Odelugo v. Comm'r

(A) as the principal place of business for any trade or business of the taxpayer, [or]

(B) as a place of business which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his trade or business * * *Sec. 280A(c)(1)(A) and (B).

In order to satisfy his burden of proof, petitioner relies on, inter alia, Ms. Johnson's testimony, ¹⁶ certain stipulated documents, and certain other documents that petitioner introduced into the record at trial. ¹⁷ (We shall refer collectively to those stipulated documents and *111 those documents that petitioner introduced into the record at trial as petitioner's documents.)

With respect to Ms. Johnson's testimony, Ms. Johnson started working for petitioner's law practice on an undisclosed date in August 1999. She had no personal knowledge regarding petitioner's law practice or any other activities of petitioner during 1998 to the date in August 1999 on which petitioner first employed her. As a result, at the trial in this case, Special Trial Judge Powell ordered Ms. Johnson to restrict her testimony to matters with respect to which she had personal knowledge. See Fed. R. Evid. 602. During her testimony, Ms. Johnson failed in certain material respects to comply with Special Trial Judge Powell's order. Under the circumstances, we shall not rely on Ms. Johnson's testimony to the extent that it pertained to matters with respect to which she did not have personal knowledge. See id.

In addition, we found Ms. Johnson's testimony to be in certain material respects general, vague, *112 conclusory, internally inconsistent, and/or contradicted by the record. Under the circumstances, we are not required to, and we shall not, rely on that testimony to establish petitioner's position with respect to any of the issues presented in this case. See Lerch v. Commissioner, 877 F.2d 624, 631-632 (7th Cir. 1989), affg. T.C. Memo. 1987-295; Geiger v. Commissioner, 440 F.2d 688, 689-690 (9th Cir. 1971), affg. per curiam T.C. Memo. 1969-159; Shea v. Commissioner, 112 T.C. 183, 189 (1999).

With respect to petitioner's documents, those documents include the purported 1998 return and the purported 1999 return. Petitioner apparently is relying on those purported returns to support his position with respect to the Schedule C deductions that he is claiming here. ^18*113 The respective expenses and the respective amounts of depreciation that are shown in the purported 1998 Schedule C and the purported 1999 Schedule C are nothing more than statements of petitioner's position and do not establish that petitioner is entitled to deduct those claimed expenses and depreciation.

Petitioner's documents also include virtually all of petitioner's bank statements for 1998 and 1999, respectively, for (1) petitioner's Chevy Chase checking account (Chevy Chase bank statements) and (2) petitioner's IRFCU checking and savings accounts (IRFCU bank statements). Those bank statements show withdrawals from, checks drawn on, and deposits into those respective accounts during the years at issue. The Chevy Chase bank statements and the IRFCU bank statements do not show the purpose of any of those withdrawals, the payee or the *114 purpose of any of those checks, ¹⁹ or the source of any of those deposits, except certain deposits into the checking account (petitioner's IRFCU checking account) that petitioner maintained at IRFCU. ²⁰ We shall not rely on those statements to establish the purpose of any of the withdrawals from, the payee ²¹ or the purpose of any of the checks drawn on, or the source of certain of the deposits ²² into petitioner's bank accounts.

In the notice for 1998, respondent determined that petitioner has *115 the following unreported income: (1) Nonemployee compensation of $ 73,839 consisting of $ 44,424 from GSA and $ 29,415 from the District of Columbia, ²³ (2) interest of $ 265, and (3) a taxable distribution of $ 13,964 from the National Finance Center Thrift Savings Plan. In the notice for 1999, respondent determined that petitioner has the following unreported income: (1) Nonemployee compensation of $ 64,944 from GSA²⁴ and (2) interest of $ 39. Petitioner concedes the income determinations in the notices.

In the answer, respondent alleged (1) that the 1998 bank deposits analysis showed that during 1998 petitioner made total deposits of at least $ 166,658 into petitioner's bank accounts, of which $ 136,362 is taxable (and therefore $ 30,296 is not taxable), and (2) that the 1999 bank deposits analysis showed that during 1999 petitioner made total deposits of at least $ 106,751 into those accounts, of which $ 101,179 is taxable (and therefore $ 5,572 is not taxable). ^25*117 Respondent did not allege in the answer that respondent reduced the total deposits that respondent alleged for petitioner's respective taxable years 1998 and 1999 by the amounts *116 of total unreported income that respondent had determined in the respective notices and that respondent should have reasonably known had been deposited into petitioner's bank accounts during those respective years. Nor did respondent allege in the answer that respondent reduced the amounts of total unreported income that respondent alleged in the answer for petitioner's respective taxable years 1998 and 1999 by any portion of the amounts of unreported income that respondent had determined in the respective notices.

