- 35 -
liability.” Id. The taxpayer bears the burden of proving that
he falls within this exception. Higbee v. Commissioner, supra at
447.
Sparkman claims he had reasonable cause for claiming the HEH
losses because of ongoing litigation in Hvidding v. Commissioner,
T.C. Memo. 2003-151, and Richter v. Commissioner, T.C. Memo. 2002-
90, concerning “this same issue”. These cases involved HEH
customers’ right to claim energy credits; these cases do not
provide reasonable cause for Sparkman’s failure to substantiate
his claimed HEH losses.
Sparkman claims he had reasonable cause for failing to report
a portion of the HECO payments because the Form 1099 was never
received and (somewhat inconsistently) because he reasonably
believed that HEH had reported the balance of the HECO income not
reported by Mercury Solar PTO. We have found, as petitioners
stipulated, that HECO issued a Form 1099 to Mercury Solar PTO for
all the payments in question. The evidence does not establish
that HEH reported, or should have reported, the disputed HECO
payments or that petitioner (who prepared the HEH returns)
reasonably believed otherwise; more fundamentally, the evidence
does not establish that Sparkman had reasonable cause to believe
that the HECO payments were properly considered as income to
anyone other than himself. We hold that Sparkman is liable for
section 6662(a) accuracy-related penalties for all years at issue.
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