Court Opinion

ID: 4330710
Source: CourtListenerOpinion
Date Created: 2018-11-13 23:47:37.469059+00
Date Added: 2024-06-11T14:20:11.275797
License: Public Domain

107 T.C. No. 2

                UNITED STATES TAX COURT

  JAMES LUTHER COCHRANE, Petitioner v. COMMISSIONER
            OF INTERNAL REVENUE, Respondent

Docket No. 2002-95.                    Filed August 7, 1996.

      P was ordered to file responses to R's requests
for admission. P's subsequent responses to the
requests for admission were evasive and incomplete and
contained time-worn tax protester statements. R moved
for sanctions, asking that the matter in the requested
admissions be taken as established for purposes of this
case.

     Rule 90(c), Tax Court Rules of Practice and
Procedure, generally requires that a party upon whom a
request for admission is served specifically admit or
deny the proposed admission. Rule 104(c), Tax Court
Rules of Practice and Procedure, provides that the
Court may sanction a party who fails to obey an order
with respect to the provisions of Rule 90 by ordering
that the matter in the requested admissions be taken as
established for purposes of the case. Rule 104(d)
provides that an evasive or incomplete response to a
requested admission is to be treated as a failure to
respond.
                                  - 2 -

          1. Held: Sanctions imposed; the matters
     contained in R's requested admissions are established
     for purposes of this case.

          2. Held, further: P had unreported taxable
     income as determined by R for each of the years in
     issue. P is also liable for an addition to tax for
     fraud under sec. 6653(b), I.R.C., for each of the years
     in issue, an addition to tax for substantial
     understatement of income tax under sec. 6661, I.R.C.,
     for 1984, and an addition to tax for failure to pay
     estimated tax under sec. 6654, I.R.C., for 1986.

     James Luther Cochrane, pro se.

     Karen N. Sommers, for respondent.

                               OPINION

     RUWE, Judge:    Respondent determined deficiencies in and

additions to petitioner's Federal income taxes as follows:

                                          Additions to Tax
 Year   Deficiency     Sec. 6653(b)(1)       Sec. 6653(b)(2)    Sec. 6661

 1983     $3,264           $1,632            50 percent of         --
                                             the interest due
                                             on $3,264

 1984      6,767            3,384            50 percent of       $1,692
                                             the interest due
                                             on $6,767

 1985      2,133            1,067            50 percent of         --
                                             the interest due
                                             on $2,133

                                 Additions to Tax
 Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6654

 1986   $2,884           $2,163           50 percent of the      $139
                                          interest due on
                                          $2,884
                               - 3 -

     The issues for decision are:   (1) Whether petitioner

received taxable income as determined by respondent for each of

the years in issue; (2) whether petitioner is liable for an

addition to tax for fraud under section 6653(b)1 for each of the

years in issue; (3) whether petitioner is liable for an addition

to tax for substantial understatement of income tax under section

6661 for 1984; and (4) whether petitioner is liable for an

addition to tax for failure to pay estimated tax under section

6654 for 1986.

     Prior to trial, the Court granted respondent's motion to

impose sanctions pursuant to Rule 104(c), as a result of

petitioner's failure to obey our order that he respond to

requests for admission.   We ordered that the matter contained in

respondent's requests be taken as established for purposes of

this case.   Because of the importance of this ruling to the

outcome of this case, we will explain the relevant procedural

history as well as the reasoning behind our imposition of

sanctions.

                       Procedural Background

     From the inception of this case, petitioner demonstrated

that he intended to rely upon frivolous positions.   For example,

     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                                 - 4 -

attached to his amended petition was a document entitled

"Preliminary Statement and Refusal for Cause", in which

petitioner purports to reject respondent's notices of deficiency.

Among the reasons given were that petitioner was a "nontaxpayer

(i.e., not liable for any true tax class of taxable income)" and

that he was not a "U.S. person" but rather "a foreign person

residing in a foreign state (i.e., California Republic)."    On May

15, 1996, petitioner filed a motion to review the sufficiency of

the notice of deficiency, in which he made essentially the same

arguments and also asserted that "studies also prove that a

shrewd and criminal Constructive Fraud has been slipped over

America by government under counterfeit 'color of law'", and that

he will "'squarely challenge' the fraudulent usurping and

octopus-like JURISDICTION AUTHORITY" asserted over him.    The

record contains similar instances of petitioner's conduct, but

the above examples are sufficient to show the nature of

petitioner's approach in this case.

