TAX COURT OPINION

Case: Mary A. Penland
Docket Number: 6241-07
Judge: Morrison
Opinion Type: memo
Filed: 11/17/2011
Pages: 28

T.C. Memo. 2011-274 UNITED STATES TAX COURT MARY A. PENLAND, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 6241-07. Fil d November 17, 2011. Mary A. Penland, pro se. Bradley C. Plovan, for espondent . || MEMORANDUM FINDINGS OF FACT AND OPINjION MORRISON, Judge: On De ember 15, 20 6, the respondent ("the IRS") issued the petitioner,.i Mary A. Penland, a notice· of deficiency for tax years 1998, 1999, and 2001 (years at issue). The notice stated that the IRS determined (i) thatl she had deficiencies in taxes of $2,048,607 for 1998, $558,401 for 1999, and $686,371 for 2001; (ii) that she was liable for additions to - 2 - tax under section E651(a) (1)1 of $512,401.75 for 1998 and $23,477 for 1999; and (iii) that she was liable for an addition to tax under section 6654(a) of $93,740.61 for 1998. On March 15, 2007, Mary Penland filed a petition disputing the IRS' s determinations; she was a South Carolina resident at the time . The IRS . concedes that she is not liable for the addition to tax under section 6654(a) for 1998. In deciding whether to sustain the remaining determinations in the notice of deficiency, we resolve the following issues: A. Did Mary Penland own all shares of Penco, Inc. , an S corporation, during the years at issue? (We conclude that she owned all shares of Penco.) B. Did Penco own Woodruff Auto Sales,2 a sole proprietorship, during the years at issue? (We conclude that it did own Woodruf f . ) . . C. Did Penco own Sweet Water Miniature Horses, Inc. ,1 during t e years at issue? (We conclude that it did not own Sweet Water ) e . 1Unless otherw se indicated, ection references are to the Internal Revenue Co e, as amended, effective for the years at issue, and Rule ref rence and Procedure . are to the Tax Coùrt Rules of Practice 2We refer to Woodruff Auto Sales as either "Woodruff Auto Sale s" or "Woodruf f " . 3We· refer to S 7eet Water Miniature Horses, "Sweet Water Miniature Horses" or Sweet Water" Inc. as either D. Was the IRS' s disallowance 'of Penco' s net section 1231 losses (other than due to casualty or th ft) proper? (We conclude that it was proper . ) E. Is Mary Penland entitled to carry a neti perating loss from 2000 to the yéars at issue? (We ccin lude that she is not so entitled?. ) F. Did Mary Penland pay her tax liäbilities by abandoning her rights to PencS's assets? (We conclu e that she did not so pay her liabilities.) G. Did the receiver appointed to manage Pen o's assets assume Mary Penland's income-tax liabili ies for the years at issue, thùs relieving her of li bility? (We conclude that the receiver did not assum her liabilit ie s . ) H. Was the IRS' s determination that section 446 required Penco to use the accrual method of accou ting an abuse of discretion? (We conclude that it was ot an abuse of discretion.) I. Was the IRS's determination. that Penco im st take into account a section 481(a) adjustment for 1998 proper? (We conclude that the determination was mproper . ) J. Is Mary Penland li ble for the section 6 51 latë-filing penalty for 1998 and 1999? (We conclude that she is liable.) FINDINGS OF.FACT The parties s ipulated some acts; those facts are so found. Before 1998 Before 1998, Mary Penland'sihusband (Charles Penland) owned Woodruff Auto Sales, a used-car business that maintained an inventory of vehicles for sale. Charles Penland apparently operated Woodruff s a sole proprietorship, not as a corporation. Sweet Water Miniature Horses ;was in the business of buying, selling, and breediing miniature horses. It is unclear who owned Sweet Water before the years at issue--1998, 1999, and 2001. And it is unclear what type of entity Sweet Water was for federal income-tax purposes--e.g., a sole proprietorship or a C corporation--both before and during the years at issue. Penco, Inc., w s a South Carolina corporation. It was incorporated on Oct ber 29, 1996, by an.attorney named Terry Clark. As reflecte in Penco's corporate'records, on November 1, 1996: (i) Clark tr nsferred his rights in Penco to Mary Penland; (ii) Penco named Mary Penland its sole officer; and (iii) Penco issued Mary Penland all of its stock.4 4That Mary Penland's ownership of Penco began on Nov. 1, the stipulation. 