Court Opinion

ID: 9906033
Source: CourtListenerOpinion
Date Created: 2023-11-30 20:02:46.426852+00
Date Added: 2024-06-11T09:24:04.675943
License: Public Domain

United States Tax Court

                               T.C. Memo. 2023-144

                            MICHAEL B. SHAPIRO,
                                 Petitioner

                                           v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                     —————

Docket No. 26538-21L.                                    Filed November 30, 2023.

                                     —————

Richard Stephen Kestenbaum and Scott L. Kestenbaum, for petitioner.

Frederick C. Mutter and Mimi M. Wong, for respondent.

         MEMORANDUM FINDINGS OF FACT AND OPINION

       MARVEL, Judge: Petitioner, Michael B. Shapiro (Dr. Shapiro),
contests his underlying liability for additions to tax under sections
6651(a)(2) and 6654 for his 2012–15 taxable years (years at issue) in this
section 6330 proceeding. 1 Dr. Shapiro argues that, because of a divorce
and declining distributions from his medical practice during the years
at issue, as well as a disabling condition he developed in 2015, he had
reasonable cause for his failure to timely pay his income tax and to make
required estimated tax payments during the years at issue. While we
do not doubt that Dr. Shapiro had personal, professional, and financial
challenges during the years at issue, we nonetheless conclude that Dr.
Shapiro has not shown that his failure to timely pay his income tax was
due to reasonable cause in the light of all of the facts and circumstances.

        1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the
Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and
Rule references are to the Tax Court Rules of Practice and Procedure. Some monetary
amounts have been rounded to the nearest dollar.

                                 Served 11/30/23
                                          2

[*2] We therefore hold that section 6651(a)(2) additions to tax apply for
the years at issue. In addition, we hold that Dr. Shapiro is liable for
additions to tax under section 6654 for failing to make required
estimated tax payments during the years at issue. Finding no abuse of
discretion either, we sustain respondent’s determination to collect
unpaid amounts for the years at issue by levy.

                              FINDINGS OF FACT

      Some of the facts have been stipulated and are so found. The First
and Second Stipulations of Facts and the attached Exhibits are
incorporated herein by this reference. Dr. Shapiro resided in Florida
when he timely filed his Petition. 2

I.     Dr. Shapiro’s Medical Career

       Dr. Shapiro earned a medical degree from New York Medical
College in 1995. During the years at issue he was a partner at Orlin &
Cohen Orthopedic Associates, LLP (OCOA), in New York. He worked as
an orthopedic surgeon specializing in the performance of spinal
surgeries for nearly the entirety of the years at issue, as explained
below.

       OCOA reported ordinary business income 3 and made the
following distributions to Dr. Shapiro in 2011 and during the years at
issue:

                      Year        Ordinary Business     Distributions
                                       Income

                      2011            Unknown 4           $1,526,811

       2 Unless otherwise agreed by the parties in writing, venue for an appeal is the

U.S. Court of Appeals for the Eleventh Circuit. See § 7482(b)(1)(G)(i).
        3 We summarize only the items of “Ordinary business income (loss)” reported

on each Form 1065, U.S. Return of Partnership Income, Schedule K–1, Partner’s Share
of Income, Deductions, Credits, etc., that OCOA issued to Dr. Shapiro and that is in
the record. Neither party has requested that we make any findings about the amounts
of other items reported on each Schedule K–1, such as the comparatively small
amounts of interest income that OCOA reported to Dr. Shapiro.
       4 Dr. Shapiro reported income from “rental real estate, royalties, partnerships,

S corporations, trusts, etc.” of $1,937,633 for 2011, but his 2011 Schedule E,
Supplemental Income and Loss, is not in the record and the record is unclear as to
whether the entirety of this amount came from OCOA.
                                            3

[*3]                   Year        Ordinary Business      Distributions
                                        Income

                       2012             Unknown              1,190,000

                       2013                 $1,211,110         749,659

                       2014                  1,243,042        974,507 5

                       2015                     940,724       878,000 6

Dr. Shapiro’s distributions from OCOA declined after 2011 in large part
because he was “an out-of-network surgeon” who “didn’t participate in
the [health insurance] plans” until 2011, but OCOA required “the spine
surgeons . . . to go in network” after that point. 7 He did not personally
make this decision, and he protested it to no avail.

      On August 18, 2015, Dr. Shapiro developed a disabling condition
preventing him from working as an orthopedic surgeon for the rest of

        5 The parties erroneously stipulated that the 2014 distributions from OCOA

totaled $974,607. The record is otherwise clear that the correct distribution amount is
$974,507, and we so find. See Cal-Maine Foods, Inc. v. Commissioner, 93 T.C. 181, 195
(1989) (holding that we are not obliged to accept a stipulation between the parties when
it is clearly contrary to facts disclosed by the record).
        6 Dr. Shapiro argues that he received distributions of only $620,000 for 2015.

He bases this claim on a letter dated February 18, 2016, from Michael Passet, chief
executive officer of OCOA, which states that Dr. Shapiro received “total compensation
from the practice” of $620,000 for 2015. The parties have stipulated that the $620,000
amount “is inconsistent with both the ordinary business income and distributions
reported . . . on the Schedule K–1.”
        Michael Passet did not testify at trial, and the letter itself gives no indication
of the purpose for which it was used, the circumstances surrounding its creation, the
records on which it was based, or what “total compensation from the practice” means.
While Dr. Shapiro testified that the letter “was for insurance company stuff that I was
dealing with at that time” and that “[w]e get less money because as partners we pay
for other expenses of the practice, whether it’s rent or maintenance or unforeseen
things that may happen[,]” these explanations are insufficiently detailed to explain the
six-figure discrepancy between the 2015 Schedule K–1 and the letter without further
corroborating evidence. We accordingly give the February 18, 2016, letter no weight.
        7 Another contributing factor was OCOA’s increased debt service expenses and

capital expenditures during the years at issue.
                                           4

[*4] his life. At some point after December 31, 2015, Dr. Shapiro
redeemed his interest in OCOA. 8

       On April 18, 2017, in the U.S. District Court for the Southern
District of New York, Dr. Shapiro sued certain underwriters at Lloyd’s
of London for breach of contract in relation to disability insurance
coverage. On September 15, 2017, again in the U.S. District Court for
the Southern District of New York, Dr. Shapiro filed a separate action
against certain underwriters at Lloyd’s of London for breach of contract
and declaratory judgment in relation to disability insurance coverage.
Dr. Shapiro and the defendants settled both lawsuits and filed a
stipulation of voluntary dismissal with prejudice on September 16, 2019.
Dr. Shapiro received a lump-sum payment in connection with the
settlement in September or October 2019. The only copy of the
settlement agreement in evidence is fully redacted, and the record does
not otherwise disclose the amount of the lump-sum payment.

II.    Dr. Shapiro’s Family and Divorce

      Dr. Shapiro married Marna Shapiro (Mrs. Shapiro, and together
with Dr. Shapiro, the Shapiros) on May 25, 1995. The Shapiros have
two children from their marriage, a daughter born in 1999 and a son
born in 2002. Mrs. Shapiro did not work outside the home while
pregnant with her daughter or during the remainder of her marriage to
Dr. Shapiro.

       In 2004 the Shapiros purchased a home for $1.8 million. In
connection with the home purchase, they obtained a bank loan for
approximately $1.3 million. They also borrowed from June Shapiro, 9
who is Dr. Shapiro’s mother, and from Mrs. Shapiro’s father; funds from
these sources totaled approximately $500,000.           June Shapiro
occasionally helped the Shapiros financially throughout their marriage.