     On March 18, 1996, respondent served petitioner with

requests for admission.   The requests consisted of 41 paragraphs,

including 9 attached exhibits.    Respondent's statements of fact

were clear, concise, and understandable.   They were couched in

unequivocal terms, which facilitate unequivocal responses.    On

April 22, 1996, petitioner filed an objection to respondent's

requests for admission.
                               - 5 -

     On May 6, 1996, respondent filed a motion to review the

sufficiency of petitioner's objections to respondent's requests

for admission.   On May 9, 1996, this Court ordered petitioner to

respond to the requested admissions on or before May 20, 1996.

The order expressly warned petitioner that if he failed to

comply, the Court would be inclined to impose sanctions pursuant

to Rule 104(c), the provisions of which were quoted in the order.

On May 28, 1996, we granted petitioner's request for an extension

of time to June 10, 1996, in which to file his response.

     On June 10, 1996, petitioner served respondent with

petitioner's supplemental response to the requests for admission.

In responses 31 through 33, petitioner admitted that the 1983,

1984, and 1985 Federal income tax returns attached as exhibits to

respondent's requests for admission "represent return information

filed by petitioner for 1983, 1984, and 1985".   However,

petitioner qualified these admissions and noted an objection to

these exhibits "if they constitute improper forms to utilize for

his correct filing status during these periods."2

     2
      Each of petitioner's 1983, 1984, and 1985 returns reports
wages and includes a Form W-2 from his employer, General Dynamics
Corp. The 1983 return also includes a Form W-2 from petitioner's
employer, Rohr Industries, Inc. On each of those returns,
petitioner claimed that all his wage income was excludable from
taxable income as income earned for services performed in a
foreign country. On Forms 2555, attached to each return,
petitioner stated that he was physically present in a foreign
country for the entire 12-month period covered by each return.
                               - 6 -

     Petitioner's remaining answers were evasive and

unresponsive, as illustrated by the following examples:

     (1) In request for admission (request) 1, respondent

asserted that during the years in issue, petitioner worked as an

engineering technician for General Dynamics Corp. and Rohr

Industries, Inc., in San Diego and Chula Vista, California,

respectively.   In petitioner's response, he stated that he

     is without knowledge or information sufficient to form
     a belief as to the truth of respondent's allegations.
     Respondent has not identified the term "employed" to be
     defined within the subject matter or scope of any
     statute and implementing regulation.

          In further reply, Petitioner had no contract of
     employment with either General Dynamics Corporation or
     Rohr Industries.

     (2) In request 3, respondent asserted that petitioner

resided at 1655 Oleander Avenue, Chula Vista, California, during

the years in issue.   In response, petitioner stated that he "is

without knowledge or information sufficient to form a belief as

to the truth of respondent's allegations. * * * [R]espondent has

not defined 'residing' under a statute or section of a statute

and its implementing regulations."

     (3) In request 5, respondent asserted that petitioner did

not reside outside the United States at any time during the years

in issue.   In response, petitioner again stated that he lacked

sufficient information to answer.    In addition, he stated that

"respondent does not cite any statute * * * defining 'reside' or
                                - 7 -

'United States' in order to specify any of several possible

definitions applicable to these terms."

     (4) In request 6, respondent asserted that petitioner did

not receive any income from sources outside the United States

during the years in issue.    In response, petitioner stated that

"respondent does not cite statute and its implementing regulation

defining the terms 'income' or 'United States' used in the

allegation."

     (5) In request 10, respondent asserted that petitioner

reported on his tax returns for 1983 through 1985 that certain

wages were excluded from gross income as income earned while

physically present in a foreign country during the entire 12

months of the taxable year.   In response, petitioner contended

that the "Statements are presumptive of law and are not facts

susceptible to admission or denial by petitioner."   In addition,

petitioner stated that "respondent does not define the term

'wages' or the term 'taxable years' used in reference to

petitioner in this case" and that "respondent fails to identify

any * * * authority for establishing California [as a] state

under federal revenue jurisdiction."

     (6) In requests 15 through 17, respondent asserted that

during 1984 through 1986, petitioner conducted a tax return

preparation and tax counseling business and that petitioner

received, but failed to report, fees in 1984, 1985, and 1986.

Respondent listed the names of specific payors and the amounts
                                - 8 -

they paid to petitioner.    In response, petitioner stated that

respondent failed to identify "by statute and regulation any

activity for which petitioner would receive income from 'fees',

or a statute and regulation identifying any amount in question as

a 'fee'."