1996, is a fact sta ed in pars. 11 and 12 of The Nov. 1, 1996 da e is contradicted by par. stipulation, which tates: years at was the sole owner of Penco, ownership started in 1998, par. 1999, and 2001, the years at issue. it would not matter here because as 4 says, her ow1ership was coextensive with the years 1998, issue [1998, 1999, and 2001], petitioner [Mary Penland] "Beginning in 1998 and through the Inc. ('Penco')." Even if her 4 of the I 1998-2001 The parties stipulated þhat Mary Penland owne Penco during the years at issue--1998, 1999, and 2001. She now contends that she did not . As we explain infra part A, we conal ide that she is bound by her stipulation. The parties stipulated that Charles Penland transferred Woodruf f Auto Sales to Penco in 1998 . Mary Penlan now contends that the transfer did not occur. As we explain infra. part B, we. conclude thats she is bound bÿ her stipulation. . Th re is no evidence that Penco disposed} of Woodruf f during th years at issue. We therefore conclude that Penco owned Woodruff during 1998, 1999, and 2001. Mary Penland concedes that Penco did not own weet Water Miniature Horses during the years at issue . See i ifra part C. For the years at issue Pencoi filed Forms 1120S, U.S. Income Tax Return for an S Corporation,: which Mary Penland si ned. Attached to each" of these returns was(cid:16)041a Schedule K-1, Shareholder' s Share of Income, Credits, Deductions, etc. Each Schedule K-1 reported that Mary Penland was Penco's sole shareholder. The returns computed Penco's taxable income using the cash met od of accounting and reported the income, losses,. and ex enses of both Woodruf f Auto Sales and Sweet Water Miniature Horses . Attached to the 1999 and 2001 returns were Fo ms 4797, Sales of Business Property; no For 4797 was attached to Penco' s 1998 return. On the Fo ms 4797, Penco reported that its net section 1231 losses (other than due to casualty or theft)5 were $927,290 for 1999 and $37, 736 for 2001. Mary Penland iled Forms 1040, U.S. Individual Income Tax Return, for 1998, 1999, and 2001. She filed her 1998 return on September 8, 2003, her 1999 returr on September 22, 2000, and her 2001 return on July 26, 2002. Each of her income-tax returns reported her 100-percent· share of Penco's income, expenses, and other tax attributes. The returns also reported that she earned wages from Woodruff Auto Sales of $15,750 in 1999 and $39.,000 in 2001. Her filing status each year was inarried filing separately. 2002-2005 The record does not reveal whether the ownership of Penco, Woodruff Auto Sales, or Sweet Water Miniature Horses changed from 2002 to 2005. Thus it is unclear whether, after 2001, the ownership of these entities was the same as it was at the end of 2001, when Mary Penland owned 100 'percent of the shares of Penco, Penco owned Woodruf f as a sole proprietorship, and Penco did not own Sweet Water. sA sec. 1231 loss is a loss from the sale, exchange, or (i) property used in a trade or business or (ii) conversion of capital assets heldl for more than one year in connection with a trade or business or in connection with a transaction entered into for profit. Sec. 1231(a)(3). - 7 - 2005-Present: Charles Penland's Criminal Proceedings In July 2005, a federal. grand jury indicted Charles Penland for various drug and money-laundering offenses. She Indictment, United States v. Penland, No. 7:05-cr-00710-HFF (July 12, 2005)~, ECF No. 27.' On March 3, 2006, the United States filed a bill of particulars which contained a list of properties that the government alleged to be forfeitable on conviction. One of the entries on the list of properties was Pen o's "business assets and corporate interests * * including b t not imited to all monies, claims, interests and accounts receivabld payable to or received by * * * [Penco]". Government's+Third Bill of Particulars for Forfeiture of Property at 6-7, United States v. Penland, No. 7:05-cr-00710-HFF (Mar. 3, 2006), ECF No. 224. The bill of particulars also specified real properties that the government intended, if necessary, to seek forfeit re of as ll. 'We take judicial notice of the public record of Charles Penland's criminal proceedings in the U.S. District Court District of South Carolina. See Fed. R. Evid. 201, for the 7Among those real properties was 2.837 acres of land that "Woodkuff, South C rolina (cid:0)54029388".The "South Carolina Inveptment Corpor tion" the bill of particulars identified as "Woodruff Auto Sales", Cross Anchor Highway", bill of particulars alleges hat this par el was titled in the name of parties have not addressed w ether this pyoperty,v as its name suggests, was used for the Woodruff Auto Sales business Penco owned during the years 'at the treatment of this property either contradicts or supports the stipulation that Penco owned Woodruff during the years at is ue. Neither party as argued that "300 t the time. The issue. equivalent substitute asset s under 21 U. S . C . sec-. 853 (p) .. Id . at 7-10 . On March 14, 2006,. Charles Penland pleaded guilty to (i) conspiring to possess cocaine .and methamphetamine with intent to distribute in violation of 21 U.S.C. sec. 841(a) (1) and (b) (1) (A); (ii) money laundering in violation of 18 U.S.C. Sec. 1956 (a) (3) (A) , (B) , and (C) ; and (iii) attempting to possess cocaine with .intent to distribute in violation of 21 U.S.C. sec. 846. . Plea Agreement, United States v. Penland, No. 7:05-cr-00710-HFF (Mar. 14, 2006), ECF No. 234. Charles Penland agreed to forfeit hatever interests he had in the properties listed in the agreement. Id. at 2-5. The list of properties coincided with the properties the government alleged in the bill of particulars to be forfeitable on conviction and did. not include the properties identified as equivalent substitute assets. The agreement stipulated that the properties on the list were traceable to or were derived from his intentional and willful violations of 21 U.S.C. secs. 846 and 841(a) (1). Id. 