UNITED STATES TAX COURT



           EDWARD R. AREVALO, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 13272-04.               Filed May 18, 2005.



     P entered into a contract with American
Telecommunications Co., Inc. (ATC). Under the terms of
the contract, P paid $10,000 to ATC and ATC provided P
with legal title to two pay telephones (pay phones). P
also entered into a service agreement with Alpha
Telcom, Inc. (Alpha Telcom), the parent company of ATC,
under which Alpha Telcom serviced the pay phones and
retained most of the profits.

     1. Held: Because P did not have the benefits and
burdens of ownership with respect to the pay phones, P
did not have a depreciable interest in the pay phones.
Therefore, P is not entitled to claim a deduction for
depreciation with respect to the pay phones in 2001.

     2. Held, further, because P’s pay phone
activities did not obligate him to comply with the
requirements set forth in either title III or title IV
of the Americans with Disabilities Act of 1990, Pub. L.
101-336, 104 Stat. 353, 366, P’s $10,000 investment in
                               - 2 -

     the pay phones is not an eligible access expenditure.
     Therefore, P is not entitled to claim the disabled
     access credit under sec. 44, I.R.C., for his investment
     in the pay phones in 2001.



     Edward R. Arevalo, pro se.

     Catherine S. Tyson, for respondent.



                              OPINION


     COHEN, Judge:   Respondent determined a deficiency of $1,999

in petitioner’s Federal income tax for 2001 that was attributable

to respondent’s disallowance of depreciation deductions and tax

credits claimed by petitioner with respect to two public pay

telephones (pay phones).   In an amendment to answer, respondent

asserted an increased deficiency of $30,247 and a penalty of

$6,049 under section 6662 as a result of petitioner’s failure to

report income from dividends and stock sales.   After concessions

by the parties, the issues for decision are:

     (1) Whether petitioner is entitled to claim a deduction for

depreciation under section 167 with respect to the pay phones in

2001 and

     (2) whether petitioner is entitled to claim a tax credit

under section 44 for his investment in the pay phones in 2001.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue, and
                                - 3 -

all Rule references are to the Tax Court Rules of Practice and Procedure.

                              Background

     This case was submitted on a stipulation of facts and

supplemental stipulation of facts, and the stipulated facts are

incorporated in our findings by this reference.    Petitioner

resided in Austin, Texas, at the time that he filed his petition.

Petitioner’s Investment in the Pay Phones

     On June 7, 2001, petitioner entered into a contract with

American Telecommunications Co., Inc. (ATC), a wholly owned

subsidiary of Alpha Telcom, Inc. (Alpha Telcom), entitled

“Telephone Equipment Purchase Agreement” (ATC pay phone

agreement).   Under the terms of the ATC pay phone agreement,

petitioner paid $10,000 to ATC, and ATC provided him with legal

title to the “telephone equipment” that was purportedly described

in an attachment to the ATC pay phone agreement entitled

“Telephone Equipment List”.    The attachment, however, did not

identify any pay phones subject to the agreement.    The ATC pay

phone agreement also included the following provision:

     1.   Bill of Sale and Delivery

     a.   Delivery by Seller shall be considered complete
     upon delivery of the Equipment to such place(s) as are
     designated by Owner.

     b.   Owner agrees to take delivery of Equipment within
     (15) fifteen business days. If Seller has not
     delivered the equipment within (90) ninety days, Owner
                              - 4 -

     may terminate this Agreement upon Seller’s receipt of
     signed notice from Purchaser.

     c.   Upon delivery, Owner shall acquire all rights,
     title and interest in and to the Equipment purchased.

     Exhibit E, “Buy Back Election”, to the ATC pay phone

agreement stated:

     1.0 Buy Back Election: Should Owner elect to sell any
     telephone equipment, itemized in Exhibit “A”, American
     Telecommunications Company, Inc., (hereinafter
     “Seller”), agrees to buy back such equipment from
     Owner, according to the following terms and conditions:
     1) If exercise of the buy back election occurs in the
     first thirty-six months after the equipment delivery
     date, the re-sale price shall be the Owner’s original
     purchase price of $5,000.00, minus a “restocking fee”
     of (10%) ten percent of the purchase price; 2) If the
     buy-back election is made more than (36) thirty-six
     months after the equipment delivery date, the sale
     price shall be the Owner’s original purchase price of
     $5,000.00, and there shall be no “restocking fee” for
     Purchaser’s election to re-sell the equipment purchased
     back to Seller. This “Buy Back Election” shall expire
     on the (84th) eighty-fourth month anniversary of
     Owner’s equipment delivery date. 3) Seller, or its
     designee, reserves the right of first refusal as to the
     telephone equipment. If Owner enters into an agreement
     to sell the telephone equipment to any third party,
     Seller, or its designee, shall have thirty (30) days to
     match any legitimate offer to purchase said equipment
     received by Owner.

