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Petitioner also claimed dependency deductions for his two
children, but he was unable to show that he paid over one-half of
their support for the 2002 year or that he was otherwise entitled
to claim them as his dependents. Finally, petitioner claimed
meals and entertainment expenses, but he was unable to identify
the names of the clients and other essential information required
for the allowance of a deduction under section 274(d).
Although petitioner may have incurred additional expenses in
the conduct of his real estate business, the record is
insufficient to enable the Court to allow any deductions beyond
those we have decided.
Respondent determined that petitioner was liable for
additions to tax under section 6651(a)(1) and (2), and section
6654(a). Section 6651(a) provides for an addition to tax of 5
percent per month, up to 25 percent, for failure to file that is
not due to reasonable cause. Petitioner has not shown reasonable
cause for failing to file a return. See Bebb v. Commissioner, 36
T.C. 170, 173 (1961). Petitioner’s reason for not filing or
paying the tax was that he could not afford to pay. Section
6654(a) imposes an addition to tax for failure to pay estimated
tax. That addition to tax is mandatory, unless a taxpayer falls
within one of the exceptions in section 6654(e). Petitioner has
not shown that his situation falls within those exceptions.
With respect to the additions to tax, respondent bears a
burden of production. See sec. 7491(c). The record in this
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Last modified: November 10, 2007