'at 6. On the same day, Mary Penland entered into an agreement with the United States in which she agreed to "abandon, quitclaim and forfeit" her interests in the properties the indictment alleged to be forfeitable. Forfeiture Agreement and Stipulation, United States v. Penland, No. 7:05-cr-00710-HFF (Mar. 14, 2006), 'ECF No. 236. Penco's assets and receivables were (among those properties. Id. at 1-4. She also agreed to execute documents required to transfer clear title to the nited States; to assist with resolving claims of third pa ties to any of the assets; and to provide records, documents, ànd other materials needed to identify and resolve issues relating to ownership, chain of title, and encumbrances or liens. In exchange, the government agreed to release to her the real property that the bill of particulars identified as equivalent substitute assets. Id. at 5. The agreement did not mention Mary Penland's tax liabilities. Mary Penland's agreement with the United States also addressed her right to petition for an ancillary hearing under 21 U.S.C. sec. 853(n). She stipulated that she understood that--if not for the agreement--she could have filed a petition for an ancillary hearing under 21 U.S.C. sec. 853(n) to assert any interest she had or claimed to have in the propert es alleged to !I be forfeitable. Id. at 1. She agreed to waive her right to do so. Id. at 4-5. On June 6, 2006, the U.S. District Court for the District of South Carolina, under Federal Rule of Criminal Procedure 32.2(b) (2), entered a preliminary order of forfeiture as to Charles Penland. The order decreed that, subject to 21 U.S.C. sec. 853(n), Charles Penlandiforfeited "all right, title and interest" in listed property to the United States. Preliminary Order of Forfeiture as to Charles sW. Penland, Sr., ·at 3-4, United . - 10 , States v. Penland, No. 7:05.-cr-00710-HFF (June 6, 2006), ECF No. 260. Among the listed property were the "business assets and corporate interests of * * * [Penco, Inc.] , including but not limited to all monies, inventory, equipment, claims, interests and accounts receivable payable t or received by * * * [Penco, Inc.]". Id. at 8. The preliminary order said that the "United States is not seeking and this Court is not ordering forfeiture of the * * * corporations themselves or the stock of such corporations, at this time."8 Id. at 9. The preliminary order authorized the court-appointed receiver to "sell or otherwise dispose of" Penco's assets and directed the receiver to hold the proceeds of the sale until entry of a final order of forfeiture. Id. at 10 . .On motion of the United States, the preliminary order dismissed the allegations that the properties the United States agreed to release to Mary Penland|were forfeitable. Id. at 16-17. the corporations and the owner of the businesses Penco was among the. businesses "described As we explain below, because the district court entered "Accordingly, remains the sole 8The preliminary order went on to state : until further notice, Charles W. Penland, Sr. stockholder of described above." above" . the preliminary order after the years at does not contradict during the years at See ig f ra pt . A . the stipulation that Mary Penland owned Penco issue . issue, this language Notice of Deficiency - 11 - On December 15, 2006, the IRS issued Mary Pen .and a notice of deficiency.' The notice stated that the IRS de ermined (i) that she had deficiencies in tax of $2,048,607 for 1998, $558,401 for 1999, and $686,371 for 2001; (ii) that she was liable for additions to tax under section 6651(a) (1) of $512, 01.75 for 1998 and $23,477 for 1999; and (iii) that she was liablé for an addition to tax under section 6654(a) of $93,740.6EL for 1998. The IRS determined that Penco did not own Sweet Water Miniature Horses. The notice of deficiency stated; that the IRS therefore made the followingichanges to Penco's ordinary income: Changes to PÄnco's Ordinary Income Made by the IRS To Reflect That Penco Did Not Own "Sweet Water Miniature Horses 1998 1999 Eliminating Sweet Water ($112,645) ($118,880) Income 2001 -0- Eliminating Sweet Water 175,580 327,537 $152,562 expenses Eliminating depreciation 662,635 316,998 99,303 deductions for Sweet Water assets Total 725,570 525,655 251,865 9The date on the notice of deficiency is more than three years after Penland filed her income-tax returns. Generally, time limit for the IRS to assess tax (and Sthus for the IRS to issue a notice of deficiency) the return, unless certain e ceptions apply. Untimeliness of defense. Adler v. Commissioner, 85 T.C. 535, 540 (1985) .' The taxpayer must specifically p ead it. Rul raise the question of timeli ess in the pleadings (or otherwise), and we do not address it. the notice o deficiency ìls an affirmative is three years frod the filing of the Sec. 6501. 