in for profit within the meaning of section 183 and had economic substance. We find, however, that the nonrecourse note is too speculative to be included in the basis of the software. See Estate of Baron v. Commissioner, 83 T.C. 542, 549 (1984), affd. 798 F.2d 65 (2d Cir. 1986). In Baron, we found a nonrecourse note too contingent where "the rights had no value apart from the income stream which might be generated ** and the *** stream was totally dependent upon public acceptance." Similarly, HSL's income stream from the distribution of the software, for purposes of paying off the large nonrecourse note, was almost totally dependent upon the implementation of the Peat Marwick recommendations and upon the nursing home industry's interest in such a package. We conclude, therefore, that possible profits from the software's commercial success or lack thereof in a narrow market is insufficient to support the nonrecourse note, and no portion of the $3,244,050 nonrecourse note can be included in basis.9 5. Section 6621(c) Finally, we address the issue of whether petitioner and Shumway are liable for additional interest under section 6621(c). Tax Reform Act of 1986 (formerly sec. 6621(d)). Section 6621(c) provides for an increase in the interest rate if there is a substanțial underpayment of at least $1,000 in any taxable year "attributable to one or more tax motivated transactions." Sec. 6621(c)(1) and (2). The additional interest applies to tax-motivated transactions, including "any valuation overstatement" within the meaning of section 6659(c). Sec. 6621(c)(3)(A)(i). Pursuant to section 6659(c), a valuation overstatement exists if the value of the property, or the adjusted basis of the property, claimed on a return "is 150 percent or more of the amount determined to be the correct amount of such valuation or adjusted basis (as the case may be)." On their respective returns, petitioner and Shumway each advanced a value of $3,759,500 for an asset which we have determined to be valued at $515,450 for depreciation "It is therefore not necessary for us to consider either petitioner's or respondent's expert witnesses' appraisals for purposes of valuing the computer software package. purposes. This is more than a 150-percent valuation overstatement. Respondent is entitled to impose a greater interest rate on the interest which accrued after December 31, 1984, on that part of the deficiencies attributable to tax-motivated transactions. Sec. 6621(c). See, e.g., Zirker v. Commissioner, 87 T.C. 970, 981 (1986). 6. IMTI Business Expenses This particular issue is unique to petitioner Ronnen, and involves a Schedule C business deduction of a net operating loss on her 1978 income tax return attributable to IMTI in the amount of $36,238. The sole issue is whether petitioner may deduct the net loss of $36,238 against other income. Petitioner has the burden of proof as as to both the deductibility and substantiation of her claimed business expenses. Welch v. Helvering, 290 U.S. 111, 115 (1933); Rule 142(a), Tax Court Rules of Practice and Procedure. Based on the lack of evidence to support petitioner's deductions, we find that she has failed to carry her burden of proof with respect to all claimed IMTI expenses. Petitioner acknowledges that she is unable to secure any related business documentation or records of her expenses but urges us, nevertheless, to find for her based on Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930). In Cohan, the Court of Appeals found as a fact that the taxpayer had paid certain travel and entertainment expenses and allowed him to take certain deductions even though he could not substantiate them. The court, in commenting on this absence of proof, noted: Absolute certainty in such matters is usually impossible and is not necessary; the Board should make as close an approximation as it can, bearing heavily if it chooses upon the taxpayer whose inexactitude is of his own making. But to allow nothing at all appears to us inconsistent with saying that something was spent. [39 F.2d at 543-544.] In the instant case, we are unable to find as a fact that petitioner paid any of the business or travel and entertainment expenses that she claims are related to IMTI. Petitioner introduced no evidence, either documentary or by testimony, that would support her stance. The only item offered in support of her deductions is a memorandum which contains a list of claimed expenditures dated April 19, 1978, totaling $10,867.03. This document, however, is merely self-serving and provides no tangible evidence of incurred expenses. Moreover, Schacht's testimony on petitioner's behalf provided no additional support of petitioner's claims. We decline, therefore, to apply the Cohan rule on this record. See Stemkowski v. Commissioner, 82 T.C. 854, 867 (1984); Epp v. Commissioner, 78 T.C. 801, 807 (1982). Decisions will be entered under Rule 155. HAROLD A. ABELES AND BARBARA ABELES, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 4433-83. Filed January 21, 1988. Respondent sent a joint notice of deficiency to H and W. H did, but W did not, receive the notice. H filed a petition and an amended petition forging W's signature. Decision was entered against H and W. After the decision became final, W moved to vacate the decision as it related to W. Held, the decision will be vacated as it relates to W because the decision was entered when the Court lacked jurisdiction