     (7) In requests 34 through 39, respondent attached copies of

canceled checks and asserted that petitioner received these

checks from clients of his tax return preparation and tax

counseling business in exchange for services rendered.     In

requests 40 and 41, respondent attached a copy of a receipt given

by petitioner to John Morales and asserted that the receipt was

given by petitioner in exchange for payment by Mr. Morales for

petitioner's income tax services.    Petitioner's response to each

of these requests was essentially the same:     "petitioner objects

to respondent's exhibit * * * as inconclusive of income, and

respondent fails to identify as income under any statute and

regulation, and is not identified as any income item by tax class

or other identification."

     (8) In request 18, respondent asserted that, when

interviewed by Internal Revenue Service (IRS) special agents

concerning his income tax liabilities for the years in issue,

petitioner told the agents that he was not in business, and did

not own any interest in a business.     In response, petitioner

stated that he lacked "knowledge of any 'effectively connected
                                - 9 -

income' or 'liability' under a revenue law for any calendar

year."

     (9) In request 21, respondent asserted that petitioner

informed the IRS special agents that he earned no income in 1986

and was not required to file a return for that year.   In

response, petitioner explained that he "did not state that he had

'earned no income', although this may be factual; but petitioner

had no 'earned income' or items amounting to income to the best

of his knowledge and belief."

     (10) In requests 22 and 23, respondent asserted that

petitioner advised his clients to claim the foreign earned income

exclusion on their returns and that none of petitioner's clients

actually resided or worked outside the United States during 1984,

1985, or 1986.   In response, petitioner stated that respondent

failed to define the terms "client", "resided", and "United

States".

     On January 19, 1996, the parties were notified that this

case was scheduled for trial on June 17, 1996, in San Diego,

California.   When the case was called on June 17, 1996,

petitioner made an oral motion for continuance for the purpose of

obtaining discovery, which was denied.   Respondent then filed a

motion to impose sanctions upon petitioner, pursuant to Rule

104(c), for failure to comply with our May 9, 1996, order that

petitioner respond to the requests for admission.   Petitioner

objected and argued against respondent's motion for sanctions.
                              - 10 -

Petitioner's arguments were essentially the same as those

contained in his written responses to the requests for admission.

Petitioner did not deny the truth of the allegations contained in

the requests.

     Rule 90(a) permits a party to serve upon any other party

written requests for admission of the truth of any matter that

relates to statements or opinions of fact or of the application

of law to fact.   Rule 90(c) provides that each matter is deemed

admitted unless

     within 30 days after service of the request or within
     such shorter or longer time as the Court may allow, the
     party to whom the request is directed serves upon the
     requesting party (1) a written answer specifically
     admitting or denying the matter involved in whole or in
     part, or asserting that it cannot be truthfully
     admitted or denied and setting forth in detail the
     reasons why this is so, or (2) an objection, stating in
     detail the reasons therefor. * * *

Rule 90(c) further provides that an

     answering party may not give lack of information or
     knowledge as a reason for failure to admit or deny
     unless such party states that such party has made
     reasonable inquiry and that the information known or
     readily obtainable by such party is insufficient to
     enable such party to admit or deny. * * *

In addition, Rule 104(c) provides:

     If a party * * * fails to obey an order made by the
     Court with respect to the provisions of Rule * * * 90,
     then the Court may make such orders as to the failure
     as are just, and among others the following:
                               - 11 -

     (1) An order that the matter regarding which the order
     was made or any other designated facts shall be taken
     to be established for the purposes of the case in
     accordance with the claim of the party obtaining the
     order.

Rule 104(d) provides that a party's evasive or incomplete

response is treated as a failure to respond for purposes of Rules

90 and 104.

     Rule 104(c) provides authority for the imposition of

sanctions where a party who has been ordered to respond to

requests for admission files an evasive or incomplete response.

One of those potential sanctions is an order that the matter in

the requests for admission be taken as established for purposes

of the case.    Petitioner failed to admit or deny the truth of the

specific requests for admission.   Instead, his responses were

evasive and incomplete.   He attempts to justify this tactic by

questioning the meaning of the common terms and language used in

the requests.   We will not repeat the quibbles that petitioner

used to justify his evasive and incomplete responses.   Suffice it

to say that they are based on time-worn tax protester arguments

that have been universally rejected by the courts.   See, e.g.,

United States v. Hanson, 2 F.3d 942, 945 (9th Cir. 1993); United

States v. Studley, 783 F.2d 934, 937 (9th Cir. 1986); see also

Santangelo v. Commissioner, T.C. Memo. 1995-468 (and cases cited

therein), affd. without published opinion 87 F.3d 1322 (9th Cir.