Exhibit E further stated:

     4.0 Maintenance Requirements For Buy Back Provision:
     If Purchaser elects to require Seller to re-purchase
     the Pay Telephone Equipment, Purchaser must establish
     to Seller’s satisfaction that all repairs and
     maintenance, as set forth in Exhibit “B”, have been
     performed as required. This means that the regular
     maintenance “recommended” in Exhibit “B” is mandatory.
     Purchaser will establish that regular maintenance and
     repairs have been performed on the Equipment by
     maintaining a logbook. The logbook must set forth the
     dates and times maintenance and repairs were made to
                                 - 5 -

     the Equipment, who performed the repairs and
     maintenance, and by retaining receipts and cancelled
     checks for all parts, service, and repairs made to the
     Equipment. Purchaser will be required to surrender, to
     Seller, the logbook and all other proof establishing
     that required maintenance and repairs were performed.
     Purchaser must also establish to Seller’s satisfaction
     the person(s) who performed the repairs and maintenance
     were qualified to do so.

     Exhibit B to the ATC pay phone agreement set forth a

recommended schedule of weekly maintenance work to be performed

on the pay phones by petitioner.    Exhibit C to the ATC pay phone

agreement included a list of service providers available to

maintain the pay phones should petitioner not want to service the

phones himself.   Petitioner also had the option to enter into a

service agreement with Alpha Telcom (Alpha Telcom service

agreement) if he did not want to be involved in the day-to-day

maintenance of the pay phones.

     Under the terms of the Alpha Telcom service agreement, Alpha

Telcom agreed to service and maintain the pay phones for an

initial term of 3 years in exchange for 70 percent of the pay

phones’ monthly adjusted gross revenue and all “dial around fees”

generated by the pay phones.   In the event that a pay phone’s

adjusted gross revenue was less than $194.50 for the month, Alpha

Telcom would waive or reduce the 70-percent fee and pay

petitioner at least $58.34, so long as the equipment generated at

least that amount.   In the event that a pay phone’s adjusted

gross revenue was less than $58.34 for the month, petitioner
                              - 6 -

would receive 100 percent of the revenue.   Notwithstanding the

terms of the Alpha Telcom service agreement, Alpha Telcom made it

a practice to pay $58.34 per month per pay phone regardless of

how little income the pay phone produced.   Additionally, under

the Alpha Telcom service agreement, Alpha Telcom negotiated the

site agreement with the owner or leaseholder of the premises

where the pay phones were to be installed, installed the pay

phones, paid the insurance premiums on the pay phones, collected

and accounted for the revenues generated by the pay phones, paid

vendor commissions and fees, obtained all licenses needed to

operate the pay phones, and took all actions necessary to keep

the pay phones in working order.   Petitioner signed the Alpha

Telcom service agreement on June 7, 2001, the same day that he

signed the ATC pay phone agreement.

     In a letter dated June 11, 2001, petitioner received

confirmation of his pay phone order and notice that an order had

been placed for the installation of the pay phones.   Petitioner

had no say as to which pay phones were assigned to him, and he

was not informed as to the location of these pay phones.

     Thell G. Prueitt (Prueitt), an agent and sales

representative for ATC, informed petitioner that the income from

the pay phones was taxable but that the pay phones were

depreciable property and, thus, petitioner could claim a

depreciation deduction with respect to the pay phones.
                               - 7 -

Petitioner claimed a $714 depreciation deduction with respect to

the pay phones on the Schedule C, Profit or Loss From Business,

that was attached to his income tax return for 2001.   Petitioner

reported no other items of income or expense on this Schedule C.