over W. Brannon's of Shawnee, Inc. v. Commissioner, 69 T.C. 999 (1978), followed. William Weintraub, for the petitioner Barbara Abeles. OPINION FAY, Judge: Respondent determined deficiencies in petitioners' Federal income tax for the 1975 and 1977 taxable years in the amounts of $48,591 and $29,844, respectively. On February 12, 1985, this Court dismissed this case for lack of prosecution and entered deficiencies against petitioners. This matter is before the Court on petitioner Barbara Abeles' motion to vacate and motion to dismiss for lack of jurisdiction. The issues are whether the Court had jurisdiction over petitioner Barbara Abeles when it entered the February 12, 1985, decision, and whether the Court has jurisdiction to entertain the motion to dismiss for lack of jurisdiction. Petitioners resided in California at all relevant times. Petitioner Barbara Abeles (Mrs. Abeles) is an artist's representative. Petitioner Harold A. Abeles (Mr. Abeles) has a law degree and a graduate tax law degree. Though Mr. Abeles began his 33-year law practice as a tax attorney, the majority of his law practice has been in fields not directly related to taxation. As a result of illness which adversely affected his memory, Mr. Abeles terminated his law practice in the mid-1980's. At the time of the hearing, he was organizing a money market fund. Mr. and Mrs. Abeles were married in 1972 and divorced in 1982 or 1983. For the taxable years at issue, 1975 and 1977, Mr. and Mrs. Abeles filed joint Federal income tax returns claiming deductions from a truck tax shelter. On November 30, 1982, respondent sent the notice of deficiency upon which this case is based to Mr. and Mrs. Abeles. The notice of deficiency disallowed the truck tax shelter deductions. Mr. Abeles did, but Mrs. Abeles did not, receive the notice of deficiency. In response to the notice of deficiency, Mr. Abeles filed a petition with this Court instituting the present case. The caption of the petition is in Mr. and Mrs. Abeles' name, but the petition is signed only in Mr. Abeles' name and the body of the petition designates only Mr. Abeles as "petitioner." The petition alleges that the necessary records are in the Government's possession and does not specifically allege any errors in respondent's determination of deficiencies. On April 28, 1983, the Court, in response to respondent's motion to dismiss for lack of jurisdiction, issued an order allowing Mrs. Abeles to file an amended petition to become a party to this case. On May 23, 1983, Mr. Abeles filed an amended petition which stated that Mrs. Abeles read the original petition and that she ratifies and affirms the action of Mr. Abeles in filing the petition on her behalf. The amended petition contains a signature line for Mrs. Abeles on which Mr. Abeles signed Mrs. Abeles' name.2 'Mr. and Mrs. Abeles' 1976 taxable year is the subject of the case in docket No. 1372-81. 2John J. Harris, a thoroughly qualified questioned signature examiner, opined in a written statement submitted to the Court that the signature appearing on the amended petition was not that of Mrs. Abeles. Mr. Abeles, unable to obtain the documentation necessary to substantiate the claimed truck tax shelter deductions, agreed to a cash out-of-pocket settlement. As a result of Mr. Abeles' illness, Mr. Abeles did not effectuate the settlement by executing a decision document. On February 12, 1985, pursuant to respondent's oral motion of January 8, 1985, the Court dismissed this case for lack of prosecution by petitioners and entered a decision of reduced deficiencies reflecting the cash out-of-pocket settlement; $24,008 for 1975 and $23,809 for 1977. During Mr. and Mrs. Abeles' marriage, Mrs. Abeles relinquished all authority to Mr. Abeles with respect to their tax and financial matters. Mrs. Abeles was not even aware of whether Federal income tax returns were filed on her behalf for the years at issue. Neither Mrs. Abeles nor her divorce counsel asked Mr. Abeles about tax matters. Around the time the notice of deficiency was mailed and the petition and amended petition were filed, Mr. and Mrs. Abeles were in the process of divorce. Mr. Abeles did not inform Mrs. Abeles of the notice of deficiency, the petition, or the amended petition. Mrs. Abeles was not even aware of the tax dispute arising from the 1975 and 1977 taxable years until her bank accounts were levied and a lien was placed on her residence. Mr. Abeles chose not to inform Mrs. Abeles of these events for several reasons. First, Mr. Abeles believed that he could obtain the necessary documentation to substantiate the truck tax shelter deductions. Second, even if the deductions could not be substantiated, he intended to pay any resulting deficiency. Third, he was concerned that if Mrs. Abeles became upset about the tax dispute, he would not be allowed to continue to visit freely with their child. We will first consider Mrs. Abeles' motion to vacate. A decision of this Court becomes final, in the absence of a timely filed notice of appeal, 90 days after it is entered. Sec. 7481;3 sec. 7483. This Court has jurisdiction to vacate a decision that has become final where, inter alia, the Court lacked jurisdiction when the decision was entered. Bran "Unless otherwise indicated, all section references are to the Internal Revenue Code of 1954 as amended and in effect during the taxable years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. |