       On April 8, 2011, Dr. Shapiro initiated an action for divorce
against Mrs. Shapiro in the Supreme Court of the State of New York,
Nassau County (family court). Pursuant to New York law, a series of
automatic orders became binding on the Shapiros upon the filing and
service of the summons and complaint in the divorce action. The

         8 The record is unclear concerning whether a payment based on the value of

his interest in OCOA and related entities that Dr. Shapiro made on or about October
21, 2016, in connection with the divorce action that we describe below occurred before
or after his OCOA interest terminated. See infra note 13.
       9 June Shapiro did not testify at trial.
                                            5

[*5] automatic orders remained in full force and effect during the
pendency of the divorce action, which concluded on February 14, 2014. 10
Among the automatic orders was an order stating that from April 8,
2011, and continuing during the pendency of the divorce action, neither
party could liquidate, sell, or transfer any assets (whether held
individually or jointly), including retirement funds, without consent
from the other party or further order of the family court. During the
pendency of the divorce action, neither party granted consent to the
other to liquidate or sell an asset. In addition, there is no indication that
either party petitioned the family court to liquidate assets to pay
delinquent tax liabilities.

       On October 6, 2011, Dr. Shapiro reported to the family court that
he had assets valued at $221,829, consisting of (1) $27,000 in a checking
account, (2) $188,463 in an individual retirement account, and
(3) $6,366 in a mortgage escrow account. He reported the value of his
business and real estate interests as “subject to appraisal.” He also
reported that he had total liabilities of $2,368,537, including
approximate federal and state income tax liabilities of $304,553, and
that he was a defendant in three medical malpractice lawsuits and three
general lawsuits.

      In an interim order dated April 30, 2012, the family court ordered
Dr. Shapiro to make various payments to Mrs. Shapiro. Specifically, the
family court ordered Dr. Shapiro to pay:

    •   monthly carrying charges on the marital residence of $14,943
        (commencing on May 1, 2012, but retroactive to November 22,
        2011);

    •   monthly interim maintenance of $11,000 and monthly child
        support of $5,500 (each commencing on May 1, 2012, but
        retroactive to November 22, 2011);

    •   arrears of $2,000 per month in respect of the retroactive amounts
        owed until they were satisfied;

        10 In the First Stipulation of Facts, the parties referred to the divorce action as

concluding on February 14, 2004, which is a typographical error. The record is
otherwise clear that the divorce action concluded on February 14, 2014, the date that
the family court issued its trial decision, and we so find. See Cal-Maine Foods, Inc., 93
T.C. at 195.
                                      6

[*6] •    for his children’s sports, dance, camp, and other extracurricular
          activities;

   •     for his wife’s and children’s existing medical insurance coverage;

   •     for his wife’s and children’s medical and pharmaceutical
         expenses, provided they used in-network providers and the
         expenses were unreimbursed, non-elective, and non-cosmetic;

   •     for any necessary dental, optical, psychiatric, or therapeutic
         expenses for his wife and children; and

   •     for an existing life insurance policy in a total benefit amount of
         $4 million.

In the interim order, the family court performed a “computation of the
statute” to determine “a presumptively correct maintenance payment of
$13,100.00 per month ($157,200.00 annually).” Ultimately, however,
the family court ordered maintenance of only $11,000 per month because
“[t]he presumptive statutory amount does not factor in [Dr. Shapiro’s]
substantial state and federal tax payment obligations, unreimbursed
medical expenses for [Mrs. Shapiro] and the parties’ two children, the
carrying costs on the marital residence and other Court-ordered
obligations.”

       On February 21, 2013, Dr. Shapiro executed an affidavit in
connection with his divorce proceedings. He prepared the affidavit to
support a request for a decrease of the amounts that he was required to
pay pursuant to the interim order. He argued that he did not have
sufficient income to pay the court-ordered amounts and his taxes. In the
affidavit, he stated in part:

   •     he had monthly expenses of $58,634 and monthly income of
         $50,000;

   •     his 2012 income was lower than his 2011 income, upon which the
         award amounts in the April 30, 2012, interim order were based;

   •     the Shapiros never had any savings and lived above their means;

   •     the Shapiros lived paycheck to paycheck during their marriage;

   •     the Shapiros’ only asset was their principal residence, which was
         heavily mortgaged; and
                                     7

[*7] •    during their marriage, the Shapiros were always in trouble with
          taxing authorities because they never saved enough money to
          account for their tax obligations.

The family court referred consideration of Dr. Shapiro’s request for a
decrease to trial for determination.

       The family court held trial in the divorce action on various dates
between June 19 and September 22, 2013. The family court issued its
trial decision on February 14, 2014. In pertinent part, the family court:

   •     stated that, because of excessive spending during their marriage,
         the Shapiros did not timely pay their tax obligations and often
         had to borrow from June Shapiro to pay their taxes;

   •     determined that a decrease in its April 30, 2012, award to Mrs.
         Shapiro of interim maintenance was unwarranted;

   •     awarded Mrs. Shapiro 15% of Dr. Shapiro’s interest in OCOA and
         two related entities, or $389,135;

   •     ordered the Shapiros to sell the marital residence on or before
         June 1, 2016, and to divide the net proceeds equally between
         themselves;

   •     ordered Mrs. Shapiro to pay all utilities and related carrying
         charges for the marital residence until it was sold on or before
         June 1, 2016;

   •     ordered Dr. Shapiro to pay Mrs. Shapiro $20,000 per month in
         maintenance from March 1, 2014, to March 1, 2019, reduced by
         payments that Dr. Shapiro made directly toward the mortgage,
         property taxes, and homeowners’ insurance until the sale of the
         marital residence;

   •     ordered Dr. Shapiro to pay child support of $6,250 per month
         beginning on March 1, 2014;

   •     ordered Dr. Shapiro to pay Mrs. Shapiro 50% of the balance in a
         Citibank account as of the commencement of the divorce action,
         or $15,953;
                                      8

[*8] •    awarded Mrs. Shapiro 50% of the value of an individual
          retirement account as of the date of commencement of the
          divorce action;

   •     ordered Dr. Shapiro to maintain a $4 million life insurance policy
         until his younger child reached 21 years of age;

   •     ordered Dr. Shapiro to maintain health insurance for the benefit
         of his children and to pay their unreimbursed medical, dental,
         orthodontic, pharmaceutical, psychological, and therapeutic
         expenses;

   •     ordered the Shapiros each to pay their own vehicle expenses;

   •     ordered Dr. Shapiro to pay for all reasonable extracurricular
         expenses of his children, not to exceed $5,000 per year per child;

   •     ordered the Shapiros to share equally in the cost of reasonable
         summer camp expenses for their children; and

   •     ordered Dr. Shapiro to pay $150,000 of legal fees for Mrs. Shapiro
         and $15,000 of expert witness fees.

