallments" of estimated taxe are 3due att four timenduringsthe year and each is 25 percent of- the "required annual payment . " Sec . 6654 (c ) (1) , (d)-(1) (A)2 For :an individual taxpayer whose adjusted grosì income for the taxable year is $150, 000 or less, a "required annual payment" is equal to the lesser of-- - 21 - (i) 90 percent of the tax shown on the return for (or, if no return is filed, 90 percent the taxable year -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 pteceding 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 Courrt 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. - 22 - The Coui-t has considered all of petitioner'sacontentions, arguments, requests, sand 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