F I L E D
                                                                           United States Court of Appeals
                                                                                   Tenth Circuit
                       UNITED STATES COURT OF APPEALS
                                                                                   MAR 1 2000
                              FOR THE TENTH CIRCUIT
                                                                             PATRICK FISHER
                                                                                        Clerk

    JOHN PAUL MASSA,

                 Petitioner-Appellant,

    v.                                                        No. 99-9022
                                                        (Tax Court No. 12472-97)
    COMMISSIONER OF INTERNAL                              (Petition for Review)
    REVENUE,

                 Respondent-Appellee.


                               ORDER AND JUDGMENT              *




Before TACHA , ANDERSON , and LUCERO , Circuit Judges.



         This petition for review concerns petitioner’s 1992 tax return.      1
                                                                                  The

Commissioner of Internal Revenue (Commissioner) determined a deficiency of

$5,115 in petitioner’s 1992 tax return and assessed an addition to tax of $1,279

because the return was not timely filed. The deficiency resulted because the

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
1
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Commissioner disallowed certain trade or business deductions and medical

expense deductions that petitioner claimed to offset his gross income. Petitioner

requested a redetermination of the deficiency, and the Tax Court found that

petitioner was not entitled to the claimed deductions and upheld the additions to

tax for failing to file a timely tax return. We affirm.

       Petitioner argues that the Tax Court erred in upholding the Commissioner’s

disallowance of his 1992 claimed deduction under 26 U.S.C. § 162(a). Petitioner

argues that he incurred ordinary and necessary expenses in carrying on a trade or

business in connection with his attempts to sell Melaleuca products in the former

Soviet Union. The Tax Court found that petitioner was not carrying on a trade or

business during 1992, but rather, was only investigating potential trade

opportunities. As support for the ultimate finding, the Tax Court pointed to the

lack of evidence that petitioner’s communications with and travel to Russia

resulted in any completed business transactions. On review, “we must apply the

statutory standard of [26 U.S.C.] § 162 to determine whether taxpayer[] . . .

incurred expenses ‘during the taxable year in carrying on any trade or business.’”

Jackson v. Commissioner , 

, 1524 (10th Cir. 1989). This is a mixed

question of law and fact.   See 

review the Tax Court’s

factual findings and the inferences drawn therefrom for clear error, and we review

de novo the application of the law to the facts.   See 

though a taxpayer has made a firm decision to enter
      into business and over a considerable period of time spent money in
      preparation for entering that business, he still has not engaged in
      carrying on any trade or business within the intendment of section
      162(a) until such time as the business has begun to function as a
      going concern and performed those activities for which it was
      organized.

(further quotation omitted). Carrying on a trade or business for

purposes of § 162(a) refers to “extensive activity over a substantial period of time

during which the [t]axpayer holds himself out as selling goods or services.”

Snyder v. United States , 

, 1364 (10th Cir. 1982) (further quotation

omitted). Based on this standard, the record supports the Tax Court’s findings.

Not only is there no evidence that the business had begun to function as a going

concern or performed sales activities, the record shows that petitioner had not

even made a firm decision to enter into any business in the former Soviet Union.

The evidence indicates that petitioner investigated potential trade and sales

opportunities but did not carry on a trade or business in 1992.

      Petitioner also argues that pursuant to 26 U.S.C. § 213(a), he was entitled

to deduct the expense of a special diet required to accommodate his medical

condition. The Tax Court upheld the Commissioner’s disallowance of the

deduction of $2,696 because petitioner failed to establish that his special diet was

something other than a substitute for a normal diet, nor did he establish the

amount by which his actual food expenditures exceeded the cost of a normal diet.


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       The cost of a special diet may be deductible under § 213(a) if petitioner

shows both that the diet is medically necessary and the amount by which the cost

of the special diet exceeds the cost of a normal diet.   See Huff v. Commissioner ,

T.C.M. 1995-200 (1995);      Nehus v. Commissioner , T.C.M. 1994-631 (1994),        aff’d,

No. 95-70566, 1997 WL75572, at **1 (9th Cir. Feb. 18, 1997) (unpublished).

We agree with the Tax Court that petitioner is not entitled to the deduction

because he did not establish the amount by which his special diet exceeded the

cost of a normal diet.

       Finally, petitioner maintains that he should not be held liable for the

addition to tax assessed pursuant to 26 U.S.C. § 6651(a)(1) for failing to timely

file his 1992 tax return. The statute provides that the addition to tax should not

be imposed if the failure to timely file “is due to reasonable cause and not due to

willful neglect.” 26 U.S.C. § 6651(a)(1). It is petitioner’s burden to show

reasonable cause.    See United States v. Craddock (In re Craddock)    , 

, 1254-55 (10th Cir. 1998). “Reasonable cause exists if the taxpayer

exercised ordinary business care and prudence and was nevertheless unable to file

the return within the prescribed time.”     

(further quotation omitted).

Petitioner testified that he believed he was not required to file a tax return in 1992

because his gross income fell below the threshold amount indicated in 26 U.S.C.

6012(a)(1)(A)(i). In calculating his gross income, petitioner mistakenly believed


                                             -4-
that his claimed Schedule C business expense deductions and his alleged net

operating carryover losses from 1990 and 1991 reduced his 1992 reported gross

income below the threshold level for filing a return. The Tax Court found that, in

light of the fact that petitioner is a certified public accountant, his failure to

understand the term “gross income” was not reasonable cause for his untimely

filing.

          This is a mixed question of law and fact; we review the Tax Court’s factual

findings for clear error and its legal conclusions   de novo . See In re Craddock ,

149 F.3d at 1255. The Tax Court did not err in finding that petitioner did not

show reasonable cause for his untimely filing. AFFIRMED. The mandate shall

issue forthwith.

                                           ENTERED FOR THE COURT



                                           Carlos F. Lucero
                                           Circuit Judge




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