TAX COURT OPINION

Case: Thomas McCarthy, Jr.
Docket Number: 11105-12
Judge: Gustafson
Opinion Type: bench
Filed: 07/22/2013
Pages: 21

UNITED STATES TAX COURT WASHINGTON, DC 20217 THOMAS McCARTHY, JR., ) Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent CZ ) ) Docket No. 11105-12. ) ) ) ) OR D E R Pursuant to the opinion of the Court as set forth in the pages of the transcript of the proceedings before Judge David Gustafson at Washington, D.C., on July 3, 2013, containing his oral findings of fact and opinion, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Gustafson at Washington, D.C., containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) David Gustafson Judge Dated: Washington, D.C. July 22, 2013 SERVED Jul 23 2013 Capit al Reporting Company 3 1 2 Bench Opinion by Judge David Gustafson July 3, 2013 3 McCarthy v. Commiss Loner, 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Docket No. 11105-12 THE COURT HAS DECIDED TO RENDER THE FOLLOWING AS ITS ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. THIS BENCH OPINION IS MADE PURSUANT TO THE AUTHORITY GRANTED BY SECTION 7459 (B) OF THE INTERNAL REVENUE CODE, AND RULE 152 OF THE TAX COURT RULES OF PRACTICE AND PROCEDURE; AND IT SHALL NOT BE RELIED ON AS PRECEDENT IN ANY OTHER CASE. By notice of deficiency dated February 3, 2012 (Ex. 1-J), the Internal Revenue Service (IRS) determined a deficiency in the Federal income tax of petitioner Thomas McCarthy, Jr., for the years 2005, 2006, and 2007, along with additions to tax under sections 6651(a) (1) and (a) (2) and section 6654. The parties have stipulated to the resolution of all of the income issues in this case (Stip. 4, 14, 19) and have reached partial agreement as to some of the expense issues. After concessions, the issues for decision are whether Mr. McCarthy is entitled to certain deductions and credits, whether he is liable for self-employment tax, and whether he is liable for the additions to ta>:. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 8 9 10 11 12 Trial of chis case was conducted on July 2, 2013, in Washington. D.C. Mr. McCarthy represented himself, and Christopher R. Moran represented the Commissioner. We find the following facts: INDINGS OF FACT Law practice Mr. McCar;hy has been an attorney since 1989. He practiced law at his own firm until 2005. He alleges that in 200 4 he had a net loss (and he so claimed on his 2004 tax return filed late in November 2005, Ex. 27-P) . Ho(cid:16)0407ever,he put on no actual evidence of his income and expenses in 2004. 13 Consequently, we are unable to find whether he had 14 15 16 17 net income or net loss in that pre-suit year. Mr. McCar -hy practiced at his firm in 2005 as well; and in March of that year he was hired and paid as a consultan: by the International Bank for 18 Reconstruction and Development (commonly called "the 19 World Bank") . (Stip, 9. ) It is not implausible that 20 21 22 23 24 25 he would have incur -ed some expenses in 2005 in connection with his law practice and consultancy, but he proved none. His only evidence was a handwritten listing of expenses (Ex. 42-P), for which he offered no backup. We are unable to find any deductible expenses in 2004. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 World Bank Employment 2 3 4 5 In Octobe 2005 Mr. McCarthy was hired as a full-time employee of the World Bank, and thereafter through 2007 he was paid wages as an employee (and not as an independent contractor). (Stip. 7.) The 6 World Bank did not withhold income tax or social 7 8 9 security tax from Mr. McCarthy's wages. The Forms W-2 that the World Bank issued to Mr. McCarthy for each of the years at issue (Exs. 4-P, 10-P, 14-P) advised 10 him of his obligation to pay social security and 11 medicare taxes on h s World Bank wages and to file 12 13 14 15 16 17 18 19 20 21 Schedule SE with his tax return. Mr. McCarthy testified very generally that in the years at issue he drove in connection with his work, but he offered no specifics about his driving, did not distinguish it from nondeductible commuting, and offered no logs or other records to substantiate vehicle expense as an unreimbursed employee business expense. We therefore are unable to find any unreimbursed employee business expense for any of the years at issue. 