Fortunato J. Mendes v. Commissioner of Internal Revenue 121 T.C. 308 (t.C. 2003)
Mendes v. Commissioner T.C. No. 16032-95.
This Tax Court case concerns tax deficiencies and additions to tax for the 1988 taxable year. The IRS denies that Fortunato J. Mendes (Mendes) is entitled to any claimed deduction and dependency exemptions.
In 1995, the IRS noticed a deficiency in Mendes’ tax returns from 1988 which Mendes did not file until 1997. The Court finds that petitioner lacked reasonable cause for his failure to timely file the 1988 return, it follows that his underpayment was due to negligence as he was incarcerated at the time for a murder he committed.
Because this tax report was filed over 2 years after a notice was issued to the petitioner, he essentially waived his right to the escape from any possible liabilities and thus prohibited from using this amended tax return to calculate the penalty.
The Court sustains respondent’s inclusion of $40,347 in petitioner’s gross income for the audit year, and hold that
petitioner is not entitled to a deduction for loss of the IBM sale proceeds of $27,573 as an offset to that income inclusion. The Court further sustains respondent’s determination under section 6654, in which the petitioner is responsible for the addition to tax pursuant.
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