     Prueitt also informed petitioner that all of the amounts

that petitioner spent in connection with the pay phones qualified

for the tax credit granted under section 44 for compliance with

the Americans with Disabilities Act of 1990 (ADA), Pub. L. 101-

336, 104 Stat. 327.   Additionally, petitioner received a copy of

a letter dated March 4, 1999, in which George Mariscal, president

of Tax Audit Protection, Inc., informed Paul Rubera (Rubera),

president of Alpha Telcom, that “Persons or companies that own

pay telephones that have been modified for use by the disabled

individual are eligible for the tax credit as per the Internal

Revenue Code section outlined in this letter [i.e., section 44]”.

Petitioner also received a copy of a letter dated June 7, 1999,

in which Fred H. Williams of Perkins & Co., P.C., opined to

Rubera that “The purchase of these payphones is an expenditure

which qualifies for the Disabled Access Credit”.

     A salesperson for Alpha Telcom informed petitioner that the

pay phones were modified by (1) lengthening the cords and/or

reducing the height to make the pay phones accessible to the

wheelchair bound and/or (2) installing volume controls to make

them more useful to the hearing impaired.   Alpha Telcom
                                 - 8 -

represented to investors that these modifications made the pay

phones compliant with the ADA.    The ATC pay phone agreement also

stated:   “Phones have approved installation under the

* * * [ADA]”.   Petitioner was not provided with a list of the

modifications that were made to the pay phones that were assigned

to him, and he did not know the cost of these modifications.

Petitioner claimed a $1,894 tax credit with respect to the pay

phones on Form 8826, Disabled Access Credit, that was attached to

his income tax return for 2001.    For purposes of claiming this

credit, petitioner reported that he had $10,000 of “eligible

access expenditures” during 2001.

     Alpha Telcom grew rapidly but was poorly managed and

ultimately operated at a loss.    On August 24, 2001, Alpha Telcom

filed for bankruptcy under chapter 11 of the Bankruptcy Code in

the U.S. Bankruptcy Court for the Southern District of Florida.

The case was later transferred to the U.S. Bankruptcy Court for

the District of Oregon on September 17, 2001.    On March 15, 2002,

petitioner filed a proof of claim in the bankruptcy court in the

amount of $11,166.80, representing the $10,000 that he had

invested plus approximately 9 or 10 months of payments that he

had not received from ATC as of the claim date.    The bankruptcy

case was dismissed on September 10, 2003, by motion of Alpha

Telcom.   The bankruptcy court held that it was “in the best

interest of creditors and the estate to dismiss so that
                                 - 9 -

proceedings could continue in federal district court, where there

was a pending receivership involving debtors.”

       The receivership was the result of a civil enforcement

action brought by the Securities and Exchange Commission (SEC)

against Alpha Telcom in 2001 in the U.S. District Court for the

District of Oregon.    The District Court appointed a receiver in

September 2001 to take over the operations of Alpha Telcom and to

investigate its financial condition.     On February 7, 2002, the

District Court held that the pay phone scheme was actually a

security investment and that Federal law had been violated by

Alpha Telcom because the program had not been registered with the

SEC.    The U.S. Court of Appeals for the Ninth Circuit affirmed

this decision on December 5, 2003.

Petitioner’s Unreported Income

       During 2001, petitioner received proceeds of $146,912.28

from the sale of stocks from his USB PaineWebber brokerage

account.    Petitioner also received dividends of $5,982.05 during

2001.    Petitioner did not report the stock sales or dividends on

his income tax return for 2001.    Respondent has conceded that the

stock sales did not result in taxable gains.

Internal Revenue Service Determinations

       The Internal Revenue Service (IRS) disallowed the

depreciation deduction claimed by petitioner because “the

telephone is located in a place that * * * [petitioner did] not
                              - 10 -

own or operate as a trade or business and * * * [petitioner] did

not have depreciable interest in the pay phone”.   The IRS also

disallowed the disabled access credit claimed by petitioner

because “no business reason has been given or verified to comply

with ADA of 1990”.

Procedural Matters

     The petition in this case was prepared by the office of Tom

Buck, C.P.A. (Buck), and was filed with the Court on July 26,

2004.   Buck’s letterhead asserts:   “Understanding how to play the

game is half the battle.”   On September 8, 2004, Buck sent a

letter to petitioner that stated that “my purpose was to work

within the IRS system to buy you as much time as possible, before

the IRS has a legal right to enforce collection action against

you.”   By notice served October 5, 2004, this case was set for

trial on March 7, 2005.   Petitioner failed and refused to appear

for trial and attempted to withdraw his petition through a letter

received by the Court on the day of trial.