39. enland did not - 12 - The IRS also determined that Penco was not entitled to most of the net section 1231 losses (other than due to casualty or theft) reflected on the Forms 4792 that it had filed with its Forms 1120S for·1999 and 2001.1° For 1999, the IRS determined . that Penco was entitled to only $595. of the $927,290 loss that it claimed. For 2001, the IRS determined that Penco was entitled to none of the $37,736.loss that it claimed. Thus the IRS increased Penco's taxable income by $926,695 for 1999 and $37,736 for 2001. The IRS determined that section 446 required Penco to use the accrual method of accounting. As a result of that conclusion, the IRS made two types of determinations. First, the IRS made the following changes to. Penco's ordinary income to reflect Penco' s ·income computed using the accrual method:11 1°Penco did not file a Form 4797 for 1998 and did not claim a net sec. 1231 gain or loss. 11The parties do not dispute that the amounts of these changes are correct if the IRS was correct Penco is required to use the accrual method of accounting. infra pt. in determining that I. See - 13 - Changes to Penco's Ordinary Income Made by the IRS to Reflect Penco's Income (cid:16)042 Computed Using the Accrual Method 1998 ,1999 . 2001 Gross receipts $271,039 $2,798,545 $2,689,373 Expenses Cost of goods sold Total (4, 7.95) 72 , 434 994,678 (6, 528) 223, 783 (3, 220 ) 128, 125 3,015,800 2,814,278 Second, the IRS determined that section 481(a) required Penco to take into account a $3,709,197 adjustment to taxable income for 1998 to prevent duplicating or omitting income or expenses from prev1ous years . The IRS made other determinations, none of which are in dispute. The IRS determined (i) that Mar Penland failed to report $1, 800 of gambling in ome for 1998; (ii) that she was entitled to a $300 rate-redu tion credit for 2001k under section 6428; (iii) that she was not entitled to carry fcrward a $221,117 net operating loss from 1998 to 1999; and (iv) t at the amounts she claimed for personal-exe ption deduct ons sh uld be reduced by $2, 700 for 1998, $2, 750 f r 1999, and $2, 900 for 2001. Penland raised the gambling-income issue for the first ShË did not raiÄe the issue in her time in her reply brief . petition, and she presented no evidence or argument on the issue at trial. Issues not raised* in the petition are deemed conceded. Rule 34(b) (4). So we need not address this issue. . - 14 - OPINION The taxpayer generally h,as the burden of proving that the IRS's determinations described in the notice of deficiency are wrong. Rule 142(a) (1); Welch v. Helvering, 290 U.S. 111, 115 (1933) . But section 7491 (a) (1) imposes the burden of proof on the IRS if the taxpayer introduces credible evidence and satisfies the conditions of section 7491(a) (2) . The taxpayer bears the burden of proving that the conditions in section 7491(a) (2) have been satisfied. See Rolfs v. Commissioner, 135 T.C. 471, 483 (2010). Penland failed to do so for any factual issue and thus bears the burden of proof. A. Mary Penland Owned All Shares of Penco, Corporation, During the Years at 2001. Inc., an S Issue--1998, 1999, and Mary Penland n'ow asserts that her husband, Charles Penland, owned Penco during 1998, 1999, and 2001, an assertion that contradicts paragraph 4 of the stipulation. Paragraph 4 states that "throughout th years at issue petitioner [Mary Penland] was the sole owner of P nco, Inc." As we explain below, we will not permit her to contr dict the stipulation. Stipulations are generally treated "as conclusive [admissions]". Rule 91(e). However, we will disregard stipulations where the facts as stipulated are "clearly contrary to facts disclosed by the record". Jasionowski v. Commissioner, 66 T.C. 312, 318 (1976). Su h circumstandes are [not present - 15 - here. The record does not contradict the stipulatioh. Indeed the record supports it: Penco'sy corporate records report that Mary Penland was its sole shareholder. Penland argues that Penco's assets could not have been forfeited unless Charles Penland owned Penco. But even if he ownedy Penco at the time of Êhe forfeiture in 2006, the issue here is whether Mary Pgnland wned Penco in 1998, 1999, and 2001. And the weight of the evidence in the record supports the stipulation that she owned Penco in those years. Because the stipulation is not clear y contgary to the facts disclosed by the record, there is no basis for us to disregard it. See id. We therefore conclude that Mary Penland owned Penco during the years at issue, as stipulated." B. Penco Owned Woodruff AuNo Sales, a Sðle ProÔrietorship, During the Years