22 Mortgage Interest 23 24 25 In April 1997 Mr. McCarthy purchased a house on Harness Creek View Drive that has been his principal residence ever since. (Stip. 26) He 866.488.DEPO www.CapiialReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 acquired it for a price of $645,000 (Stip. 29), and financed·the acquisltion by a mortgage of $500,000 (Stip. 30). Sometime before 2005 he and his ex-wife became estranged. In 2005 their divorce was finalized; and under the terms of the "Consent Order" (Ex. 33-P), Mr. McCarthy was to purchase his ex- 7 wife's interest in their house for $175,000 (payable 8 9 $100,000 in 2005 and $75,000 in 2006). To accomplish this buyout he refinanced the 10 mortgage in 2005 (at a time when his debt on the 11 12 13 14 existing loan was apparently $443,967, Ex. 43-P) and again in 2006. Highlander Title Assurance was a firm in which Mr. McCarthy was a general partner (Ex. 7-P) and which was owned by members of his family. 15 Highlander processed the refinancings and prepared 16 17 18 19 20 the HUD-1 statements. As a result of these transactions, Mr. McCarthy incurred total acquisition indebtedness of an amount no greater than what the Commissioner conceded and that we assume -- i.e., $500,000 plus $175,000, or $675,000. We find that Mr. 21 McCarthy did not prove his contention that he paid an 22 extra $200,000 of acquisition indebtedness to his 23 wife. Consequently, to the extent his borrowing 24 25 exceeded $675,000, it was for indebtedness other than acquisition indebtedness. 866.488.DEPO www.CapitalReportingCompany.com Capit al Reporting Company 7 1 The Commi:ssioner stipulates that Mr. 2 McCarthy paid mortgage interest of $34,831 in 2005, 3 4 and that he is entitled to a deduction of this amount. He also stipulates that Mr. McCarthy paid 5 mortgage interest o $96,806 in 2006, and $73,262 in 6 7 8 9 10 11 12 13 2007. However, the Commissioner contends that his deductions in those two years are limited to the amounts attributable to his acquisition indebtedness ($675,000) plus the $100,000 of home equity indebtedness permitted by section 163(h) (3) (C)), totaling $775,000. The Commissioner calculated that the deduction so linited is $66,592 for 2006 and $66,724 for 2007 (see Ex. 1-J at 6-7), and Mr. 14 McCarthy did not offer any critique of this 15 16 17 18 19 20 21 22 23 computation nor any alternative computation of the limitation. Real Estate Taxes Mr. McCarthy alleges that he paid real estate taxes on the Harness Creek house in each of the years at issue, but he has no Form 1098, or receipt from the tax collector, or cancelled check, or other typical evidence of payment. Instead -- For 2005 Mr. McCarthy relies on an "Annual 24 Billing" generated by the tax collector that shows, 25 for the fiscal year ended June 30, 2005, total 866.488.DEPO www.CapitalReportingCompany.com 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Capital Reporting Company 8 payments of $6,248.06 and a balance due of zero. However, the document gives information as of April 2011 and does not snow whether any payment was made during the years at issue. For 2006 he relies on a HUD-1 statement (Ex. 46-P) that was generated by his own Highlander company. We find the authenticity of this document to be doubtful. Moreover, we find that the information on it is equivocal and, to the extent it may support his contentions, is contradicted by the tax collector's apparent statement that the taxes remained unpaid (Ex. 26-P). For 2007 Mr. McCarthy relies on an ostensible escrow statement from his lender (Ex. 47- P), which purports to show that on Mr. McCarthy's behalf the lender paid taxes totaling $6,113 in May 2007. However, the Form 1098 (Ex. 22-P) that was issued by the lendec at year end contradicts this flatly and shows (in box 5) a zero amount for real estate taxes paid. On the evidence presented, we are unable to find that Mr. McCarthy paid real estate taxes in any of the years in sui . Damage to the House Mr. McCar hy had homeowner's insurance. 