III.     Payments Related to the Divorce

       On brief, respondent assumes that Dr. Shapiro actually paid the
carrying charges on the marital residence, spousal maintenance, and
child support in the amounts and at the times ordered by the family
court in its April 30, 2012, interim order and in its February 14, 2014,
trial decision. We deem this to be a concession by respondent that Dr.
Shapiro made all of these payments in the amounts ordered through at
least the end of the years at issue, and we so find. We are unable,
however, to find that Dr. Shapiro made payments of court-ordered
arrears because Dr. Shapiro has not substantiated whether or when
those payments were made and respondent has not conceded that the
arrears were paid.
                                  9

[*9] We specifically find that Dr. Shapiro made the following
additional payments in connection with the divorce action:

                 Date              Recipient         Amount

           November 14, 2011     Dr. Shapiro’s       $20,000
                                divorce lawyers

             June 10, 2012     Brant Lake Camp         5,000
                                  (for child’s
                                 enrollment in
                                summer 2012)

             July 11, 2012       Dr. Shapiro’s        22,313
                                divorce lawyers

             July 26, 2012     Brant Lake Camp         5,730
                                  (for child’s
                                 enrollment in
                                summer 2012)

            October 9, 2012      Mrs. Shapiro’s       20,000
                                divorce lawyers
                                (prepayment of
                                legal fees to be
                                awarded in the
                                    future)

            October 26, 2012     Dr. Shapiro’s        11,272
                                divorce lawyers

            January 2, 2013      Dr. Shapiro’s         3,356
                                divorce lawyers

            January 4, 2013      Dr. Shapiro’s        17,000
                                divorce lawyers

              On or about         Mrs. Shapiro’s      65,000
           February 18, 2013     divorce lawyers
                                 (pursuant to an
                               interim counsel fee
                                  award by the
                                   family court)

             April 8, 2013       Dr. Shapiro’s        20,000
                                divorce lawyers
                                           10

[*10]                   Date                 Recipient         Amount

                   June 28, 2013           Dr. Shapiro’s          25,000
                                          divorce lawyers

                  August 30, 2013          Dr. Shapiro’s          50,000
                                          divorce lawyers

                 November 5, 2013          Dr. Shapiro’s          10,000
                                          divorce lawyers

                 February 24, 2014      Brant Lake Camp            6,925
                                           (for child’s
                                          enrollment in
                                         summer 2013)

                    On or about         Cara Klein, Ph.D.          2,850
                   March 27, 2014

                 September 2, 2014         Dr. Shapiro’s          25,000
                                          divorce lawyers

                    On or about           Mrs. Shapiro’s        150,000
                 September 5, 2014        divorce lawyers

                 February 25, 2016      The Law Office of       35,764 12
                                          Anthony A.
                                           Capetola 11

                 February 28, 2016         Dr. Shapiro’s          11,794
                                          divorce lawyers

       11 Dr. Shapiro credibly testified that Anthony A. Capetola was Mrs. Shapiro’s

“new counsel” in 2016, and we so find.
        12 On February 25, 2016, the Shapiros sold the marital residence. Dr. Shapiro

did not actually receive any proceeds from this sale; instead, the buyers of the residence
paid $35,764 at his direction and for his benefit as a distribution in escrow to The Law
Office of Anthony A. Capetola.
                                         11

[*11]                  Date                Recipient        Amount

                   On or about         Mrs. Shapiro (for    389,535 13
                 October 21, 2016      the family court’s
                                        award of 15% of
                                         Dr. Shapiro’s
                                       interest in OCOA
                                        and two related
                                            entities)

      We further find that Dr. Shapiro paid health insurance expenses
in 2011 and during the years at issue in the following amounts:

                                Year          Amount

                                2011           $28,534

                                2012      28,534 (at a
                                          minimum) 14

                                2013            35,224

                                2014            38,068

                                2015            42,827

IV.     Transfers to Dr. Shapiro

      June Shapiro transferred $30,000 to Dr. Shapiro on December 21,
2015. She also transferred another $20,000 to Dr. Shapiro on October
4, 2016.

       13 The record is unclear concerning how Dr. Shapiro funded this amount and

whether it was funded by Dr. Shapiro’s redemption of his interest in OCOA that
occurred on an unspecified date after December 31, 2015. See supra note 8 and
accompanying text.
       14 The record does not disclose Dr. Shapiro’s actual health insurance expense

in 2012, but respondent assumes on brief that the 2011 amount also represents Dr.
Shapiro’s 2012 health insurance expense. We deem this to be a concession by
respondent that Dr. Shapiro had a health insurance expense of at least $28,534 in
2012, and we so find.
                                            12

[*12] V.      Tax Reporting and Payments

     Dr. Shapiro timely filed his Form 1040, U.S. Individual Income
Tax Return, with extension for each year at issue as follows:

             Taxable          Filing Date        Filing Status         Tax
              Year                                                   Reported
                                                                      as Due

              2012        October 11, 2013       Married filing     $332,170 15
                                                  separately

              2013        October 14, 2014       Married filing       446,929
                                                  separately

              2014        October 14, 2015          Single            436,531

              2015          On or before            Single            215,387
                          October 15, 2016

       Dr. Shapiro made the following income tax payments either
during the pendency of the divorce action16 or in respect of the years at
issue:

                 Taxable Year         Payment Date           Amount

                       2010           April 15, 2011         $160,000

                       2011         October 18, 2011          100,000

                       2011           March 6, 2012           300,000

                       2011           April 15, 2012              45,000

        15 In addition to the tax that Dr. Shapiro reported as due on his 2012 Form

1040, respondent later assessed a deficiency in tax for 2012. There is no indication
that Dr. Shapiro is disputing the 2012 deficiency as part of his challenge to the
underlying liabilities in this case, and we deem any such challenge to be conceded
because he did not assign any error to it in his Petition. See Rule 331(b)(4).
        16 For the sake of completeness, we note that Dr. Shapiro made a $300,000

estimated tax declaration payment toward his 2010 tax liability on January 18, 2011,
before the pendency of the divorce action, that is not listed in the table.
                                    13

[*13]          Taxable Year      Payment Date      Amount

                   2011         August 16, 2012     115,000

                   2011        January 16, 2013      45,000

                   2012        November 3, 2014     382,952

                   2013        November 3, 2014     281,293

                   2013          April 20, 2022     172,925

                   2014          April 11, 2014      75,000

                   2014          June 25, 2014       80,000

                   2014          April 15, 2015      50,000

                   2014          April 20, 2022     235,120

                   2015          April 20, 2022     181,121

       As shown above, Dr. Shapiro did not pay any of the tax that he
reported as due for 2012, 2013, or 2015 on or before the payment due
dates (or even the extended filing dates) for those years; for 2014,
however, he made two estimated tax payments, along with another
timely partial payment on April 15, 2015. Shortly after Dr. Shapiro filed
his return for each year at issue, respondent assessed the tax that Dr.
Shapiro reported, as well as (1) an addition to tax under section
6651(a)(2) for failure to timely pay tax, (2) an addition to tax under
section 6654 for failure to make estimated tax payments, and (3) accrued
interest. Respondent later made further assessments of section
6651(a)(2) additions to tax and accrued interest for each year at issue.

VI.     Section 6330 Hearing

      On November 13, 2020, the Internal Revenue Service (IRS) sent
Dr. Shapiro a Letter 1058, Final Notice of Intent to Levy and Notice of
Your Rights to a Hearing (levy notice), with respect to the years at issue.
On December 2, 2020, Dr. Shapiro timely submitted Form 12153,
Request for a Collection Due Process or Equivalent Hearing (hearing
request), in response to the levy notice. In the hearing request, Dr.
                                         14

[*14] Shapiro requested that respondent determine that his income tax
liabilities for the years at issue were not currently collectible because he
was not earning any income. On December 8, 2020, respondent
transferred consideration of the hearing request to the IRS Independent
Office of Appeals (Appeals). 17 On or about January 5, 2021, Appeals
assigned consideration of the hearing request to Appeals Officer
Stephanie Armenia (AO Armenia). On January 22, 2021, Dr. Shapiro
sent Revenue Officer Raul Candelario (RO Candelario) a Request for
Abatement of Penalty (penalty abatement request) with respect to the
additions to tax for failure to timely pay tax for the years at issue.

         On February 1, 2021, AO Armenia scheduled the section 6330
hearing for February 26, 2021. AO Armenia also requested that Dr.
Shapiro provide either confirmation that he had paid his income tax
liabilities in full for the years at issue or, alternatively, certain financial
information, including a Form 433–A, Collection Information Statement
for Wage Earners and Self-Employed Individuals.

