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Petitioner failed to provide evidence indicating that Temps
to Go existed as an active trade or business in 2003. While
petitioner may have intended to create a greeting card business,
petitioner’s evidence indicates that her activities during 2003
were related to an attempt to start a business. Thus, for the
same reasons that we upheld respondent’s disallowance of
petitioner’s Schedule C expenses for 2002, we sustain
respondent’s disallowance of petitioner’s 2003 Schedule C
deductions as determined in the notice of deficiency.9
Sec. 6651(a)(1) Addition to Tax
Section 6651(a)(1) imposes an addition to tax for failure to
file a timely return. The addition equals 5 percent of the
amount required to be shown on the return for each month or
fraction thereof that the return is late, not to exceed 25
percent. Sec. 6651(a)(1).
Respondent bears the burden of production with respect to
the addition to tax. Sec. 7491(c); Higbee v. Commissioner, 116
T.C. 438, 446-447 (2001). To meet his burden of production,
respondent must come forward with sufficient evidence indicating
it is appropriate to impose the addition to tax. See Higbee v.
Commissioner, supra. Once respondent meets his burden of
production, petitioner bears the burden of proving he is not
9 As in 2002, many of petitioner’s claimed expenses in 2003
appear to be personal in nature. Many other claimed expenses
lack the required substantiation.
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Last modified: March 27, 2008