1996).
                              - 12 -

     In interpreting and applying our Rules, we generally seek

guidance from judicial decisions interpreting the counterparts to

our Rules in the Federal Rules of Civil Procedure.    Dusha v.

Commissioner, 82 T.C. 592, 599 (1984).   The analog to Rule 90(a)-

(c) is rule 36(a) of the Federal Rules of Civil Procedure.

Freedson v. Commissioner, 65 T.C. 333, 334 (1975), affd. 565 F.2d
954 (5th Cir. 1978); Notes to Rule 90(a)-(c), 60 T.C. 1057, 1114-

1116.

     In Asea, Inc. v. Southern Pac. Transp. Co., 669 F.2d 1242,

1245 (9th Cir. 1981), the court upheld the propriety of imposing

the sanction of deeming certain matters admitted for violation of

rule 36(a) of the Federal Rules of Civil Procedure.   In doing so,

the court stated, id. at 1246, that the discovery process is

subject to the "overriding limitation" of good faith, that

"callous disregard" of discovery responsibilities cannot be

condoned, and that:

     The general power of the district court to control the
     discovery process allows for the severe sanction of
     ordering a matter admitted when it has been
     demonstrated that a party has intentionally disregarded
     the obligations imposed by Rule 36(a). [Id. at 1247.]

The court expressly stated:

     It is also clear that an evasive denial, one that does
     not "specifically deny the matter," or a response that
     does not set forth "in detail" the reasons why the
     answering party cannot truthfully admit or deny the
     matter, may be deemed an admission. * * * Since such
     a response does not comply with the literal
                              - 13 -

     requirements of Rule 36(a), the district court may, in
     its discretion, deem the matter admitted.* * * [Id. at
     1245.3]

See also Havenfield Corp. v. H & R Block, Inc., 67 F.R.D. 93, 96-

97 (W.D. Mo. 1973).

     The responses to the requests for admission that petitioner

provided pursuant to our order were evasive, incomplete, and not

made in good faith.   We therefore ordered that the facts asserted

in respondent's requests be taken as established pursuant to Rule

104(c).   No additional sanctions were imposed, and petitioner was

given the opportunity to present evidence at trial.   Petitioner

chose not to testify and did not call any other witnesses.

     3
      In Asea, Inc. v. Southern Pac. Transp. Co., 669 F.2d 1242,
1244 (9th Cir. 1981), the defendants responded to 18 of the
plaintiff's requests for admission as follows:

     "Answering party cannot admit or deny. Said party has
     made reasonable inquiry. Information known or readily
     obtainable to this date is not complete. Investigation
     continues."

     The Court of Appeals rejected the view that a party can
avoid the admission or denial of a proper request for admission
simply by "tracking" the language of Fed. R. Civ. P. 36(a):

          We are not persuaded that an answer to a request
     for admission necessarily complies with Rule 36(a)
     merely because it includes a statement that the party
     has made reasonable inquiry and that the information
     necessary to admit or deny the matter is not readily
     obtainable by him. The discovery process is subject to
     the overriding limitation of good faith. * * * [Id. at
     1246.]
                               - 14 -

Respondent announced that she would rely upon the deemed

admissions, which we incorporate herein by this reference.4

                             Discussion

Deficiencies for the Taxable Years in Issue

     For purposes of convenience, we will combine our findings of

fact and opinion.

     During the years in issue, petitioner resided in Chula

Vista, California, U.S.A.    From 1983 through 1985, petitioner

worked as an engineering technician for General Dynamics Corp. in

San Diego, California.   In 1983, petitioner worked for Rohr

Industries, Inc., in Chula Vista, California.    During 1983, 1984,

and 1985, petitioner received wages from General Dynamics Corp.

in the amounts of $4,729.40, $30,359.84, and $6,206.99,

respectively.   Petitioner received $13,223.05 in wages from Rohr

Industries, Inc., in 1983.

     On his Federal income tax returns for 1983 through 1985,

petitioner reported these wages and claimed that they were

excludable from gross income as foreign earned income.    See sec.