       On February 22, 2021, RO Candelario denied the penalty
abatement request. On February 23, 2021, Dr. Shapiro sent AO
Armenia and RO Candelario a Protest of Abatement of Penalty (penalty
protest) with respect to the additions to tax for failure to timely pay tax
for the years at issue. In the penalty protest, Dr. Shapiro requested
abatement of the additions to tax for failure to timely pay tax for the
years at issue on the ground of reasonable cause. He contended that he
exercised ordinary business care and prudence. He stated that three
events prevented him from paying his income tax liabilities for the years
at issue: (1) divorce proceedings with his wife; (2) a reduction in his
income from OCOA; and (3) the permanent disability that he developed
on August 18, 2015. He also incorrectly stated, however, that at the
time he filed for divorce on April 8, 2011, he had been timely paying his
federal income tax. In the Form 433–A attached to the penalty protest,
Dr. Shapiro reported that he had liquid assets the value of which
exceeded $8 million as of January 22, 2021, and that his only liability as
of the same date related to his purchase or lease of a $200,000 Mercedes
automobile. Although the 2019 settlement agreement that Dr. Shapiro
reached with Lloyd’s of London, which he also attached to the penalty
protest, is now redacted, we infer that some portion of the

        17 On July 1, 2019, the IRS Office of Appeals was renamed the IRS Independent

Office of Appeals. See Taxpayer First Act, Pub. L. No. 116-25, § 1001, 133 Stat. 981,
983 (2019).
                                    15

[*15] $8 million in liquid assets that he reported was attributable to the
settlement.

       On February 26, 2021, AO Armenia and Dr. Shapiro’s
representative held the section 6330 hearing by telephone. AO Armenia
informed Dr. Shapiro’s representative that, after her review of the
information that Dr. Shapiro provided, she concluded that he had
sufficient assets from which to pay his income tax liabilities for the years
at issue. AO Armenia also indicated that she would sustain the
proposed levy action because Dr. Shapiro had not shown reasonable
cause for penalty abatement.

       On June 24, 2021, Appeals sent Dr. Shapiro a Notice of
Determination Concerning Collection Action under IRC Sections
6320 or 6330 of the Internal Revenue Code (Notice of Determination) for
the years at issue. AO Armenia sustained the proposed levy action to
collect Dr. Shapiro’s income tax liabilities for the years at issue.

       AO Armenia determined that Dr. Shapiro’s request for currently
not collectible status was inappropriate. She found that Dr. Shapiro had
sufficient means to pay his tax liabilities in full and that he failed to
provide a viable collection alternative. AO Armenia also concluded that
Dr. Shapiro had a poor compliance history.

       AO Armenia denied Dr. Shapiro’s penalty protest because she
found that he “failed to show reasonable cause for paying late and not
making timely estimated tax deposits.” She determined that Dr.
Shapiro failed to show ordinary business care and prudence with respect
to payment of his income tax liabilities during the years at issue. She
also found that Dr. Shapiro had sufficient available funds in investment
accounts and disposable income during the years at issue to pay his
income tax liabilities, even after consideration of his payments for
alimony, child support, and marital expenses. She concluded that
respondent properly assessed additions to tax for failure to timely pay
and for failure to make estimated tax payments against Dr. Shapiro for
the years at issue.
                                          16

[*16]                                OPINION

I.      Jurisdiction and Standard of Review

       We have jurisdiction to review the IRS’s determination
concerning a levy action when the taxpayer petitions for review. 18 See
§ 6330(d)(1); Atl. Pac. Mgmt. Grp., LLC v. Commissioner, 152 T.C. 330,
333 (2019). Dr. Shapiro has petitioned for review of the Notice of
Determination, which concerns a proposed levy action. We therefore
hold that we have jurisdiction to review the Notice of Determination.

        Where the validity of the taxpayer’s underlying liability is
properly at issue, see § 6330(c)(2)(B), we review the underlying liability
de novo, Sego v. Commissioner, 114 T.C. 604, 609–10 (2000). Underlying
liability includes additions to tax. See Katz v. Commissioner, 115 T.C.
329, 339 (2000). We review the IRS’s determinations respecting any
nonliability issues for abuse of discretion. Goza v. Commissioner,
114 T.C. 176, 182 (2000).

       On brief, Dr. Shapiro challenges only his underlying liability for
the section 6651(a)(2) and 6654 additions to tax. He does not challenge
respondent’s determination that currently not collectible status is
inappropriate, nor does he raise any other nonliability issue with respect
to the proposed levy action. We review Dr. Shapiro’s challenge to his
underlying liabilities de novo.

II.     Underlying Liabilities

       A taxpayer may challenge the existence or amount of his
underlying tax liability in a section 6330 hearing, and in a proceeding
before this Court, only if he “did not receive any statutory notice of
deficiency for such tax liability or did not otherwise have an opportunity
to dispute” it. § 6330(c)(2)(B). The parties agree that Dr. Shapiro did
not have a prior opportunity to dispute the section 6651(a)(2) and 6654
additions to tax for the years at issue. The record is also clear that AO
Armenia considered Dr. Shapiro’s challenges to these additions to tax in
the section 6330 hearing. Cf. Giamelli v. Commissioner, 129 T.C. 107,

         18 While we historically have held that a taxpayer must timely file a petition

in order to invoke our CDP jurisdiction, the Supreme Court of the United States has
recently held to the contrary. See Boechler, P.C. v. Commissioner, 142 S. Ct. 1493,
1501 (2022) (“Section 6330(d)(1)’s 30-day time limit to file a petition for review of a
collection due process determination is an ordinary, nonjurisdictional deadline subject
to equitable tolling.”); see also Mellon v. Commissioner, T.C. Memo. 2023-108, at *14.
In any case, Dr. Shapiro timely filed his Petition.
                                         17

[*17] 115 (2007) (“[W]e do not have authority to consider section
6330(c)(2) issues that were not raised before the Appeals Office.”). We
therefore proceed to consider Dr. Shapiro’s underlying liability for the
section 6651(a)(2) and 6654 additions to tax in turn.

       A.      Section 6651(a)(2)

        Section 6651(a)(2) imposes an addition to tax for failure to pay the
amount of tax shown on a taxpayer’s federal income tax return on or
before the payment due date, unless such failure is due to reasonable
cause and not due to willful neglect. 19 See El v. Commissioner, 144 T.C.
140, 150 (2015). The section 6651(a)(2) addition to tax applies only when
an amount of tax is shown on a return filed by the taxpayer or a section
6020 substitute for return prepared by the Secretary. See § 6651(a)(2),
(g)(2); Cabirac v. Commissioner, 120 T.C. 163, 170 (2003), aff’d per
curiam, No. 03-3157, 2004 WL 7318960 (3d Cir. Feb. 10, 2004); see also
El, 144 T.C. at 150.

       Section 7491(c) places the burden of production on the Secretary
with respect to the liability of any individual for any penalty, addition
to tax, or additional amount. “The Commissioner’s burden of production
with respect to the section 6651(a)(2) addition to tax requires that the
Commissioner introduce evidence that a return showing the taxpayer’s
tax liability was filed for the year in question.”           Wheeler v.
Commissioner, 127 T.C. 200, 210 (2006), aff’d, 521 F.3d 1289 (10th Cir.
2008). The Commissioner must also introduce evidence that the
taxpayer failed timely to pay the tax shown on the return. See Reynoso
v. Commissioner, T.C. Memo. 2013-25, at *48–49.               Once the
Commissioner meets his burden of production, the taxpayer has the
burden of proof and must come forward with sufficient evidence to
persuade us that the Commissioner’s determination is incorrect. See
Higbee v. Commissioner, 116 T.C. 438, 446–47 (2001).                 The
Commissioner need not present evidence as to reasonable cause in order
to meet his burden of production. See Charlotte’s Office Boutique, Inc.
v. Commissioner, 121 T.C. 89, 110 (2003), supplemented by T.C. Memo.
2004-43, aff’d, 425 F.3d 1203 (9th Cir. 2005).