Where a taxpayer has failed to maintain sufficient records under section 6001, as is the case here, the Commissioner of Internal Revenue (Commissioner) may rely on the bank deposits method in order to determine the taxpayer's income. Nicholas v. Commissioner, 70 T.C. 1057, 1064 (1978). Respondent has the burden of proof with respect to the allegations of unreported income that respondent advanced in the answer on the basis of the bank deposits method, see Rule 142(a), and the obligation to check all reasonable leads in order to verify the essential accuracy of the income approximation produced by that method.²⁶

On the record before us, we find that respondent has failed to carry respondent's burden of showing that respondent checked all reasonable leads *118 in order to verify the essential accuracy of the amount of total unreported income for each of petitioner's taxable years 1998 and 1999 that respondent alleged in the answer. In fact, respondent appears to have ignored actual facts of which respondent was aware that affect the essential accuracy of each of those amounts of alleged total unreported income.

With respect to the total deposits that respondent alleged in the answer for petitioner's taxable year 1998, respondent knew that at least certain ($ 10,464) of the nonemployee compensation that petitioner received from GSA during that year, which respondent included as part of the total unreported income determined in the notice for 1998, ²⁷ had been deposited by direct deposit into petitioner's IRFCU checking account. ²⁸ Respondent has not proffered any evidence as to whether the $ 30,296 that respondent excluded from petitioner's total deposits under the 1998 bank deposits analysis included any of the $ 10,464 that GSA had deposited into petitioner's IRFCU checking account during 1998. Nor has respondent proffered any evidence as to whether respondent checked all reasonable leads in order to verify whether any of the remaining unreported *119 income that respondent determined in the notice for 1998 (i.e., the balance of the nonemployee compensation from GSA ($ 33,960), the nonemployee compensation from the District of Columbia ($ 29,415), and the distribution from the National Finance Center Thrift Savings Plan ($ 13,964)), had been deposited into petitioner's bank accounts during that year.

With respect to the total deposits that respondent alleged in the answer for petitioner's taxable year 1999, respondent knew that all ($ 64,944) of the nonemployee compensation that petitioner received from GSA during that year, which respondent included as part of the total unreported income determined in the notice for 1999, had been deposited by direct deposit into petitioner's IRFCU checking account. Respondent has not proffered any evidence as to whether *120 the $ 5,572 that respondent excluded from petitioner's total deposits under the 1999 bank deposits analysis included any of the $ 64,944 that GSA had deposited into petitioner's IRFCU checking account during 1999. Moreover, even if respondent had excluded $ 5,572 of the total amount that GSA had deposited, respondent did not exclude from petitioner's total deposits during 1999 the balance ($ 59,372) that GSA had deposited into petitioner's IRFCU checking account during that year. Nor did respondent reduce the amount of total unreported income that respondent alleged in the answer for petitioner's taxable year 1999 by any portion of the amount of unreported income that respondent determined in the notice for 1999.

On the record before us, we find that respondent has failed to carry respondent's burden of establishing that petitioner has unreported income for his respective taxable years 1998 and 1999 in excess of the amounts determined in the notices. On that record, we further find that respondent has failed to carry respondent's burden of establishing that petitioner has the increases in the deficiencies for his respective taxable years 1998 and 1999 that respondent alleged in the *121 answer.

It is petitioner's position that he is entitled to deduct for his taxable year 1998 the following: (1) Advertising expenses of $ 1,856, (2) vehicle expenses of $ 6,150, (3) insurance premiums of $ 2,394, (4) mortgage interest of $ 11,538, (5) other interest of $ 1,835, (6) office expenses of $ 8,300, (7) repair and maintenance expenses of $ 3,374, (8) expenses for supplies of $ 3,125, (9) taxes and licenses of $ 10,716, (10) utility expenses of $ 1,100, and (11) depreciation of $ 3,601 with respect to (a) the U Street property and (b) certain unidentified vehicles. It is petitioner's position that he is entitled to deduct for his taxable year 1999 depreciation of $ 8,782 with respect to (1) the U Street property and (2) an unidentified vehicle. ^29*122