866.488.DEPO www.Cap talReportingCompany.com Capital Reporting Company During an absence in 2007, his house was damaged. The insurance company p. id about $9,000 to cover the repairs, except tha Mr. McCarthy had to pay $1,500 out of pocket to cover the $1,500 deductible required 9 by his policy. Dependents Mr. McCar-hy and his ex-wife have three sons. Under the terms of their divorce (Ex. 33-P), they share joint legal and physical custody, and the 1 2 3 4 5 6 7 8 9 10 sons spend alternat ng weeks at each parent's house, 11 with exceptions in álternating odd and even years. 12 13 14 2007 was an odd-numbered year; and under the terms of their consent order, if it had been followed literally, the sons would have stayed with Mr. 15 McCarthy slightly more than half of the days of 2007. 16 However, Mr. McCarthy's work required that he be out 17 18 19 20 of the country for about 13 weeks in January through May, and some of those weeks were weeks that the sons would otherwise have been scheduled to be with him. Instead, they stayed with their mother those weeks. 21 When Mr. McCarthy was back in the country, his wife 22 23 24 25 cooperated in letting him make up some of the weeks, but he did not make up all the missed weeks, and as a result the sons stayed with him somewhat less than half of the days of|2007. His ex-wife claimed their 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 sons as dependents on her 2007 -tax return. Mr. McCar:hy alleged that in each of the years at issue he incurred and paid $7,500 to someone named Mary to care for his sons. At trial he appeared to abandon this con ention, and he did not put on any proof of such payments. Tax Returns Mr. McCarthy had filed returns for years before 2005, but he did not file timely returns for 2005, 2006, or 2007 (Stip. 2.) He did not make quarterly payments of estimated tax for those years, and he still has not made tax payments for those years. The IRS began an examination of him and prepared substitutes for returns (SFRs) pursuant to section 6020(b), us ng the information available to the agency. (Stip. 40; Exs. 29-R, 30-R, 31-R). Mr. 17 McCarthy later subm tted returns (and then revised 18 19 20 returns) for those vears, on which he claimed head- of-household status . The IRS issued a notice of deficiency to 21 Mr. McCarthy on February 3, 2012, and he timely filed 22 23 24 25 his petition in this Court on May 3, 2012. At that time Mr. McCarthy resided in Maryland. (Stip. 1.) I. Burden of proot OPINION 866.488.DEPO www.CapitalReportingCompany.com Capit al Reporting Company 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 The IRS's determination is presumed correct, and taxpayers generally bear the burden to prove their entitlenent to any deductions they claim. Rule 142(a). Deduct ons are a matter of legislative grace, and taxpayers must satisfy the specific requirements for any deduction claimed. See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Furthermore, taxpayers are required to maintain records sufficient to substantiate their claimed deductions. See sec 6001; 26 C.F.R. sec. 1.6001- 1(a); see also id. sec.-1(e) ("The books or records *** shall be retained so long as the contents thereof may become material in the aåninistration of any internal revenue law"). Mr. McCart.hy generally lacked records to prove his contentions. Moreover, the few records that he produced included HUD-1 Statements allegedly produced by his own firm, Highlander (Exs. 43-P, 44- P, 46-P), and we find the documents unreliable. He professed to be uncertain about whose signatures appeared on the HUD-1 statements for the firm (though it is very small). One of the forms, according to his explanation of it, substantiated payment of property tax (Ex. 46-P, line 105), but a later property tax 25 bill (Ex. 26-P) app2rently showed that "prior year 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 taxes remain unpaid," We are unpersuaded as to the authenticity and reliability of the HUD-1 statements. II. 2005 law practice expenses Mr. McCar:hy did not substantiate any expenses that could be deducted from the income (now stipulated by the parties) that he earned in his law practice. A Schedule C, "Profit or Loss From Business", that he :3ubmitted late with a tax return claimed deductions of $23,328 (reported as "returns and allowances"), but his unsupported list of those expenses does not carry his burden of proof. III. Net operating loss Section 172 (a) provides, "There shall be allowed as a deduction for the