       Respondent has met his burden of production. The parties have
stipulated the income tax returns that Dr. Shapiro filed for the years at
issue and the amount of tax that each one showed. Respondent has also

        19 The section 6651(a)(2) addition to tax is imposed only on the net amount of

tax that remains unpaid after the payment due date. See § 6651(b); Treas. Reg.
§ 301.6651-1(d)(1).
                                   18

[*18] produced a Form 4340, Certificate of Assessments, Payments, and
Other Specified Matters, for each year at issue showing that Dr. Shapiro
had paid none (or, for 2014, only $205,000 out of $436,531) of the tax due
by the payment due date. Dr. Shapiro therefore has the burden of
proving that respondent’s decision to assert section 6651(a)(2) additions
to tax for the years at issue was incorrect.

       Dr. Shapiro argues that he has demonstrated reasonable cause
for his failure to timely pay his tax for the years at issue. On brief,
respondent has conceded the issue of willful neglect, so Dr. Shapiro’s
burden of proof extends only to whether reasonable cause existed for his
failure to timely pay his tax.

       Whether reasonable cause is present in any given situation is a
question of fact. See Commissioner v. Lane-Wells Co., 321 U.S. 219, 225
(1944); Sami v. United States, 277 F.2d 153, 154 (5th Cir. 1960); Se. Fin.
Co. v. Commissioner, 153 F.2d 205, 205–06 (5th Cir. 1946), aff’g 4 T.C.
1069 (1945); Crocker v. Commissioner, 92 T.C. 899, 913 (1989). A failure
to pay is considered due to reasonable cause if the taxpayer has made a
satisfactory showing that he exercised ordinary business care and
prudence in providing for payment of his tax liability but was either
unable to pay the tax or would suffer undue hardship if he paid on the
due date. See Treas. Reg. § 301.6651-1(c)(1); see also Estate of Hartsell
v. Commissioner, T.C. Memo. 2004-211, slip op. at 7. The reasonable
cause inquiry thus includes two questions: first, whether the taxpayer
used ordinary business care and prudence, and second, whether he was
nevertheless unable to pay the tax or would suffer undue hardship if he
did. See Lindsay v. United States, 4 F.4th 292, 294 (5th Cir. 2021). “The
term ‘undue hardship’ means more than an inconvenience to the
taxpayer. It must appear that substantial financial loss . . . will result
to the taxpayer for making payment on the due date . . . .” Treas. Reg.
§ 1.6161-1(b); see Treas. Reg. § 301.6651-1(c)(1) (clarifying that an
“undue hardship” means an undue hardship “as described in
§ 1.6161-1(b) of this chapter”).

       In determining whether the taxpayer is unable to pay the tax or
would suffer undue hardship in spite of the exercise of ordinary business
care and prudence, consideration is given to all of the facts and
circumstances of the taxpayer’s financial situation. See Treas. Reg.
§ 301.6651-1(c)(1). This includes the amount and nature of the
taxpayer’s expenditures in the light of the income (or other amounts) he
could, at the time of such expenditures, reasonably expect to receive
before the date prescribed for the payment of the tax. See id. A taxpayer
                                      19

[*19] who incurs lavish or extravagant living expenses in such an
amount that the remainder of his assets and anticipated income will be
insufficient to pay his tax has not exercised ordinary business care and
prudence in providing for the payment of his tax liability. See id. A
taxpayer is considered to have exercised ordinary business care and
prudence if he made reasonable efforts to conserve sufficient assets in
marketable form to satisfy his tax liability and nevertheless was unable
to pay all or a portion of the tax when it became due. See id.

        “The reasonable cause standard is a one-time test to be passed or
failed at the payment due date. . . . Events occurring after the due date
are still relevant, however, to the reasonable cause determination.”
Estate of Hartsell, T.C. Memo. 2004-211, slip op. at 7; see Estate of Sowell
v. United States, 198 F.3d 169, 172–73 (5th Cir. 1999) (considering a
taxpayer’s failure to attempt to obtain a loan for four years after the
payment due date and its failure to appeal the IRS’s denial of its request
for a payment extension). Reasonable cause may not exist if the
taxpayer does not comply within a reasonable period after the facts and
circumstances explaining the taxpayer’s noncompliant behavior cease to
exist. See Steven Bros. Found., Inc. v. Commissioner, 39 T.C. 93, 130
(1962) (“[A]n acceptable reason for failure to file a return will excuse
such failure only so long as the reason remains valid.”), aff’d in part,
rev’d and remanded in part, 324 F.2d 633 (8th Cir. 1963); Estate of
Maltaman v. Commissioner, T.C. Memo. 1997-110, slip op. at 16 (holding
that the taxpayer’s reliance on a preparer’s advice that a second return
filing extension could be obtained became unreasonable during the four-
month period after the taxpayer learned that the IRS denied the second
extension request and the return was overdue); cf. Russell v.
Commissioner, T.C. Memo. 2011-81, 2011 WL 1314673, at *8 (“Courts
considering the issue have held that the determination of ‘reasonable
cause’ under section 6651(a)(2) should receive similar analysis to that
under section 6651(a)(1).”).

        “Adverse economic conditions do not necessarily constitute
reasonable cause” for nonpayment of federal income tax, Estate of
Hartsell, T.C. Memo. 2004-211, slip op. at 12, at least absent “the serious
effort required to pay . . . timely[,]” id., slip op. at 15. A taxpayer “cannot
rely on undue financial hardship alone to excuse his inability to pay
taxes. The regulations require a showing of reasonable cause even if
undue hardship would be suffered.” Nasir v. Commissioner, T.C. Memo.
2011-283, 2011 WL 6029936, at *6. When a taxpayer faces competing
financial obligations, the governing Treasury Regulations “clearly
require a factual assessment of the taxpayer’s financial situation to
                                    20

[*20] determine whether it has exercised ordinary business care and
prudence in responding to competing financial obligations.” Fran Corp.
v. United States, 164 F.3d 814, 819 (2d Cir. 1999); cf. Kennedy v. United
States, 542 F. Supp. 1046, 1049 (D.N.H. 1982) (finding a lack of
reasonable cause where there was no effort to show “what the assets and
liabilities of the parties were as of the due date of payment”). A taxpayer
involved in a divorce proceeding should ordinarily “explain[] how his
divorce proceeding excused his failures to satisfy his tax obligations.”
Kelly v. Commissioner, T.C. Memo. 2022-73, at *6. A taxpayer’s
assertion that he spent all of his money in a year in which he obtained
a divorce, standing alone, is not reasonable cause for the failure to pay
income tax timely. See Joubert v. Commissioner, T.C. Memo. 2007-292,
slip op. at 3, 11. We may take into account the extent of the taxpayer’s
efforts to borrow to pay the tax liability. See Estate of Hartsell, T.C.
Memo. 2004-211, slip op. at 20.

       A taxpayer’s illness or disability may constitute reasonable cause
if there is a nexus between the illness or disability and the taxpayer’s
noncompliance and if the taxpayer otherwise used ordinary business
care and prudence in attempting to meet his tax obligations. See
Erickson v. Commissioner, 172 B.R. 900, 909–10 (Bankr. D. Minn. 1994)
(finding reasonable cause for a quadriplegic taxpayer’s failure to file and
timely pay where the taxpayer provided information to an agent and
monitored the agent’s compliance, but the agent nonetheless failed to
carry out the taxpayer’s obligations timely); cf. Williams v.
Commissioner, 16 T.C. 893, 906 (1951) (finding a lack of reasonable
cause where the nexus between the taxpayer-husband’s impairment and
the taxpayers’ failure to file their tax returns on the due dates was
unclear).