In support of his position that he is entitled to the Schedule C deductions that he is claiming, petitioner relies on Ms. Johnson's testimony and petitioner's documents. We set forth above our evaluation of that evidence. Petitioner also relies on petitioner's proffered documents, virtually all of which pertain to petitioner's taxable year 1998 (petitioner's 1998 proffered documents). ^30*123 At the trial in this case, respondent objected to the admission of petitioner's proffered documents on the ground that no proper foundation had been laid for the admission of those documents as business records. It is not clear from the record whether Special Trial Judge Powell ruled on that objection. The following discussion assumes arguendo that Special Trial Judge Powell admitted petitioner's proffered documents into evidence and made them part of the record.

We first evaluate petitioner's 1998 proffered documents. Those proffered documents consist of (1) certain checks (petitioner's checks) that petitioner issued to various individuals and establishments, including certain checks that petitioner issued to a pediatrician; (2) certain credit card statements consisting of (a) two statements for a Chase card that show closing dates of June 18 and July 20, 1998, respectively, and (b) two statements for a Visa Gold card that show closing dates of June 19, 1998, and September 11, 1998, respectively; (3) a purported mileage log of petitioner (petitioner's 1998 purported mileage log); (4) duplicates of certain of the IRFCU bank statements and the Chevy Chase bank statements that are included in petitioner's documents that the parties stipulated; (5) certain invoices and billing statements from various establishments (petitioner's invoices and billing statements), including certain statements from a pediatrician; (6) *124 certain receipts consisting of (a) two receipts from Sears dated September 12 and October 21, 1998, respectively, (b) a receipt from Hechinger dated October 17, 1998, and (c) a receipt from the University of the District of Columbia dated May 29, 1998; (7) certain documents relating to certain student loans; (8) certain deposit slips; and (9) a notice dated September 25, 1998, with respect to an unsatisfied parking ticket.

We find that petitioner's 1998 proffered documents are inadequate to establish petitioner's entitlement to any of the Schedule C deductions that he is claiming for his taxable year 1998. By way of illustration of the inadequacies of petitioner's 1998 proffered documents, we do not know the claimed expense(s) to which approximately three-quarters of petitioner's checks pertain. ^31*125 As for the remainder of petitioner's checks, although we have been able to determine the claimed expense(s) to which those checks pertain, we find that those checks do not establish, inter alia, that petitioner paid those expenses in conducting his law practice.

By way of further illustration of the inadequacies of petitioner's 1998 proffered documents, petitioner's credit card statements do not establish the claimed expense(s) to which those statements pertain or whether petitioner is claiming all of the expenses shown in those statements. Moreover, we find that petitioner's credit card statements do not establish, inter alia, that petitioner paid the expenses shown in petitioner's credit card statements in conducting his law practice.

As a further illustration of the inadequacies of petitioner's 1998 proffered documents, petitioner's 1998 purported mileage log ³² consists of four columns with the headings "Date", "From", "To", and "Miles". The entries shown in the columns headed "From" and "To" for the period January 5 through May 10, 1998, consist of various addresses with no further explanation. Virtually all of the entries shown in the columns headed "From" and "To" for the *126 period May 11 through December 29, 1998, consist of terms such as "Home", "Court", "Jail", "Witness", "Client's Home", and "Crime Scene". ³³ Because petitioner was not at the trial in this case, he was not available to explain the entries in petitioner's 1998 purported mileage log. Nor is there reliable evidence in the record to explain (1) any of the entries in petitioner's 1998 purported mileage log and (2) how petitioner used that purported log to calculate the deduction that he claims for vehicle expenses. We find that petitioner's 1998 purported mileage log does not establish, inter alia, that petitioner made the purported trips reflected in that purported log in conducting his law practice.

By way of further illustration of *127 the inadequacies of petitioner's 1998 proffered documents, we find that petitioner's invoices and billing statements do not establish, inter alia, that petitioner paid the amounts shown therein and/or that petitioner paid the amounts shown in those invoices and billing statements in conducting his law practice.

As a final illustration of the inadequacies of petitioner's 1998 proffered documents, neither the receipt from the University of the District of Columbia nor the receipts from Sears indicate the reason petitioner expended the amounts shown in those respective receipts. Although the receipt from Hechinger shows the items ³⁴ that were purchased for the total amount shown in that receipt, we find that it does not establish, inter alia, that petitioner purchased those items in conducting his law practice.