taxable year an amount equal to *** the ne·: operating loss carryovers to such year." Mr. McCarthy's 2004 return (Ex. 27-P) showed a loss of $32,237, and he claimed that he is entitled to claim a carryforward of that loss in 2005, 2006, and 2007. However, his 2004 return is 20 merely a statement of his claims and does not 21 22 23 24 25 establish the corre< tness of the facts stated therein. See Wilkin: on v. Commissioner, 71 T.C. 633, 639 (1979). Rather, Mr. McCarthy bears the burden of establishing both the existence of the NOL in the prior years and the|amount that may be carried 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 1 forward to the years at issue. See Rule 142(a); 2 Keith v. Commissioner, 115 T.C. 605, 621 (2000). He 3 4 5 6 did not prove at trial any expenses for 2004 that could have given rise to a loss. Even if that were not sufficient to resolve the issue, it would have to be resolved against Mr. 7 McCarthy on other grounds. "Sectiòn 172 *** requires 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that the losses be carried back and forward in a certain order." Benton v. Commissioner, 122 T.C. 353, 375(2004). The taxpayer has an "obligation (under section 172(b) (2))" to follow the prescribed sequence. Plumb v. Commissioner, 97 T.C. 632, 641 (1991). The loss-generating year that Mr. McCarthy alleges is 2004. Section 172 (b) (1) (A) provides, "a net operating loss Eor any taxable year *** shall be a net operating losa carryback to each of the 2 taxable years preceding the taxable year of such loss," i.e., in this case, 2002 and 2003. Section 172 (b) (2) provides, "The entire amount of the net operating loss for any taxable year *** shall be carried to the earl est of the taxable years to which (by reason of parag aph (1)) such loss may be carried," i.e., in his case 2002, a year not in suit. Section 172(b (2) continues, "The portion of such loss which sha 1 be carried to each of the other 866.488.DEPO www.CapitalReportingCompany.com Capit al Reporting Company 14 1 2 3 4 5 6 7 8 9 10 11 taxable years [such as 2005, in this case] shall be the excess, if any, of the amount of such loss over the sum of the taxable income for each of the prior taxable.years to wh ch such loss may be carried." That is, before Mr. McCarthy may claim a 2004 NOL in 2005, he must first use it in 2002 and 2003, or show that in those years he had no income, or insufficient income to absorb the 2004 loss. The statute does allow taxpayer to "relinquish the entire carryback period, " sec. 172(b) (3), i.e., in this case, 2002 and 2003; but he 12 must do so "by the due date *** for filing the 13 14 15 16 17 18 19 20 taxpayer's return f r the taxable year of the net operating loss." Mr McCarthy does not allege any such relinquishment and for 2004 he did not file any return by the due d te. Thus, he cannot prove his entitlement to a ca ryforward of a 2004 NOL into any of the years at iss e here. III. Real estate ta and mortgage interest For the r asons discussed above, Mr. 21 McCarthy failed to show that he paid real estate 22 23 24 25 taxes or that he paid mortgage interest on acquisition indebtedness above the amounts that the Commissioner conceded. We are not persuaded of the correctness of his 211egation that his wife incurred 866.488.DEPO _.Capi alReportingCompany.com Capit al Reporting Company 15 1 2 3 4 5 6 7 8 9 10 11 12 13 $200,000 of personal debt secured by the property, which he was requir$d to pay to or for her in order to acquire her ·interest. However, even if that were true, the debt was not acquisition debt when his wife allegedly incurred it, see sec. 163(h) (3) (B); and by court order (Ex. 33- P) he was entitled to acquire her interest in the house for $175,000. If she made other demands in the divorce settlement, and if he used refinancing proceeds in order to satisfy those demands, his paymentl of those demands did not constitute acquisitj|on indebtedness. In the twn years as to which this issue is disputed -- 1.e., 2C06 and 2007 -- Mr. McCarthy's 14 mortgage interest déductions are limited to the 15 16 17 18 19 20 21 22 23 24 25 amounts attributable to his acquisition indebtedness ($675,000) plus the $100,000 of home equity indebtedness permitted by section 163(h) (3) (C), totaling $775,000. Mr. McCarthy is therefore entitled to deductidns of only $66,592 for 2006 and $66,724 for 2007. IV. Dependency exenption deductions and filing status Section 151(a) of t e Internal Revenue Code provides for a deduction for certain exemption amounts. Section 151(c) allows an exemption for "each 866.488.DEPO www.Capi alReportingCompany.com Capital Reporting Company . 