911(a) and (b).   Petitioner's apparent position is that the State

of California is not part of the United States.    Courts have long

     4
      We have often decided cases on the basis of deemed
admissions. See, e.g., Marshall v. Commissioner, 85 T.C. 267,
271 (1985); Doncaster v. Commissioner, 77 T.C. 334, 336 (1981);
Freedson v. Commissioner, 65 T.C. 333, 335 (1975), affd. 565 F.2d
954 (5th Cir. 1978).
                               - 15 -

rejected tax protester arguments of this sort.   See, e.g., United

States v. Hanson, supra at 945; United States v. Studley, supra

at 937.

     Petitioner also conducted a tax return preparation and tax

counseling business from 1984 through 1986.   Petitioner advised

his clients to file Federal income tax returns claiming the same

foreign earned income exclusion that petitioner claimed on his

returns.    None of petitioner's clients actually worked or resided

outside the United States at any time during 1984, 1985, or 1986.

Petitioner received fees of $1,800 in 1984, $6,190 in 1985, and

$12,790 in 1986.5   Petitioner failed to report these fees as

income on his 1984 and 1985 income tax returns, and he has not

yet filed a return for 1986.

     When interviewed by IRS special agents on April 15, 1987,

petitioner stated that he had never received payment from anyone

in exchange for his tax return preparation and counseling

services.   Petitioner also informed the agents that he had earned

no income in 1986 and was not required to file a return for the

     5
      In request 15, respondent lists the individuals who paid
petitioner for his tax return preparation and tax counseling
services plus the amount and year of payment. Request 15 asserts
that Barbara Gibson paid petitioner $2,108 in 1985. In request
38, respondent attached a copy of Barbara Gibson's canceled
check, which is dated Mar. 21, 1986, and payable to petitioner in
the amount of $2,108. We, therefore, find that petitioner
received this amount from Barbara Gibson in 1986 rather than
1985. With this adjustment, the amounts listed in request 15
correspond to the amount of tax return preparation fees listed in
the notices of deficiency for 1984, 1985, and 1986.
                               - 16 -

year.    When questioned regarding his Federal income tax

liabilities for each of the years in issue, petitioner stated

that he was not in business and had never had any interest in a

business.

     During 1985, petitioner received $152 in interest on a

Federal income tax refund, $521.47 in interest earned on his Rohr

Federal Credit Union account, and $22.28 in interest earned on

his North Island Federal Credit Union account.    Petitioner

improperly reported this interest on his 1985 return as "excluded

under Internal Revenue Code § 103(a)(1)".6

     Petitioner understated his taxable income for 1983 through

1985 in the amounts of $19,609, $31,340, and $12,053,

respectively.    Petitioner also failed to file his 1986 return and

had unreported taxable income for that year in the amount of

$11,710.    Petitioner understated his income tax liabilities for

the years 1983, 1984, 1985, and 1986 in the amounts of $3,264,

$6,564, $1,403, and $1,311, respectively.

Addition to Tax for Fraud Under Section 6653(b) for 1983-86

     Respondent determined that petitioner is liable for an

addition to tax for fraud for each of the years in issue.

     6
      Sec. 103(a)(1) excludes from gross income interest earned
on the obligations of a State, Territory, or possession of the
United States.
                              - 17 -

Respondent bears the burden of proof on this issue.    Sec.

7454(a); Rule 142(b).

     For the taxable years 1983 through 1985, if any portion of

an underpayment of tax required to be shown on a return is due to

fraud, there shall be added to the tax an amount equal to 50

percent of the underpayment, as well as an amount equal to 50

percent of the interest payable under section 6601 with respect

to the portion of the underpayment attributable to fraud.     Sec.

6653(b)(1) and (2).   For the taxable year 1986, the addition to

tax is equal to 75 percent of the portion of any underpayment

attributable to fraud, plus 50 percent of the interest due on

this portion.   Sec. 6653(b)(1)(A) and (B).   If respondent

establishes that any portion of the underpayment for 1986 is

attributable to fraud, then the entire underpayment is to be

treated as attributable to fraud, except with respect to any

portion of the underpayment that petitioner establishes is not

attributable to fraud.   Sec. 6653(b)(2).

     In order to discharge her burden, respondent must prove by

clear and convincing evidence that:    (1) An underpayment exists

for the years in issue, and (2) some portion of the underpayment

is due to fraud.   Sec. 7454(a); Petzoldt v. Commissioner, 92 T.C.
661, 699 (1989).   The facts contained in respondent's requests

for admission establish that there was an underpayment of tax for

each of the years in issue in the amounts determined by

respondent.
                               - 18 -

     Respondent must also show that petitioner intended to evade

taxes known to be owing by conduct designed to conceal, mislead,

or otherwise prevent the collection of taxes.     Stoltzfus v.