                            Discussion

Burden of Proof

     As a preliminary matter, we note that section 7491 is

applicable to this case because the examination in connection

with this action was commenced after July 22, 1998, the effective

date of that section.   See Internal Revenue Service Restructuring

and Reform Act of 1998, Pub. L. 105-206, sec. 3001(c)(1), 112
                               - 11 -

Stat. 727.   Under section 7491, the burden of proof shifts from

the taxpayer to the Commissioner if the taxpayer produces

credible evidence with respect to any factual issue relevant to

ascertaining the taxpayer’s tax liability.    Sec. 7491(a)(1).

However, section 7491(a)(1) applies with respect to an issue only

if the taxpayer has complied with the requirements under the Code

to substantiate any item, has maintained all records required

under the Code, and has cooperated with reasonable requests by

the Commissioner for witnesses, information, documents, meetings,

and interviews.   See sec. 7491(a)(2)(A) and (B).

     Petitioner failed to appear at trial or to produce any

credible evidence.   Petitioner has no records or information as

to where the pay phones are located or as to the amount of

revenue that they produced.    Therefore, the burden of proof has

not shifted to respondent.    Nonetheless, our findings in this

case are based on a preponderance of the evidence.

Depreciation Deduction

     Section 167(a) allows as a depreciation deduction a

reasonable allowance for the “exhaustion, wear and tear” of

property (1) used in a trade or business or (2) held for the

production of income.    Sec. 167(a)(1) and (2).   Depreciation

deductions are based on an investment in and actual ownership of

property rather than the possession of bare legal title.     See

Grant Creek Water Works, Ltd. v. Commissioner, 

, 326
                               - 12 -

(1988); see also Narver v. Commissioner, 

, 98 (1980),

affd. 

(9th Cir. 1982).     “In a number of cases, the

Court has refused to permit the transfer of formal legal title to

shift the incidence of taxation attributable to ownership of

property where the transferor continues to retain significant

control over the property transferred.”      Frank Lyon Co. v. United

States, 

, 572-573 (1978).     “‘[T]axation is not so

much concerned with the refinements of title as it is with actual

command over the property taxed’”.      Grodt & McKay Realty, Inc. v.

Commissioner, 

, 1236 (1981) (quoting Corliss v.

Bowers, 

, 378 (1930)); see also United States v. W.H.

Cocke, 

, 445 (5th Cir. 1968).     Therefore, when a

taxpayer never actually owns the property in question, the

taxpayer is not allowed to claim deductions for depreciation.

See Grodt & McKay Realty, Inc. v. Commissioner, supra at 1236-

1238; see also Schwartz v. Commissioner, T.C. Memo. 1994-320,

affd. without published opinion 

(D.C. Cir. 1996).

     A taxpayer has received an interest in property that

entitles the taxpayer to depreciation deductions only if the

benefits and burdens of ownership with respect to the property

have passed to the taxpayer.   See Grodt & McKay Realty, Inc. v.

Commissioner, supra at 1237-1238; see also Grant Creek Water

Works, Ltd. v. Commissioner, supra at 326.     Whether the benefits

and burdens of ownership with respect to property have passed to
                               - 13 -

the taxpayer is a question of fact that must be ascertained from

the intention of the parties as established by the written

agreements read in light of the attending facts and

circumstances.    Grodt & McKay Realty, Inc. v. Commissioner, supra

at 1237.   Thus, the Court will look to the substance of the

agreement between the taxpayer and the seller and not just to the

labels used in those agreements.    Sprint Corp. v. Commissioner,

, 397 (1997); cf. Gregory v. Helvering, 

,

468-470 (1935).   Some of the factors that have been considered by

courts include:   (1) Whether legal title passes; (2) how the

parties treat the transaction; (3) whether an equity was acquired

in the property; (4) whether the contract creates a present

obligation on the seller to execute and deliver a deed and a

present obligation on the purchaser to make payments; (5) whether

the right of possession is vested in the purchaser; (6) which

party pays the property taxes; (7) which party bears the risk of

loss or damage to the property; and (8) which party receives the

profits from the operation and sale of the property.    Grodt &

McKay Realty, Inc. v. Commissioner, supra at 1237-1238.