We now address petitioner's argument that he is entitled to the Schedule C deductions that he is claiming for his respective taxable years 1998 and 1999. With respect to the claimed Schedule C deductions for 1998 for advertising expenses, *128 vehicle expenses, insurance premiums, ³⁵ mortgage interest, other interest, ³⁶ office expenses, repair and maintenance expenses, expenses for supplies, taxes and licenses, and utility expenses, we find nothing in the record that satisfies petitioner's burden of showing (1) that during 1998 petitioner paid or incurred those expenses, (2) that he paid or incurred those expenses in conducting his law practice, and/or (3) that those expenses constitute ordinary and necessary business expenses in conducting his law practice under section 162(a). On the record before us, we find that petitioner has failed to carry his burden of establishing that he is entitled for his taxable year 1998 to the respective deductions under section 162(a) that he claims for advertising expenses, vehicle expenses, insurance premiums, mortgage interest, other interest, office expenses, repair and maintenance expenses, expenses for supplies, taxes and licenses, and utility expenses.

With respect to the depreciation deductions *129 that petitioner claims with respect to the U Street property for his respective taxable years 1998 and 1999, the only evidence that petitioner introduced to support those claimed deductions is Ms. Johnson's general and vague testimony that "the depreciation on the home is based on a calculation of a formula based on * * * the amount you purchase the home over a period of time" and that a "good guess" of the purchase price for that property is $ 260,000. On the record before us, we find that petitioner has failed to carry his burden of establishing that he is entitled for his respective taxable years 1998 and 1999 to the depreciation deductions under section 167(a) that he claims with respect to the U Street property.

With respect to the respective depreciation deductions that petitioner claims for his taxable year 1998 with respect to certain unidentified vehicles and the depreciation deduction that he claims for his taxable year 1999 with respect to an unidentified vehicle, on the record before us, we find that petitioner has failed to carry his burden of establishing, inter alia, that he used any vehicle as part of his law practice. See sec. 167(a). On that record, we further find *130 that petitioner has failed to carry his burden of establishing that he is entitled (1) for his taxable year 1998 to the depreciation deduction under section 167(a) that he claims with respect to certain unidentified vehicles and (2) for his taxable year 1999 to the depreciation deduction under that section that he claims with respect to an unidentified vehicle.

Assuming arguendo that we had found that petitioner carried his burden of establishing (1) for his taxable year 1998 the deductibility under section 162(a) of petitioner's claimed expenses pertaining to the U Street property (i.e., petitioner's claimed mortgage interest, petitioner's claimed utility expenses, and petitioner's claimed repair and maintenance expenses) and (2) for his respective taxable years 1998 and 1999 the deductibility under section 167(a) of petitioner's claimed depreciation with respect to that property, he would still have to satisfy the requirements of section 280A(c) with respect to those expense and depreciation deductions. In order to satisfy the requirements of that section, petitioner would have to establish that those expense and depreciation deductions are allocable to a portion of the U Street property *131 that was exclusively used on a regular basis as the principal place of business for his law practice or as a place of business to meet or deal with clients in the normal course of his law practice. See sec. 280A(c).

The parties do not dispute that petitioner resided at the U Street property and that that property consisted of three floors. Petitioner contends that during each of the years at issue he exclusively used on a regular basis the lower two floors of the U Street property as his principal place of business for his law practice or as a place of business to meet or deal with clients in the normal course of his practice. To support petitioner's contention, petitioner relies on Ms. Johnson's testimony. As discussed above, we are unwilling to rely on Ms. Johnson's testimony to the extent that it pertained to matters surrounding petitioner's law practice or any other activities of petitioner during 1998 to the date in August 1999 on which petitioner first employed her.

Assuming arguendo that we were willing to rely on Ms. Johnson's testimony with respect to whether during each of the years at issue petitioner exclusively used on a regular basis the U Street property as his principal *132 place of business for his law practice or as a place of business to meet or deal with clients in the normal course of his practice, we found her testimony to be internally inconsistent. Ms. Johnson testified on direct examination that the top two floors of the U Street property were "completely business". On cross-examination, Ms. Johnson contradicted that testimony and testified that the top floor of the U Street property was "just his residence" and that the lower two floors of that property were used for business purposes.