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 individual who is a dependent (as defined in section 152)". Se.ction 152(¿|1) provides that "dependent" can include "a qualifying child" (as defined in section 152(c)), and Mr. McCarthy contends that in 2007 his sons were "qualifying child[ren]" for purposes of his tax liability. However, n order to be a "qualifying child, " the child must meet several tests set out in section 152.(c) (1) . Uhe test that is critical here -- and that Mr. McCarthy fails to satisfy -- is in section 152 (c) (1) (B) : The child must have "the same principal place of abode as the taxpayer for more than one-half of such taxable year." Because the sons in fact spent more days with their mother than 15 with Mr. McCarthy, they and he did not have the same 16 17 18 19 20 21 22 23 24 25 principal place of abode for more than half of the year. See Phillips v. Commissioner, T.C. Memo. 2011- 199. That also resolves Mr. McCarthy's filing status and child crcdit claims for 2007. To qualify as a "head of household, " a taxpayer must "maintain[] as his home a household which. constitutes for more than one-half of such taxable year the principal place of abode [of] *** a qualifying child. " Sec. 2 (b) (1) (A) . Likewise, the child tax credit is allowed 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company "with respect to ea h qualifying child. " Sec. 24 (a) . Since Mr. McCarthy ad no qualifying child in 2007, he is not entitled to dependency exemption deductions for them, child tax credits for them, nor head-of- 17 household status. V. Self-employment tax Mr. McCarthy now admits that he will owe self-employment tax on the income attributable to his law practice and consultancy; but as to his employment with the World Bank he has contended either that he owes no social security tax or that he owes only the emplo ee share of such tax. Social se urity employment tax is due on "wages", both by th receiving employee, sec. 3101(a), and by the paying employer, sec. 3111(a) . For employment tax purposes, "wages" is defined to include "all remuneration for employment, " sec. 3121(a)--but with exceptions that include "service performed in the em loy of an international organization" such as the World Bank, sec. 3121 (b) (15) . However, although the Code makes this exception, it also intends to require the payment of social security tax for U.S. employees of such organizations. The Code accomplishes this by imposing the so-called "self-employment" tax of section 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1401(a) on U.S. taxaayers who are employed by such organizations . "Se L f-employment income" that is subject to the tax under Section 1401(a) consists of "net earnings from delf-employment, " see sec. 1402 (b); and those net earnings consist of "the gross income derived by an individual from any trade or business carried on by such individual, " see sec. 1402 (a) . For these urposes, section 1402 (c) (2) (C) defines a "trade or business" to include "service described in sectio 3121 (b) *** (15) "--i . e . , service performed for organ zations like the World Bank. See sec 7701 (a) (18) ; 26 C. F. R. sec . 31. 3121 (b) (15) -1 (b) ; Diaz v. Commissioner, T.C. Memo. 2012-280. This is why the World Bank gave Mr . 15 McCarthy the instructions it gave on his Forms W-2. 