T.C. Memo. 2019-98 UNITED STATES TAX COURT KENT ALAN WEGENER AND SHINAE WEGENER, Petitioners1 v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 26163-16. Filed August 6, 2019. Kent Alan Wegener, pro se. Brian A. Pfeifer and Sharyn M. Ortega, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION GOEKE, Judge: Respondent determined income tax deficiencies against Kent Alan Wegener (petitioner) and his wife Shinae Wegener for 2011, 2012, and 2013 (years at issue) of $170,953, $98,573, and $21,108, respectively, additions to 1 On September 14, 2018, respondent moved to dismiss Shinae Wegener as a petitioner for failure to prosecute. We granted respondent’s motion. -2- [*2] tax for failure to file a timely return under section 6651(a)(1) for 2011 and 2012 of $24,383 and $18,968, respectively, and accuracy-related penalties under section 6662(a) for 2011, 2012, and 2013 of $34,191, $19,715, and $4,222, respectively.2 Respondent disallowed business expense deductions claimed on Schedule C, Profit or Loss From Business, for each year at issue on the basis that the expenses were not ordinary and necessary business expenses and, alternatively, petitioner did not substantiate the amounts or payment of the expenses. Following concessions the issues remaining for decision are: (1) whether petitioner is entitled to the disallowed business expense deductions; we hold he is not; and (2) whether petitioner is liable for additions to tax for failure to timely file for 2011 and 2012; we hold he is.3 FINDINGS OF FACT When petitioner timely filed the petition, he resided in California. The record consists of a stipulation of facts, accompanying exhibits, and trial 2 Unless otherwise indicated, all section references are to the Internal Revenue Code (Code) as amended and in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure. All amounts are rounded to the nearest dollar. 3 Respondent conceded the sec. 6662(a) penalties for 2011, 2012, and 2013. Petitioner conceded that he received and failed to report $23,026 of cancellation of indebtedness income in 2013. -3- [*3] testimony. Petitioner has a master of business administration degree and has worked in corporate finance for over three decades. He began his career at General Electric, where he worked for 18 years and assisted with a number of international finance projects. After leaving General Electric he worked in corporate finance for several other companies including Otis Spunkmeyer (Otis), where he served for 14 years as a vice president of finance. During the years at issue he worked for Otis, receiving an annual salary of over $200,000, and lived in California. Petitioner and his wife filed joint returns for the years at issue and claimed net loss deductions attributable to Schedule C activities for “Kent’s Cocoa llc” (Kent’s Cocoa). Despite the name petitioner did not organize a limited liability company. For each year at issue petitioner reported that Kent’s Cocoa had no gross receipts and claimed business expense deductions that are the primary subject of this dispute. Petitioner filed one Schedule C for each year at issue ...
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