On the record before us, we find that petitioner has failed to carry his burden of establishing that during each of the years at issue he exclusively used on a regular basis any portion of the U Street property as the principal place of business for his law practice or as a place of business to meet or deal with clients in the normal course of his law practice. See sec. 280A(c).

Assuming arguendo that we had found that petitioner carried his burden of establishing for his taxable year 1998 the deductibility under section 162(a) of petitioner's claimed vehicle expenses, petitioner would still have to satisfy the requirements of section 274(d) with respect to those *133 expenses. On the record before us, we find that he has not done so. See sec. 274(d)(4); sec. 1.274-5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).

Assuming arguendo that we had found that petitioner carried his burden of establishing for his taxable year 1998 the deductibility under section 162(a) of petitioner's claimed office expenses, it appears from Ms. Johnson's testimony that those claimed expenses include certain expenses that pertained to the use of a cellular telephone. ^37*134 To the extent that petitioner is claiming expenses that pertained to the use of a cellular telephone, petitioner would still have to satisfy the requirements of section 274(d). On the record before us, we find that he has not done so. See sec. 274(d)(4); sec. 1.274-5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).

It is respondent's position that petitioner is liable for the respective additions to tax under sections 6651(a)(1) and (2) and 6654(a) that respondent determined in the notices and the increases in those respective additions to tax that respondent alleged in the answer.

Section 6651(a)(1) imposes an addition to tax for failure to file timely a return. Section 6651(a)(2) imposes an addition to tax for failure to pay timely the amount shown as tax in a return. The respective additions to tax under section 6651(a)(1) and (2) do not apply if the respective failures to file timely and to pay timely are due to reasonable cause, and not willful neglect. Sec. 6651(a)(1) and (2). Section 6654(a) imposes an addition to tax in the case of an underpayment of estimated tax by an individual. ^38*135 The addition to tax under that section is mandatory unless petitioner qualifies under one of the exceptions in section 6654(e). ^39*136

Respondent must carry the burden of production with respect to the respective additions to tax under sections 6651(a)(1) and (2) and 6654(a) that respondent determined in the notices and the increases in those respective additions to tax that respondent alleged in the answer. Sec. 7491(c); Higbee v. Comm'r, 116 T.C. 438, 446-447 (2001). To satisfy respondent's burden of production, respondent must come forward with "sufficient evidence indicating that it is appropriate to impose" the additions to tax. Higbee v. Commissioner, supra at 446. Although respondent bears the burden of production with respect to the respective additions to tax under sections 6651(a)(1) and (2) and 6654(a) that respondent determined in the notices, respondent "need not introduce evidence regarding reasonable cause * * * or similar provisions. * * * the taxpayer bears the burden of proof with regard to those issues." Higbee v. Commissioner, supra.*137 Respondent bears the burden of proof with respect to the increases in the respective additions to tax under sections 6651(a)(1) and (2) and 6654(a) for petitioner's taxable years 1998 and 1999 that respondent alleged in the answer. See Rule 142(a).

With respect to the respective additions to tax under sections 6651(a)(1) and (2) and 6654(a) that respondent determined in the notices, we turn first to the addition to tax under section 6651(a)(1). We have found that petitioner did not file a return for each of his taxable years 1998 and 1999. On the record before us, we find that respondent has carried respondent's burden of production under section 7491(c) with respect to the additions to tax under section 6651(a)(1) that respondent determined in the respective notices.

Petitioner relies on Ms. Johnson's testimony to support his position that his failure to file timely was due to reasonable cause, and not willful neglect. Section 1.6081-4, Income Tax Regs., provides that "An individual who is required to file an individual income tax return will be allowed an automatic 4-month extension of time to file the return after the date prescribed for filing the return". After taking the automatic *138 four-month extension into account, the due date for petitioner's return for 1998 would have been August 15, 1999, and the due date for petitioner's return for 1999 would have been August 15, 2000. Ms. Johnson began working for petitioner sometime in August 1999 and continued to work for him until at least through 2004. We believe that Ms. Johnson had personal knowledge about why petitioner failed to file a return for each of his taxable years 1998 and 1999.