     Petitioner contends that he “purchased” the pay phones from

ATC and, therefore, held the benefits and burdens of ownership

with respect to the pay phones.    After considering the relevant

factors and weighing the facts and circumstances surrounding the
                               - 14 -

transactions among petitioner, ATC, and Alpha Telcom, we reject

petitioner’s contention for the reasons discussed below.

     First, petitioner had no control over the pay phones, never

had possession of the pay phones, and does not know what the pay

phones look like or where they are located.   Petitioner signed an

agreement containing blank spaces where the pay phones were to be

identified.

     Second, petitioner never had the power to select the

location of the pay phones or enter into site agreements with the

owners or leaseholders of the premises where the pay phones were

to be located; that power was held by Alpha Telcom through the

Alpha Telcom service agreement.

     Third, no evidence indicates that petitioner paid any

property taxes, insurance premiums, or license fees with respect

to the pay phones.

     Fourth, there was minimal risk of loss for petitioner

because the ATC pay phone agreement, in combination with the

Alpha Telcom service agreement, allowed petitioner to sell legal

title to the pay phones back to ATC for 10 percent less than the

amount that he invested in them in the first 36 months and for

the full amount that he invested in them after 36 months.

     Fifth, under the terms of the Alpha Telcom service

agreement, Alpha Telcom was entitled to receive most of the

profits from the pay phones.
                              - 15 -

     Sixth, at the time that Alpha Telcom declared bankruptcy,

petitioner filed a claim in bankruptcy court for the “price” of

the pay phones and the monthly payments that he had not received

from ATC, rather than taking possession of the pay phones or

hiring an alternative service provider to maintain the pay

phones.   This action supports the conclusion that petitioner was

not the actual owner of the pay phones.

     Seventh, although petitioner received legal title to the pay

phones under the terms of the ATC pay phone agreement, the Alpha

Telcom service agreement passed all of the responsibilities for

maintaining the pay phones and the risks associated with the pay

phones’ producing insufficient revenues to Alpha Telcom.

Therefore, when the ATC pay phone agreement and the Alpha Telcom

service agreement are construed together, it becomes clear that

petitioner received nothing more than bare legal title with

respect to the pay phones.

     Eighth, the transaction into which petitioner entered with

ATC was more akin to a security investment than a sale.    In

essence, petitioner made a one-time payment of $10,000 to ATC for

the opportunity to receive (1) a minimum annual return of

14 percent on that investment, i.e., a minimum monthly payment of

$58.34 per pay phone, and (2) the tax benefits that he believed

would result from his nominal “ownership” of the pay phones.
                                - 16 -

     Therefore, based upon our analysis of the facts and

circumstances surrounding the transactions among petitioner, ATC,

and Alpha Telcom, we conclude that petitioner did not receive the

benefits and burdens of ownership with respect to the pay phones.

Because petitioner never received a depreciable interest in the

pay phones, he is not entitled to claim a depreciation deduction

under section 167 with respect to them.

ADA Tax Credit

     For purposes of the general business credit under section

38, section 44(a) provides a disabled access credit for certain

small businesses.    The amount of this credit is equal to

50 percent of the “eligible access expenditures” of an “eligible

small business” that exceed $250 but that do not exceed $10,250

for the year.    Sec. 44(a).   Therefore, in order to claim the

disabled access credit, a taxpayer must demonstrate that (1) the

taxpayer is an “eligible small business” for the year in which

the credit is claimed and (2) the taxpayer has made “eligible

access expenditures” during that year.     If the taxpayer cannot

fulfill both of these requirements, the taxpayer is not eligible

to claim the credit for that year.

     For purposes of section 44, the term “eligible small

business” is defined as any person that (1) had gross receipts of

no more than $1 million for the preceding year or not more than

30 full-time employees during the preceding year and (2) elects
                                 - 17 -

the application of section 44 for the year.     Sec. 44(b).   The

term “eligible access expenditure” is defined as an amount paid

or incurred by an eligible small business for the purpose of

enabling the eligible small business to comply with the

applicable requirements under the ADA.     Sec. 44(c)(1).   Such

expenditures include amounts paid or incurred (1) for the purpose

of removing architectural, communication, physical, or

transportation barriers that prevent a business from being

accessible to, or usable by, individuals with disabilities;

(2) to provide qualified interpreters or other effective methods

of making aurally delivered materials available to individuals

with hearing impairments; (3) to acquire or modify equipment or

devices for individuals with disabilities; or (4) to provide

other similar services, modifications, materials, or equipment.

