Lance A. Landers - Page 7

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          personal injury client.                                                     
               Other than his own testimony, petitioner presented no                  
          evidence that the $35,789 received from Mr. Tolpin for                      
          petitioner’s percentage of the legal fees recovered was for                 
          “goodwill” and therefore entitled to capital gains treatment.               
          This was merely a fee-splitting arrangement between two                     
              On this record, we find that petitioner mischaracterized the           
          $35,789 as capital gains on his return.  We conclude that the               
          $35,789 received by petitioner was ordinary income subject to               
          self-employment tax.  Accordingly, we sustain respondent’s                  
          determination on this issue.                                                
               Section 6651(a)(1) imposes an addition to tax for failure to           
          timely file a tax return, unless failure to do so is due to                 
          reasonable cause and not willful neglect.  The taxpayer must                
          prove both reasonable cause and lack of willful neglect.  Crocker           
          v. Commissioner, 92 T.C. 899, 912 (1989).  “Reasonable cause”               
          requires the taxpayer to demonstrate that he exercised ordinary             
          business care and prudence.  United States v. Boyle, 469 U.S.               
          241, 246 (1985).  Willful neglect is defined as a “conscious,               
          intentional failure or reckless indifference.”  Id. at 245.                 
               Because petitioner stipulated that he filed his 1998 tax               
          return on October 15, 2002, respondent has met his burden of                
          production with respect to the addition to tax under section                

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