       Resolution of this case does not require us to hold that taxpayers
facing a genuine choice between satisfying court-ordered payments in a
divorce proceeding or satisfying their income tax obligations timely
should prioritize the latter over the former or vice versa. See Russell v.
Commissioner, 2011 WL 1314673, at *8 n.9 (“Financial hardship is a
defense unique to the failure to pay addition to tax.”). Instead, we find
that Dr. Shapiro has not established, by way of either his
contemporaneous actions or his explanations in this case, that he used
ordinary business care and prudence in responding to his competing
financial obligations.

      Dr. Shapiro faced various personal and financial difficulties
during the years at issue. Nonetheless, the touchstone of our analysis
                                           21

[*21] is whether the taxpayer faces undue hardship or an inability to
pay despite exercising “ordinary business care and prudence in
responding to competing financial obligations.” Fran Corp., 164 F.3d
at 819. Dr. Shapiro’s actions to ensure that his tax liabilities for the
years at issue were paid timely essentially amount to protesting OCOA’s
decision to require spine surgeons to become in-network providers and
requesting a decrease in his court-ordered payments from the family
court. 20 Dr. Shapiro also made some payments toward his 2014 income
tax liabilities after the conclusion of his divorce case and before the
payment due date. Furthermore, unlike Appeals, we conclude that Dr.
Shapiro’s compliance history with respect to taxable years other than
the years at issue merits no weight; the events occurring during the
years at issue were relatively unusual and sufficiently distinguish the
years at issue from other taxable years.

        What the record is lacking, however, is evidence that Dr. Shapiro
took actions that an ordinarily prudent taxpayer facing financial
difficulties would have taken to ensure timely tax payment, or even that
he considered taking such actions. Cf. Wichita Terminal Elevator Co. v.
Commissioner, 6 T.C. 1158, 1165 (1946) (stating that the failure of a
party to introduce evidence that, if true, would be favorable to him gives
rise to the presumption that, if produced, it would be unfavorable), aff’d,
162 F.2d 513 (10th Cir. 1947). By way of illustration, there is no
indication in the record that Dr. Shapiro ever:

    •   requested an extension of time for the payment of tax, see § 6161;

    •   submitted an installment agreement request to the IRS, see
        § 6159;

    •   was in the practice of setting amounts aside for the payment of
        his tax besides making sporadic estimated tax payments;

    •   sought out legitimate borrowing sources, such as banks, credit
        card companies, or others who might have been willing to lend to

         20 The record also discloses that during the pendency of the divorce, Dr. Shapiro

credibly told the family court that “I have not taken any vacations (except to Florida
to visit my mother). I have not been able to maintain two vehicles (I previously also
leased a Porsche) and I have been forced to take a leave of absence from my Country
Club.” We acknowledge these actions on Dr. Shapiro’s part but find them to be
relatively insubstantial under the circumstances here.
                                          22

[*22] him, before failing to pay his tax timely or even within a
      reasonable time thereafter; 21

   •   petitioned the family court for permission to liquidate assets to
       pay delinquent tax liabilities;

   •   explored whether he could have supplemented his income from
       sources in addition to, or in lieu of, OCOA; or

   •   explored whether bankruptcy could have provided a restructuring
       of his tax or other obligations. 22

       These actions or others may have provided only a partial solution,
and some of them may have been ineffective under the circumstances at
improving his ability to pay. Nonetheless, it is imperative that when a
taxpayer unilaterally extends himself a de facto loan from the
government on account of his own financial circumstances, he has
adequately explored the available alternatives and taken those that are
appropriate. The United States Treasury is not a taxpayer’s personal
line of credit, or at least one of first resort. Dr. Shapiro has the burden
to develop the record adequately to show that he has appropriately used
it as such, but he has not done so. Any suggestion that the family court
did not take Dr. Shapiro’s outstanding tax liabilities into account is also
unsupported by the record: The family court clearly did so when setting
the amount of interim maintenance.

       While we place primary emphasis on Dr. Shapiro’s
contemporaneous actions to address his tax obligations timely, his delay
in addressing his outstanding income tax obligations until 2022 has also
been inadequately explained in the light of the 2019 settlement he
reached in relation to his insurance coverage from Lloyd’s of London.
There may be a reasonable explanation for the delay, but we have not
been provided with it. In the absence of such an explanation, the delay
casts further doubt on the nexus between his divorce and declining
income during the years at issue and his failure to timely pay his income
tax.

        21 A pair of transfers from June Shapiro in 2015 and 2016 is a possible

exception to this statement, but it is unclear what the purpose of the transfers was or
to what use Dr. Shapiro put them.
       22 Under certain conditions, section 6658 provides relief from additions to tax

under sections 6651, 6654, and 6655 for failure to make timely tax payments during
the pendency of a bankruptcy action. See generally Rev. Rul. 2005-9, 2005-1 C.B. 470.
                                          23

[*23] Dr. Shapiro relies heavily on the family court’s order prohibiting
the sale or liquidation of the Shapiros’ assets, which was in effect from
April 8, 2011, to February 14, 2014. On brief, Dr. Shapiro and
respondent have each provided separate cashflow analyses for each year
at issue 23 that purport to show whether Dr. Shapiro’s OCOA
distributions alone gave him the means to pay his federal income tax
given his other expenses, many of which were court ordered.

       As a threshold matter, the payment due dates for 2013–15
occurred after February 14, 2014, so we cannot determine Dr. Shapiro’s
ability to pay for those years without an accounting of his assets; a
cashflow analysis alone is insufficient. Cf. Kennedy, 542 F. Supp. at
1049. Furthermore, neither party’s cashflow analysis shows whether
Dr. Shapiro could have reduced his expenses, increased his income, or
otherwise provided for the payment of his tax through the exercise of
ordinary business care and prudence.              In the absence of
(1) substantiation of Dr. Shapiro’s assets on the payment due dates for
2013–15 and (2) the exercise of ordinary business care and prudence on
Dr. Shapiro’s part, the parties’ cashflow analyses are misdirected. 24 It
bears emphasizing that Dr. Shapiro has left the record significantly
underdeveloped in this regard.

       Furthermore, even taken on their own terms, Dr. Shapiro’s
cashflow analyses are significantly flawed. First, many of the expenses
are unsubstantiated, and none of them are supported by citations of the
record. Second, the analysis for 2015 uses an erroneously low figure for
Dr. Shapiro’s cash inflows ($620,000 instead of $878,000). Third, Dr.
Shapiro’s payments to his own attorneys (as well as other, poorly
explained expenses such as “Miscellaneous Expenses” or “Laundry”)
were not court ordered and do not take precedence over his federal
income tax obligations; therefore, they should not have been subtracted
from the amount he could pay.

      Fourth, the analyses assume that Dr. Shapiro’s payments toward
his substantial 2011 income tax obligations are properly subtractable

        23 Respondent has also provided a cashflow analysis for 2011.

        24 The parties’ cashflow analyses also erroneously account for Dr. Shapiro’s net

cashflow only as of the close of each year at issue, not as of the payment due date for
each year at issue. Cf. Treas. Reg. § 301.6651-1(c)(1) (“A failure to pay will be
considered to be due to reasonable cause to the extent that the taxpayer has made a
satisfactory showing that he exercised ordinary business care and prudence in
providing for payment of his tax liability and was nevertheless either unable to pay
the tax or would suffer an undue hardship . . . if he paid on the due date.”).
                                    24

[*24] from the amount he could pay for the years at issue. This
assumption is without merit and represents a sleight of hand. For
purposes of calculating his ability to pay, and under the circumstances
here, his payments toward his 2011 tax liabilities in 2012 are properly
subtractable from his 2011 OCOA distributions, not his 2012 OCOA
distributions. In determining whether a taxpayer has exercised
ordinary business care and prudence, we take into account the nature of
the tax which the taxpayer has failed to pay. See Treas. Reg.
§ 301.6651-1(c)(2). The income tax is a tax imposed on taxable income.
See generally § 1. Taxable income is computed on the basis of the
taxpayer’s taxable year. See § 441(a). Attributing the 2011 income tax
payments to Dr. Shapiro’s 2012 taxable year creates the appearance, but
not the reality, of an inability to pay during the years at issue by making
it appear that Dr. Shapiro was required to support five years of income
tax obligations (2011–15) on only four years of income (2012–15).