Ms. Johnson testified that petitioner did not file a return for each of his taxable years 1998 and 1999 because he (1) did not have all of the information that he needed to file a return for each of those years and (2) was too busy in his law practice. The unavailability of information or records does not necessarily establish reasonable cause for failure to file timely a return. See Elec. & Neon, Inc. v. Commissioner, 56 T.C. 1324, 1342-1343 (1971), affd. without published opinion 496 F.2d 876 (5th Cir. 1974). A taxpayer is required to file timely based upon the best information available and to file thereafter an amended return if necessary. Estate of Vriniotis v. Commissioner, 79 T.C. 298, 311 (1982). Moreover, a taxpayer's preoccupation *139 with employment or other activities does not necessarily establish reasonable cause for failure to timely file a return. Dustin v. Commissioner, 53 T.C. 491, 507 (1969), affd. 467 F.2d 47 (9th Cir. 1972).

On the record before us, we find that petitioner has failed to carry his burden of showing that his failure to file a return for each of his taxable years 1998 and 1999 was due to reasonable cause, and not willful neglect. On that record, we further find that petitioner has failed to carry his burden of establishing that he is not liable for the additions to tax under section 6651(a)(1) that respondent determined in the respective notices.

We turn now to the additions to tax under section 6651(a)(2) that respondent determined in the respective notices. That section applies only in the case of an amount of tax shown in a return. Cabirac v. Comm'r, 120 T.C. 163, 170 (2003). For purposes of section 6651(a)(2), a return prepared by the Commissioner under section 6020(b) is treated as the return filed by the taxpayer. Sec. 6651(g)(2); Cabirac v. Commissioner, supra.Because petitioner did not file a return for each of his taxable years 1998 and 1999, respondent prepared a substitute *140 for return under section 6020(b) for each of those years. The substitute for return for 1998 showed total tax of $ 30,228.40. The substitute for return for 1999 showed total tax of $ 20,760. The record establishes that petitioner failed to pay timely the tax shown in each of those substitutes for return. On the record before us, we find that respondent has carried respondent's burden of production under section 7491(c) with respect to the additions to tax under section 6651(a)(2) that respondent determined in the respective notices.

It appears that petitioner is claiming that he failed to pay timely the tax shown in the substitute for return for 1998 and the tax shown in the substitute for return for 1999 for the same reasons that petitioner failed to file timely a return for each of those years, that is to say, he (1) did not have all of the requisite information and (2) was too busy in his law practice. On the record before us, we find that petitioner has failed to carry his burden of showing that his failure to pay timely the tax shown in the substitute for return for 1998 and the tax shown in the substitute for return for 1999 was due to reasonable cause, and not willful neglect. *141 ⁴⁰ On that record, we further find that petitioner has failed to carry his burden of establishing that he is not liable for the additions to tax under section 6651(a)(2) that respondent determined in the respective notices.

We turn finally to the additions to tax under section 6654(a) that respondent determined in the respective notices. We have found (1) that petitioner filed a return for his taxable year 1997 that showed tax due of $ 20,084 and that the IRS accepted as filed, (2) that petitioner did not file a return for each of his taxable years 1998 and 1999, and (3) that petitioner did not make any estimated tax payments for either of his taxable years 1998 or 1999. On the record before us, we find that respondent has carried respondent's burden of production under section 7491(c) with respect to the additions to tax under section 6654(a) that respondent determined in the respective notices.

With respect to the additions to tax under section 6654(a) that respondent determined in the respective notices, petitioner does not argue, and the record does not establish, that he qualifies under *142 any of the exceptions listed in section 6654(e). On the record before us, we find that petitioner is liable for the additions to tax under section 6654(a) that respondent determined in the respective notices.

With respect to the increases in the additions to tax under sections 6651(a)(1) and (2) and 6654(a) for petitioner's respective taxable years 1998 and 1999 that respondent alleged in the answer, we have found that respondent has failed to carry respondent's burden of establishing that petitioner has the increases in the deficiencies for his respective taxable years 1998 and 1999 that respondent alleged in the answer. On the record before us, we find that respondent has failed to carry respondent's burden of establishing that petitioner is liable for his respective taxable years 1998 and 1999 for the increases in the additions to tax under sections 6651(a)(1) and (2) and 6654(a) that respondent alleged in the answer.

We have considered all of the contentions and arguments of petitioner that are not discussed herein, and we find them to be without merit, irrelevant, and/or moot.

To reflect the foregoing,

Decision will be entered for respondent with respect to the deficiencies and additions *143 to tax determined in the notices and for petitioner with respect to the increases in those deficiencies and those additions to tax alleged in the answer.