Engen Robert Nurumbi, 2021 T. C. Memo. 79, filed 6/30/21, showed a real entrepreneurial spirit; he signed on with Uber, got the IT hook-ups, and subcontracted the driving to friends and relations, using a couple cars (hi, Judge Holmes) registered to him and stored at his residence. Uber gave Engen a 1099-K for $546K, which didn’t make it onto Engen’s late-filed 1040.

Engen had set up an LLC, but he never filed Form 8832, Entity Classification Election, or filed Form 1065 and K-1s. So The LLC is disregarded, and the money belongs to Engen. Engen paid his drivers with checks and cash, but has no records, so he gets no greater allowance than IRS allows for wages to his driver-employees.

Engen tries to reopen the record to put in more evidence post-trial, but Judge Pugh won’t have it.

“The character of the evidence petitioner attached to his motion is that of hearsay and impermissible summary. See Fed . R. Evid. 802, 1006. He offers it to prove facts that were foreseeably at issue at trial, namely the substantiation of business expenses and how he organized his Uber driving operation. And to the extent petitioner does not use it to prove relevant facts, he uses it to impeach the credibility of the revenue agent who testified at trial. Petitioner cites his medical history as reason for failure to produce evidence at trial, and respondent does not object to certain medical history documents petitioner attached to his motion. We are sympathetic to petitioner’s health issues, but to the extent the documents discuss petitioner’s health, they cover periods…before respondent issued the notice of deficiency and well before the trial in this case. And petitioner understood the issues to be addressed at trial, even bringing a supporting witness to testify. Finally, and most importantly, respondent could not examine this evidence at or before trial. In his response to petitioner’s motion, respondent lists relevant questions he would have asked on cross-examination had he been given the opportunity; the effect of granting petitioner’s motion would be to deny respondent that opportunity.” 2021 T. C. Memo. 79, at p. 10.

Engen flunks the Section 274 strict substantiation for his vehicles, even though he’s transporting unrelated persons and property for hire; See Section 280F(d)(4)(c). Except Engen’s vehicles are “SUVs or passenger trucks.” 2021 T. C. Memo. 79, at p. 17. I’m not sure what a “passenger truck” is. Howbeit, since such can be used for personal, rather than business purposes, and as Engen has no reliable records as to what was, or was not, business, vehicle deductions are out. He never documented his deals with his drivers as to what was permissible use of his vehicles.

But as Engen was a year late with his return, he does get a late-filing add-on.

“Petitioner argues that we should apply the reasonable cause exception because he believed he had already timely filed a …Form 1040 before filing the late-filed return. Whether a taxpayer has ‘reasonable cause’ within the meaning of section 6651(a)(1) depends on whether the taxpayer ‘exercised “ordinary business care and prudence” but nevertheless was “unable to file the return within the prescribed time.’ Petitioner’s mistaken belief that he had already filed a return within the prescribed time does not constitute reasonable cause.” 2021 T. C. Memo. 79, at pp. 19-20. (Citations omitted). And sincerity of the mistaken belief doesn’t count.

Uber and out.