       We might be more favorably disposed to such an attribution had
Dr. Shapiro also shown reasonable cause for his failure to timely pay or
make required estimated tax payments for 2011; nonetheless, the only
reason we can discern for these failures is Dr. Shapiro’s unjustified
failure to save enough money to account for them. Unreasonably
delaying the required 2011 payments until, and unreasonably
attributing them to, the years at issue creates the appearance of an
inability to pay during the years at issue but not the reality of it. Dr.
Shapiro has not shown that he lacked the means to pay the 2011 tax
timely out of his 2011 OCOA distributions, and respondent’s well-
documented 2011 cashflow analysis clearly suggests that he had the
means to do so.

       We also fail to see how section 6651(a)(2) can be read to permit
Dr. Shapiro to stop an addition to tax from accruing for both his 2011
taxable year (through actual payment) and a year at issue (through
reasonable cause) even though he made a payment only toward 2011. If
he had instead elected to apply the same payments against his liabilities
for the years at issue while leaving his 2011 balance outstanding, the
addition to tax for failure to timely pay that respondent assessed against
him for 2011 would not have stopped accruing.                Cf. Dixon v.
Commissioner, 141 T.C. 173, 185 (2013) (stating that a taxpayer
generally may “designate how voluntary tax payments should be
applied” by the IRS). We decline to attribute Dr. Shapiro’s payments
toward his 2011 tax liability, which are properly viewed as coming out
of his 2011 OCOA distributions, to his 2012 taxable year.
                                    25

[*25] Finally, despite all their flaws, Dr. Shapiro’s own cashflow
analyses show that he had positive net cashflow for 2012 and 2015. Dr.
Shapiro has failed to explain why the positive net cashflow that he
calculated for 2012 did not result in timely payment of his tax liability,
and he explains the failure to timely pay any amounts for 2015 only by
reference to his disability, which we discuss further (and reject as a
ground for reasonable cause) below.

       Respondent’s cashflow analyses are well substantiated and make
some generous assumptions in Dr. Shapiro’s favor. Nonetheless, even if
we permitted Dr. Shapiro to use them to attempt to meet his own burden
of proof, they would not avail him. Despite Dr. Shapiro’s failure to
substantiate his living expenses, respondent has permitted allowances
determined by reference to the IRS’s allowable living expense standards.
Respondent has also allowed Dr. Shapiro to subtract his actual
attorney’s fees in the divorce action from his ability to pay, despite the
lack of a court order requiring them. Overall, despite their assumptions
in Dr. Shapiro’s favor, respondent’s cashflow analyses give rise to the
conclusion that Dr. Shapiro had sufficient cashflow to pay substantially
more of his income tax obligations timely than he actually did, especially
after accounting for the substantial 2011 income tax payments that he
made during the years at issue.

       Dr. Shapiro also cites the disabling condition that he developed
on August 18, 2015, as reasonable cause for his failure to timely pay his
income tax. This disability cannot establish reasonable cause for his
2012–14 taxable years because it occurred after the payment due dates
for all of them, although it is relevant to his assertion of reasonable
cause for his 2015 taxable year. Nonetheless, Dr. Shapiro has not shown
reasonable cause for the untimely payment of his 2015 income tax
obligation, even considering his disability. He has not explained
whether his disability resulted in increased expenses or physical
difficulties relevant to the payment of his tax obligation, or merely
reduced his income (and his corresponding income tax obligation) for
2015. Neither has he accounted for the assets or sources of borrowing
available to him as of the payment due date for his 2015 taxable year or
explained why he failed to make required estimated tax payments before
August 18, 2015. Cf. § 6654(c)(2) (requiring estimated tax payments on,
inter alia, April 15 and June 15 of the taxable year). The record leaves
us unsure of:

   •   the extent of his efforts to collect from private or Social Security
       disability insurance;
                                           26

[*26] •    whether Dr. Shapiro’s testimony that “in 2016, I had disability
           insurance that started paying” refers to payments that he
           received before or after the payment due date for his 2015
           taxable year;

    •   the amount and timing of the disability payments he received
        from Guardian Life Insurance; 25

    •   whether he had additional disability coverage through an insurer
        other than Lloyd’s of London or Guardian Life Insurance;

    •   whether his rights of recovery against Lloyd’s of London could
        have been used as collateral to support borrowing as of the
        payment due date for his 2015 taxable year; and

    •   the cause of the delay between his recovery from Lloyd’s of
        London in 2019 and his payment toward his 2013–15 income tax
        obligations in April 2022.

Dr. Shapiro has failed to carry his burden to show that the disabling
condition he developed in 2015 provides reasonable cause for any of the
years at issue.

       Dr. Shapiro argues that a number of cases provide support for his
position, including East Wind Industries, Inc. v. United States, 196 F.3d
499 (3d Cir. 1999); Custom Stairs & Trim, Ltd. v. Commissioner, T.C.
Memo. 2011-155; Glenwal-Schmidt v. United States, No. 77-0902,
1978 U.S. Dist. LEXIS 16635 (D.D.C. July 12, 1978); and In re Pool &
Varga, Inc., 60 B.R. 722 (Bankr. E.D. Mich. 1986). These cases, whose
facts are highly dissimilar to the facts here, involved businesses that
faced a real choice between serious financial hardship or timely
depositing and paying employment taxes. The taxpayers in these cases

         25 The record discloses that Mrs. Shapiro unsuccessfully attempted to garnish

disability payments made to Dr. Shapiro by Guardian Life Insurance. Guardian Life
Insurance sent a letter to Dr. Shapiro, Mrs. Shapiro, and their respective counsel dated
June 16, 2016, denying the attempted garnishment on the grounds of an exemption
applicable to disability payments under New York law. Dr. Shapiro testified that his
understanding of the letter was that the money he received from Guardian Life
Insurance “wasn’t [to be used] to satisfy debts and liens, including the taxation
services, IRS.” We reject his testimony as incredible and his interpretation of the letter
as patently unreasonable. The letter discusses only an exemption from garnishment
or execution and does not refer to any limitation on his own disposition of the funds or
to his tax obligations. In any case, a letter from Guardian Life Insurance does not
constitute legal advice.
                                      27

[*27] demonstrated that they faced undue hardship or an inability to
pay despite the exercise of ordinary business care and prudence. Dr.
Shapiro has proven neither the exercise of ordinary business care and
prudence nor an inability to pay or the prospect of undue hardship.

       B.     Section 6654

       Section 6654(a) imposes an addition to tax on an individual who
underpays his estimated tax. This addition to tax is calculated with
reference to four required installment payments of the taxpayer’s
estimated tax liability. § 6654(c) and (d). Each required installment is
equal to 25% of the “required annual payment.” § 6654(d). The required
annual payment is equal to the lesser of (1) 90% of the tax shown on the
return for the taxable year (or, if no return is filed, 90% of the tax for
such year) or (2) if the individual filed a return for the immediately
preceding taxable year, 100% (or, in certain circumstances, 110%) of the
tax shown on the return of the individual for the preceding taxable year.
§ 6654(d)(1)(B) and (C); see Wheeler, 127 T.C. at 210–11. The due dates
of the required installments for a calendar year taxpayer are April 15,
June 15, and September 15 of the calendar year in question and
January 15 of the following year. § 6654(c)(2).