16 17 18 19 20 21 22 23 24 25 Those were correct :_nstructions. He offers no argument against th:_s conclusion but simply has been unwilling to yield to it. We must uphold the Commissioner' s position, since it is consistent with the Code, and hold Mr. McCarthy liable for self- employment tax on his World Bank wages . VI . Additions to tax A. FailQre to file Section 6651 (a) (1) authorizes the imposition of an addition to tax for failure to file 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 19 1 2 a timely return unl ss the taxpayer proves that such failure is due to r asonable cause and is not due to 3 willful neglect. See United States v. Boyle, 469 U.S. 4 5 6 7 8 241, 245 (1985). Mr. McCarthy admits that he failed to file returns for the three years at issue. The additLon applies "unless it is shown that such failure is due to reasonable cause and not due to willful neglect." Sec. 6651(a) (1). Mr. 9 McCarthy's only claim of reasonable cause is that he 10 11 12 13 14 15 16 17 18 19 20 21 22 was out of the coun:ry around the time his 2006 return was due in April 2007, that he was sick (for an unspecified period) after he returned home, and that the aftermath of his divorce was time-consuming and distracting. Ho ever, he maintained his employment througho2t this period and was evidently not disabled from handling business as complex as filing tax returns. We hold that he is liable for the addition to tax under section 6651(a) (1). B. Fail2re to pay Section 6551(a) (2) imposes an addition to tax for failure to Jay the amount of tax shown on a return, and the Commissioner contends that Mr. 23 McCarthy is liable Eor this addition for the three 24 25 years at issue. The addition to tax under section 6651(a) (2) applies only when an amount of tax is 866.488.DEPO www.Cap talReportingCompany.com Capit al Reporting Company 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 shown on a return, çabirac v. Commissioner, 120 T.C. 163, 170 (2003), and the Commissioner has the burden of production to show the filing of a return, i.e., to show an "amount shown as tax on [a] return, " sec. 6651(a) (2). A return made by the Secretary under section 6020(b) -- L.e., an SFR -- is treated as "the return filed by the taxpayer for purposes of determining the amount of the addition" under section 6651 (a) (2) . Sec. 6551(g) (2) . The Commissioner did prepare SFRs for Mr McCarthy and has thus carried his burden of production to show that Mr. McCarthy is liable for the addi ion to tax under section 6651(a) (2). Mr. McCarthy has not made any defense, and he is liable fo the failure-to-pay addition to tax. C. Fail re to pay estimated tax Section 6654 imposes an addition to tax on an individual taxpayer who underpays his estimated tax. The Commissioner determined this addition for 20 Mr. McCarthy's year:5 in suit but has conceded 2005, 21 22 23 24 25 leaving only 2006 and 2007 in dispute. A taxpaye: has an obligation to pay estimated tax for a particular year if he has a "required annual pavment" for that year. Sec. 6654 (d) . A "required annual payment" is defined in 866.488.DEPO www.CapitalReportingCompany.com Capit 1 Reporting Company 21 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 section 6654 (d) (1) ( ), in pertinent part, as "the lesser of (i) 90 pe cent of the tax shown on the return for the taxa le year (or, if no return is filed, 90 percent o the tax for such year), " or (ii) if the individual f led a return for the preceding taxable year, then 100 percent of the tax shown on the return of the i dividual for the preceding taxable year." Thus the Commissioner's burden of production under se tion 7491(c) requires him to produce, for each y ar for which the addition is asserted, evidence hat the taxpayer had a required annual payment unde section 6654 (d); and in order to do so he must demon trate the tax shown on the taxpayer's return f r the preceding. year or that the taxpayep filed no r turn. For the year 2007, the "preceding taxable ear" is 2006; for the year 2006, the "preceding taxa le year" is 2005; and for neither of these "preceding taxable year[s]'' did Mr. McCarthy file a return. Cons quently, the Commissioner carried his burden of produ tion to show that Mr . McCarthy is liable for the sect on 6654 addition for 2006 and 2007, and he made n defense. He is therefore liable for this addition f r failure to pay estimated tax. So that t e liabilities can be recalculated to reflect the part es' concessions and the 866.488.DEPO m.Capi alReportingCompany.com Capit al Reporting Company determinations in this opinion, decision will be entered pursuant to Rule 155. This conc udes the Court' s oral Findings of Fact and Opinion in this case. 22 (Whereupon, at 3:35 p.m., the above- entitled r1atter was concluded. ) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com