at Isshe--1998, 199$, and 2001. Mary Penland next asserts that Penco did not own Woodruff || Auto Sales during the years at issue. This assertion contradicts paragraph 14 of the stipulat on, which states that Charles "Sec. 1366(a) (1) taxes corporation shareh lders on their proportionate shares of Penland, as sole shareholder, of Penco's income for the years at issue. the S corporation'às income. Thus Mary is taxed on ther 100-percent share - 16 - Penland transferre Woodruff to Penco in 1998." Again, we see no reason to allow Mary Penland to contradict her stipulation that Woodruff was transferred to Penco in 1998. This stipulation is uncontradicted by the facts disclosed in the record. See id. The documentary evidence on which she bases her claim.that Penco did not own Woodruff Auto Sales is a solitary inadmissible document." |She also relies on her own testimony and Charles Penland's testimony. We do not believe them: their testimony was evasive and curiously unsupported by documents. ·On the other hand, documents in the record support the stipulation that Woodruff was transferred to Penco. For example, Penco's tax returns, which Mary Penland signed, report income from Woodruff for each year at issue. Again, because the stipulation is not clearly contrary to the facts disclosed by the record, there is no basis for us to disregard it. See Jasionowski v. Commissioner, supra at 318. We therefore find that Penco owned Woodruff Auto Sales in 1998, 1999, and 2001, as stipulated. "The record d es not reveal the date of the transfer in 1998. Mary Penland has not argued or presented evidence that any part of Sales was attributable to times in 1998 before the transfer. the income reported on Penco's returns for Woodruff Auto "The IRS obje ted to Exhibit 25-P at trial. The Court took the objection under advisement and later issued an order excluding the exhibit from evidence. . .- 17 - C. Penco Did Not Own Sweet Water Miniature Horses, the Years at Issue--1998, 1999, and 2001. Inc. , During The notice of deficiency reflected the IRS's etermination that Penco did not own Sweet Water Miniature Horses during 1998, 1999, and 2001. Mary Penland contended in her petition that Penco owned Sweet Water . Yet she gave no evidence that Penco owned Sweet Water, and her husband testified that it did not. She concedes the . issue in her posttrial reply brie . But even if she had not, the record compels the conclusion that Penco did not own Sweet Water during 1998, 1999, and 2001. D. The IRS' s Disallowance of Penco' s Net Section 1231 Losses (Other Than Due to Casualty or Theft) Was Pro er. The IRS disallowed net ection 1231 losses (o her than due to casualty or theft) of $92ß,695 for 1999 and $37 736 for 2001. Penland--who has the burden of proof--offered no e idence that Penco was entitled to these osses. We therefore phold the IRS' s determinat ion . E. Mary Penland Is Not Entitled To Carry a Net O erating Loss From 2000 to the Years at Issue--199s, 1999, hnd 2001. Mary Penland claims that she is entitled to carry a purported net operating loss from 2000 to the year at issue, reducing her deficiencies. A taxpayer can general y deduct a net, operating loss for one year from taxable incom in each of the preceding two years (as a "net operating loss carryback") and "It says: "Penco, Inc.k did not and has never owned the corporation Sweet Water Miniature Horse Farm, Inc. 18 - then in each of the following 20 years (as a "net operating loss carryover"). Sec. 172(a) and (b) È1). A net operating loss is carried to the earliest possible tax year first; any excess is ·| then carried to the next earliest year, and so on. Sec. 172(b) (2). Mary Penland, however, gave no evidence that she had a net operating loss in 2000. She asserts that copies of various federal and South Carolina amended tax returns for the years at issue are evidence of the loss." But merely claiming a deduction on a return is not enough to substantiate the deduction. Wilkinson v. Commissioner, 71 T.C. 633, 639 (1979); see also Lawinger v. Comm1ssloner, 103 T.C. 428, 438 (1994); Halle v. Commissioner, 7 T.C. 245 (1946), affd. 175 F.2d 500 (2d Cir. 1949); Taylor v. Commissioner, T.C. Memo. 2009-235. We therefore h ld that Mary Penland is not entitled to deductions for net perating loss carrybacks from tax year 2000 to tax years 1998 and 1999. And we hold that Mary Penland is not entitled to a deduction for a net operating loss carryover from tax year 2000 to tax year 2001. F. Mary Penland Did Not Pay Her Tax Liabilities by Abandoning Her Rights to Penco's Assets. Mary Penland asserts that she paid her tax liabilities by abandoning her rights to Penco's assets In her words: "The parties dispute whether Mary Penland filed the amended returns. We need n t resolve the 1ssue. - 19 - Due to the federalt forfeiture of Penco,t Inc., and its transfer into receiÜership, liability, should there actually be Sne, ha when the company went [ omitted.] taxes after that tax has already beeÅ paid. into receiversÈip. The Internal Revenue Service cannot collect the NetÍtio er's tax been paid itation Mary Penland, however, abandoned her righ s to Penco's assets in exchange for the release of other properties to her." The government did not agree to upply the valüe of any of the properties to her tax liabil'ities. Indeed, no document from the forfeiture proceedings purported to address the amounts of her tax liabilities. Mary Penland also argues that the IRS was an ñ"unsecured creditor" in the 2006 forfeiture proceedings and that those proceedings therefore discharged her tax liabilities." But unlike a chapter 7 bankruptcy proceeding, in whichi a court "She agreed to "abandon., quitclaim and forfeit all of her * * Inc.]('. in * * Inc.] * including but not limited to [business assets and corporate in Penco through the filing of a petiti n under 21 [Penco, interests and accountÁ receiûable payable to right, title and interest * interests of] all monies, claims, or received by [Penco, interest U.S.C. sec. 853(n). to transfer clear title to t e United Sta es; documents and other materials needed to identify (and resolve issues relating to ownership, chain of tiÊle, and encumbrances or liens; and to assist with re olving claims of any of the real property that equivalent substitute assets And she( agreed to execute documents required to (provide records, the b 11 of particÛlars identified as She waived her right to assert an the gove(cid:0)541nmentgreed to release thdrd parties to the assets. In excha ge, "The reply brief at 9 tates: "The debt has been discharged for federal brief states: IRS' unsecured creditor in this matter", and "All claims by unsecured creditors are washed away during a criminal forfeiture." tax assessment claims are washed away as the IRS is still an "The HonorablÑ Judge Floyd furtheÈ ruled that the income tax purposes." At 34 the reply - 20 - typically discharges prebankruptcy debts, see 11 U.S.C. sec. 727(b), the criminal-forfeiture proceeding against Charles Penland resulted i no order discharging his debts or those. of his wife. G. The Receiver Appointed To Manage Penco's Assets Did Not Assume Mary Penland's. Income-Tax Liabilities. Penland also sserts that th receiver appointed by the district court to manage Penco's. assets is liable for Mary Penland's income-tax liabilities for 1998, :1999, and 2001. The receiver managed Penco's assets until entry of the final order of forfeiture. One might speculate that the receiver assumed Penco' s· liabil it ies along 5 with managing Penco' s as sets . But Mary Penland gave no evidence that thiË occurred. Besides, Mary Penland's liabilities--including her liabilities for income taxes--are not Penco's liabilities. See Moline Props., Inc. v. Commissioner, 319 .S. 436 (1943) Thus an assumption of Penco's liabilities would not necessarily be an assumption of her liabilities; Furthermore, even.if the receiver had somehow assumed Mary Penland' s tax liabilities, she has not explained how that assumption would relieve her of liability. H. The IRS's Determination· That Section 446 Required Penco To Use the Accruall Method of Accounting Was.Not an Abuse o__f Discretion. Generally, a taxpayer must compute taxable income under the "method of accounting on the basis of which the taxpayer regularly computes his income in keeping his books." Sec. - 21 - 446(a). But -if the taxpayeri's method does not c early reflect income, section 446 (b) requires the taxpa(cid:0)570erto qse the method that "in the opinion of the Secretary, doès clea ly reflect income." The IRS has broad piscretion in determining which method clearly reflects income. See Thor Power Tool Co. v. Commissioner, 439 U.S. 522, 532-533 (1979). A court must uphold the IRS's determination unless the determination was an abuse of discretion. See id.; Prabel v. Commissioner, 882 F.2d 820, 823 (3d Cir. 1989), affg. 91 T.C. 1101 (1988); Exxon Mobil Corp. v. Commissioner, 114 T.C. 293, 324 (2000). Penland argues that the IRS's past failure tol challenge Charles Penland's accounting¡method for Woodruff A to Sales estops it from challenging Penco's accounting methbd. The IRS is not estoppedy from challenging Penco's accounting method for Woodruff Auto Sales. The IRS may challenge a taxpayer's accounting method for a particular tax year even though it did not challenge Khe method for a previous tax year. Ezo Prods. Co. v. Commissionér, 37 T.C. 385, 391 g(1961); see also Caldwell v. Commissioner, 202 F.2d 113, 115 (2d Cir. 1953). Besides, the taxpayers are d fferent: Charles Penland owned Woodruff before 1998, and Pe co owned Woodruff düring and after 1998. We therefore turn to wh ther the IRS abused its discretion by requiring Penco to use thb accrual metÊod. - 22 - Penland has nct shown that the IRS abused its discretion. Penco was required to use. the accrual method by the regulations under section 