United States, 398 F.2d 1002, 1004 (3d Cir. 1968); Rowlee v.

Commissioner, 80 T.C. 1111, 1123 (1983).    The existence of fraud

is a question of fact to be resolved upon consideration of the

entire record.    Gajewski v. Commissioner, 67 T.C. 181, 199

(1976), affd. without published opinion 578 F.2d 1383 (8th Cir.

1978).    Fraud is never imputed or presumed.   Instead, it must be

affirmatively established by the Commissioner with clear and

convincing evidence.    Beaver v. Commissioner, 55 T.C. 85, 92

(1970).    Since direct proof of a taxpayer's intent is rarely

available, fraud may be proven with circumstantial evidence and

reasonable inferences drawn from established facts.     Spies v.

United States, 317 U.S. 492, 500 (1943); Rowlee v. Commissioner,

supra at 1123.

     Petitioner understated his taxable income for 1983 through

1985 and failed to file a return altogether for taxable year

1986.    Such conduct constitutes strong evidence of fraud.      Otsuki

v. Commissioner, 53 T.C. 96, 107-108 (1969); Adams v.

Commissioner, T.C. Memo. 1990-38.    On the tax returns that he did

file, petitioner falsely stated that his income was excludable

because he resided outside the United States.    When interviewed

by IRS special agents concerning his Federal income tax

liabilities for the years in issue, petitioner stated that he was
                                - 19 -

not in business and never had a business of his own or any

interest in a business.   Petitioner also stated that he had never

prepared Federal income tax returns for others, or counseled or

advised anyone in the preparation of returns.    The facts

established by the deemed admissions demonstrate that these

statements were untrue.   Such failure to cooperate with tax

authorities is further evidence of fraud.    Bradford v.

Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986), affg. T.C.

Memo. 1984-601.

     We conclude that the record contains clear and convincing

evidence of petitioner's fraudulent attempt to evade income taxes

for each of the years in issue.    Accordingly, we sustain the

additions to tax for fraud.

Addition to Tax for Substantial Understatement of Income Tax in
1984

     Respondent determined that petitioner is liable for an

addition to tax for substantial understatement of income tax

under section 6661(a) for 1984.    Section 6661(a) provides for an

addition to tax equal to 25 percent of the amount of the

underpayment attributable to a substantial understatement of

income tax.   Pallottini v. Commissioner, 90 T.C. 498, 503 (1988).

An understatement is substantial if it exceeds the greater of

$5,000 or 10 percent of the tax required to be shown on the

return.   Sec. 6661(b)(1)(A).   This amount may be reduced,
                               - 20 -

however, if the taxpayer shows that there was substantial

authority for his treatment of an item, or that the relevant

facts affecting the tax treatment of the item are adequately

disclosed on the return or in a separate statement attached to

the return.   Sec. 6661(b)(2)(B).   Petitioner bears the burden of

proof.    Rule 142(a); Hall v. Commissioner, 729 F.2d 632, 635 (9th

Cir. 1984), affg. T.C. Memo. 1982-337.

     Petitioner has failed to offer any evidence on this issue,

and we sustain respondent's determination.

Addition to Tax for Failure To Pay Estimated Tax Under Section
6654 in 1986

     Respondent determined that petitioner is liable for an

addition to tax for failure to pay estimated income tax under

section 6654(a) for 1986.   Unless the taxpayer demonstrates that

one of the statutory exceptions applies, imposition of this

addition to tax is mandatory where prepayments of tax, either

through withholding or by making estimated quarterly tax payments

during the course of the taxable year, do not equal the

percentage of total liability required under the statute.   Sec.

6654(a); Niedringhaus v. Commissioner, 99 T.C. 202, 222 (1992);

Grosshandler v. Commissioner, 75 T.C. 1, 20-21 (1980).

Petitioner bears the burden of proving his entitlement to any

exception.    Habersham-Bey v. Commissioner, 78 T.C. 304, 319-320

(1982).
                             - 21 -

     Petitioner has not filed his 1986 return or made any

estimated tax payments for the year, nor has he shown that any of

the statutory exceptions are applicable in this case.   We,

therefore, sustain respondent's determination.

                                        Decision will be entered

                                   for respondent.