       The Commissioner’s burden of production under section 7491(c)
requires him to produce, for each year for which the addition to tax is
asserted, evidence that the taxpayer had a required annual payment
under section 6654(d). See Wheeler, 127 T.C. at 211–12. To do so, the
Commissioner must establish the tax shown on the taxpayer’s return for
the immediately preceding taxable year or demonstrate that the
taxpayer filed no such return. See id.; Harvey v. Commissioner, T.C.
Memo. 2023-95, at *6–7. The parties have stipulated the amount of tax
shown on each of Dr. Shapiro’s income tax returns for the years at issue,
and a Form 1040 for Dr. Shapiro’s 2011 taxable year showing the
amount of tax owed is in the record. 26 Respondent has met his burden
of production to show that Dr. Shapiro had a required annual payment
under section 6654(d) for each year at issue.

       Section 6654 does not include a general exception for reasonable
cause or lack of willful neglect. See Treas. Reg. § 1.6654-1(a)(1) (“This
addition to tax . . . is imposed whether or not there was reasonable cause
for the underpayment.”); see also Rader v. Commissioner, 143 T.C. 376,

       26 The 2011 Form 1040 is in the record as an attachment to Dr. Shapiro’s

February 21, 2013, family court affidavit.
                                   28

[*28] 390 (2014), aff’d in part, appeal dismissed in part, 616 F. App’x
391 (10th Cir. 2015); Collins v. Commissioner, T.C. Memo. 2020-50,
at *47–48. Nonetheless, no addition to tax is imposed under section
6654(a) with respect to any underpayment “to the extent the Secretary
determines that by reason of casualty, disaster, or other unusual
circumstances the imposition of such addition to tax would be against
equity and good conscience.” § 6654(e)(3)(A). Furthermore, no addition
to tax is imposed under section 6654(a) if the Secretary determines that
the taxpayer became disabled in either the taxable year for which
estimated income tax payments were required or in the preceding
taxable year and the underpayment was due to reasonable cause and
not willful neglect. See § 6654(e)(3)(B).

       For the same reasons that we find that the disabling condition Dr.
Shapiro developed on August 18, 2015, does not provide reasonable
cause for his failure to timely pay his income tax for any of the years at
issue, we also find that it does not provide reasonable cause for his
underpayment of estimated tax for the years at issue. Dr. Shapiro
argues that after he became disabled he “did not pay his net cashflow to
the IRS for fear that he would not have any monies by which to pay his
living expenses and the matrimonial order.” Nonetheless, his bank
account statements show that he did not strictly conserve his cashflow
for living expenses and tax payments after he became disabled and
before the payment due date for his 2015 taxable year. Cf. Zaimes v.
Commissioner, T.C. Memo. 2023-121, at *28–29 (finding, pursuant to
section 6151(a), that a calendar year taxpayer’s tax payment for his 2015
taxable year was due on April 18, 2016). For example, there are
unexplained charges or withdrawals of (1) $500 at an automated teller
machine in Beverly Hills, California, on October 16, 2015, (2) $314 for
“EN JAPANESE BRASSIRE” in New York, New York, on March 1,
2016, (3) $303 for “GOLDEN RULE WINE AND L” in New York, New
York, on March 29, 2016, and (4) $1,630 for “THE SETAI HOTEL” in
Miami Beach, Florida, on April 14, 2016. Dr. Shapiro has not proven
that an exception to the section 6654 addition to tax applies for any of
the years at issue. We also find specifically that, for the same reasons
that his divorce, declining income, and disability do not constitute
reasonable cause for his failure to timely pay his income tax, it is not
against equity and good conscience to impose the section 6654 addition
to tax for any of the years at issue.
                                           29

[*29] III.     Abuse of Discretion

       The only remaining question is whether AO Armenia abused her
discretion in sustaining the proposed levy to collect Dr. Shapiro’s unpaid
tax liabilities for the years at issue. Dr. Shapiro has not advanced any
argument on brief that respondent’s determinations concerning
nonliability issues are inappropriate. We therefore deem him to have
abandoned any argument that sustaining the proposed levy was an
abuse of discretion by AO Armenia. See Mendes v. Commissioner,
121 T.C. 308, 312–13 (2003) (“If an argument is not pursued on brief, we
may conclude that it has been abandoned.”).

       Nonetheless, even if we construe Dr. Shapiro’s general objection
to the levy in his petition as an argument that AO Armenia abused her
discretion in determining that a levy is appropriate, we would still
conclude that there was no abuse of discretion here. To determine
whether an abuse of discretion occurred, we review the record to
determine whether AO Armenia (1) properly verified that the
requirements of applicable law and administrative procedure have been
met; (2) considered any relevant issues that Dr. Shapiro raised; and
(3) considered whether the proposed levy balances the need for the
efficient collection of taxes with Dr. Shapiro’s legitimate concern that
any collection action be no more intrusive than necessary. See
§ 6330(c)(3); Lunsford v. Commissioner, 117 T.C. 183, 184 (2001);
Ludlam v. Commissioner, T.C. Memo. 2019-21, at *9–10, aff’d per
curiam, 810 F. App’x 845 (11th Cir. 2020).

       Our review of the record shows that AO Armenia properly verified
that all applicable legal and administrative requirements were met. 27
Currently not collectible status was inappropriate because Dr. Shapiro
reported that he had liquid assets valued at over $8 million and that his
only liability related to his purchase or lease of a $200,000 Mercedes
automobile. 28 See Am. Limousines, Inc. v. Commissioner, T.C. Memo.
2021-36, at *15 (“[A] settlement officer’s denial of currently not
collectible status is not an abuse of discretion where the taxpayer lacks

        27 The supervisory approval requirement of section 6751(b)(1) does not apply

to the additions to tax at issue because they were additions to tax under sections 6651
and 6654. See § 6751(b)(2)(A); Ludlam, T.C. Memo. 2019-21, at *10 n.4.
        28 Furthermore, it is not an abuse of discretion for Appeals to reject a collection

alternative where a taxpayer is not in compliance with his ongoing tax obligations. See
Cox v. Commissioner, 126 T.C. 237, 257 (2006), rev’d on other grounds, 514 F.3d 1119
(10th Cir. 2008); Hull v. Commissioner, T.C. Memo. 2015-86, at *15. Dr. Shapiro has
not demonstrated that he is in compliance with his ongoing tax obligations.
                                   30

[*30] sufficient income to pay its tax debt but owns assets that could be
liquidated to provide funds to satisfy that debt.”). In the absence of a
proposed collection alternative other than currently not collectible
status, AO Armenia did not err in determining that the proposed levy
appropriately balanced the need for efficient collection of taxes with Dr.
Shapiro’s legitimate interest that the collection action be no more
intrusive than necessary. See, e.g., Roberts v. Commissioner, T.C.
Memo. 2021-131, at *8 (“It is not an abuse of discretion to decline to
consider something that was never proposed.”); cf. Chavis v.
Commissioner, 158 T.C. 175, 186 (2022) (“The only collection
alternatives [the taxpayer] proposed, in her . . . hearing request or
subsequently, were to have her account placed in [currently not
collectible] status and to have the [notice of federal tax lien]
withdrawn. . . . [The taxpayer] is free to submit to the IRS at any time,
for its consideration and possible acceptance, a collection alternative in
the form of an installment agreement or an offer-in-compromise,
supported by up-to-date financial information . . . .”).

IV.   Conclusion

        Finding no merit to Dr. Shapiro’s challenge to his underlying tax
liabilities, and finding no abuse of discretion by AO Armenia, we affirm
respondent’s determination to sustain the proposed collection action.

      We have considered all of the parties’ arguments and, to the
extent they are not discussed herein, find them to be irrelevant, moot,
or without merit.

      To reflect the foregoing,

      An appropriate decision will be entered.