446. Those regulations require businesses that need to take inventories to use the accrual method of accounting for purchases and sales unless otherwise authorized by the IRS. Sec. 1.446-1(c) (2) (i) and (ii), Income Tax Regs. Inventories are necessary for a seller of merchandise. See sec. 1.471-1, Income Tax Regs.; see also sec. 1.446-1(a) (4) (i), Income Tax Regs. Penco owned Woodruff Auto Sales, a used-car dealership,.and the sale of merchandise--used cars--was Penco's main source of income." Thus the regulations required Penco to use the accrual method unless otherwise authorized by the IRS. See also Smith v. Commissioner, T.C. Memo. 1983-472 n(holding that the regulations required used-car dealer to use the accrual method). The IRS did not authorize Penco to use a cash method. We therefore conclude that Penco is required to use the accrual method as described in the notice of deficiency. I. The IRS's Determination That Penco Must Take Into Account a Section 481(a) Adiustment for ·1998 Was Improper. As discussed above, the IRS made two types of determinations on account of the clange in Penco's accounting method.. First, the IRS made changes to Penco's ordinary income in each year to Mary Penland argued that Penco did not need to use accrual We reject accounting because it did not own Woodruff Auto Sales. this argument because we find that Penco owned Woodruff during the years at issue. - 23 - reflect what Penco's income would be if it were computed using the accrual method. Second, the IRS determine that (cid:16)041ection481(a) required Penco to take into Éccount a $3,7 9,197 ¼djustment to taxable income for 1998." The petition does not assign error to the amounts of the changes the IRS made to reflect what Penco's income would be if it were computed using the accrual method. And Mary enland did not argue at trial or on brief that these amounts were in error. Mary Penland has thus conceded that if Penco must use the accrual method of accounting--as we have held that it must--the changes are correct. See Rule 34 (b) (4) ("Any issue not raised in the assignments of error shall be deemed * * * conceded."). "Sec. 481(a) provides: SEC. 481(a). General Rule.--In computing. the taxpayer's taxable income for any taiable year (referred to in this section as the "year of change")-- the (1) if such computation is under a from the method of accounting different method under which the taxpayer's taxabl income for the preceding taxable year was computed, then (2) there shall be taken into account the change in those adjustments which are determined to be necessary solely by reason of order to prevent a ounts from being duplicated or omitted, except be taken into acco nt any adjusÈment respect of any taxable year to Öhich tÑis section does not a ply unless tËe adjustment is attributable to a change in he metÑod of accounting initiated by the taxpayer. tÊere shall not in - 24 - The IRS now coÅcedes that section 481(a) does not require Penco to adjust taxÅble income for 1998 because Penco did not own Woodruff Auto Sales in 1997. Section 481(a) does not require an adjustment in a given year unless the taxpayer used a different method of accountin in the previous year. Sec. 481(a) (1). Thus section 481(a) does not require an adjustment if a different taxpayer owned a business in the year before a change in accounting method. See, e.g., Ezo Prods. Co. v. Commissioner, supra at 394 (holding that section 481(a) did not require adjustment because a corporation, which received the assets and the liabilities of a partnership in a tax-free exchange, was not the same taxpayer as the partnership. or the partners for section 481(a) (1) purposes); Estate of Biewer v. Commissioner, 341 F.2d 394 (6th Cir. 1965) (holding that section 481(a) did not require adjustment because thÁ.decedent was a different taxpayer than the estate for section 481(a) (1) purposes), affg. 41 T.C. 191 (1963). Such is the case here: Charles Penland--not Penco--owned Woodruff in 1997, the year b fore the change in accounting. J. Additions to Tax The IRS determined that Mary Penland is liable for additions to tax under section 6651(a) (1) for 1998 and 1999. The IRS has th burden of producing evidence that a taxpayer is liable for addit ons to tax. Sec. 7491(c). The IRS satisfies its burden if it pr duces "sufficimt evidence indicating that it - 25 - is appropriate to impose" the .addition to tax. Hidbee v. Commissioner, 116 T.C. 438, 446 (2001). Once the RS satisfies that burden, the taxpayer has the burden of persuading the.fact li finder that the taxpayer is rot liable for the add tion to tax because, for example, the ta%payer qualifies for ari exception. Id. at 446-447. If a taxpayer is late in filing a return, section 6651(a) (1) imposes an addition to tax unless the taxpayer had reasonable cause for failing to file on ftime and the t:axpayer s willful neglect did not cause the delfay. For each month tlle taxpayer is || late, the addition is 5 percent of the tax due.," uÛ to 25 percent. Sec. 6651(a)·(1). If a return is more than 60 days late, the minimum addition under section 6651(a) (1) is the 1 sser of $1.00 . or the tax due. Sec. 6651(a). The ,IRS met its burden f production for impo ing additions to tax under section 6651(a) (1) for 1998 and 1999. Mary Penland f iled bothr returns late : she f iled her 1998 returr on September 8, 2003,'.and she filed her 1999 return on Septembe 22, 2000. She did not prove that she is excepted from tl e addition to tax. Section 6651(a) (1) excepts a taxpayer from t e addition to "For purposes of sec. 6 51(a) (1), the tax due is "The tax required to be shown on the return * * * amount of reduced by the amount of any part of before the date prescribed for payment of amount of any credit against return." Admin. Regs. Sec. 6651(b) (1); the tax which is paid on or the tax and by the the tax which may be claimed on the s e also sec. 301.6651- (d), Proced. & - 26 - tax if the taxpayer shows that the delay had reasonable cause and that willful neglect did not causè the delay. See also sec. 30 1. 6651-1 (c ) , Proced . & Admin. Re s . But she of f ered no cause , reasonable or other i·se, for the delays. We therefore conclude that she is liable for additions to tax under section 6651( ) (1) for 1998 and 1999. K. Other Issues Mary Penland raises several other issues, which, as we explain below, affect neither- her deficiencies nor. her liability for additions to tax under section 6651(a).(1). First, she cla ms that we have deprived her of due process. Yet she does not sa - -and we do not see - -what denial of t due process occurred Second, she ra ses complaints about the district court proceedings. But e en if her comþlaints -were justified,' they would not affect her deficiencies. We lack jurisdiction to provide relief othe than "to rede ermine the correct amount of the de f i ciency" . ' Sec . 6214 (a) . We may no t enlarge upon that jurisdiction. Breman v. Commissioner, 66 T.C. 61, 66 (1976);' see also sec. 7442. Third, she stat es that she is entitled to relief under section 6015, the p ovision govern ng innocent-spouse claims. Section 6015 reliev s qualifying taxpayers from the joint liability that accompanies the fil ng of a joint income-tax - 27 - return. See sec. 6015; see also sec. 6013 (providing for filing of joint returns). Penland did not file a joint rgturn for 1998, 1999, or 2001. Thus section:6015 is inapplicable Ñere. Fourth, she argues that nby granting her attorney's motion to withdraw we have deprived her of her Sixth:.Amendment right to counsel." The Sixth Amendment provides: q"In all criminal prosecutions, the accused shäll enjoy the kight * * * to have the assistance of counsel for his defence." The Sixth Amendment has no application in civil proceedings such as deficiency actions in this Court. See, e.g., Cupp v. Commissioner, 65 T.C. 68, 85-86 (1975), affd. without published opinion 559 F.2d 1207 (3d Cir. 1977). Fifth, she argues that the IRS's determination of her income-tax deficiencies violates the Double Jeopardy Clause of the Fifth Amendment. The Double Jeopardy Clause protects criminal defendants from "a econd prosecution foy the same offense after acquittal; a sdcond prosecution for(cid:16)041thesame offense after conviction; and multiple punishments for the same offense." United States v. Halper, 490 U.S. 435, 440 (1989). The first two of these protections are not at issue because the government never prosecuted Mary Penland. Nor is the protection against multiple punishments at issue. The IRS's determination of her deficiencies seeks not to punish her but to recover her "In an order dated May 5, 2008, aftef a hearing on the issue, we granted the motion of Penland's||attornEy to withdraw. - 28 - purported underpayments of tax. See Ianniello v. Commissioner, 98 T.C. .165, 179 (1Ù92) (citing Traficant v. Commissioner, 884 F . 2d 258, 263 (6th ir . 1989) , af fg. 89 T . C. 501 (1987) ) ; cf . . Dept. of Revenue of Mont. v. Kurth Ranch, 511 U.S. 767 (1994) (holding that a state tax conditiohed on commission of a crime and exacted only after arrest for the .conduct giving rise to the tax obligation was a "punishment") . And the additions to tax are not punishments for double jeopard7 purposes because they are remedial. See Ianniello v. Commissioner, supra at 184-185 (holding fraud penalty under section 6653 is remedial); Jove v. Commissioner, T.C. Memo. 2002-14 n.9 ("additions to tax such as those under sec. 6651 (a) (1) * * * are remedial, and not punitive") (citing Helvering v. Mitchell, 303 U.S. 391, 401 (1932) , and Iannielio v. Commissioner, supra at 187) . Thus the determination does not violate the Double Jeopardy Clause . We :have consid red the parties' arguments and conclude that those not mentioned are moot, irrelevant, or without merit. To reflect the foregoing, Decision will be entered under Rule 155 .