See sec. 44(c)(2).   However, eligible access expenditures do not

include expenditures that are unnecessary to accomplish such

purposes.   See sec. 44(c)(3).    Additionally, eligible access

expenditures do not include amounts that are paid or incurred for

the purpose of removing architectural, communication, physical,

or transportation barriers that prevent a business from being

accessible to, or usable by, individuals with disabilities with

respect to any facility first placed in service after November 5,

1990.   See sec. 44(c)(4).
                              - 18 -

     Petitioner contends that he is eligible to claim the

disabled access credit under section 44(a) because (1) his pay

phone “business” was an eligible small business during 2001 and

(2) his $10,000 investment in the pay phones was an eligible

access expenditure.   In the notice of deficiency that respondent

sent to petitioner, respondent disallowed petitioner’s claim for

the disabled access credit because no “business reason” had been

given for petitioner to comply with the ADA.   In respondent’s

trial memorandum, respondent contends that petitioner’s $10,000

investment in the pay phones is not an eligible access

expenditure because it “is not at all clear that Petitioner was

required to be compliant with the ADA”.   In addition, respondent

contends that petitioner’s pay phone activities do not qualify as

an eligible small business because petitioner “was not in a

business”.   Because we conclude that petitioner’s $10,000

investment in the pay phones does not constitute an eligible

access expenditure, it is unnecessary for us to consider whether

petitioner’s pay phone activities constituted an eligible small

business during 2001.

     In order for an expenditure to qualify as an eligible access

expenditure within the meaning given that term by section 44(c),

it must have been made to enable an eligible small business to

comply with the applicable requirements under the ADA.   See

Fan v. Commissioner, 

, 38-39 (2001).   Consequently, a
                               - 19 -

person who does not have an obligation to become compliant with

the requirements set forth in the ADA could never make an

eligible access expenditure.   As relevant here, the requirements

set forth in the ADA apply to (1) persons who own, lease, lease

to, or operate certain “public accommodations” and (2) “common

carriers” of telephone voice transmission services.   See 42

U.S.C. sec. 12182(a) (2000); see also 47 U.S.C. sec. 225(c)

(2000).   As discussed below, petitioner neither owned, leased,

leased to, or operated a public accommodation during 2001, nor

was he a “common carrier” of telephone voice transmission

services during 2001.   Accordingly, petitioner was under no

obligation to become compliant with the requirements set forth in

the ADA during that year.

     The general rule of ADA title III is that no individual

shall be discriminated against on the basis of disability in the

full and equal enjoyment of goods, services, facilities,

privileges, advantages, or accommodations of any place of public

accommodation by any person who owns, leases, leases to, or

operates a place of public accommodation.   42 U.S.C. sec.

12182(a).   Thus, the ADA requires persons who own, lease, lease

to, or operate places of public accommodation to make reasonable

modifications in policies, practices, or procedures when such

modifications are necessary to afford such goods, services,

facilities, privileges, advantages, or accommodations to
                              - 20 -

individuals with disabilities, unless the entity can demonstrate

that making such modifications would fundamentally alter the

nature of such goods, services, facilities, privileges,

advantages, or accommodations.   42 U.S.C. sec.

12182(b)(2)(A)(ii).   Additionally, the ADA requires persons who

own, lease, lease to, or operate places of public accommodation

to take such steps as may be necessary to ensure that no

individual with a disability is excluded, denied services,

segregated, or otherwise treated differently from other

individuals because of the absence of auxiliary aids and

services, unless the entity can demonstrate that making such

modifications would fundamentally alter the nature of such goods,

services, facilities, privileges, advantages, or accommodations.

42 U.S.C. sec. 12182(b)(2)(A)(iii).

     To summarize, any person who owns, leases, leases to, or

operates a public accommodation is required to make modifications

for disabled individuals in order to comply with the requirements

set forth in ADA title III.   While ADA title III does not define

the terms “own”, “lease”, “lease to”, or “operate”, we must

construe those terms in accord with their ordinary and natural

meaning.   See, e.g., Smith v. United States, 

, 228

(1993); Neff v. Am. Dairy Queen Corp., 

, 1066 (5th

Cir. 1995) (construing the term “operate”, as used in ADA title

III, as follows:   “To ‘operate,’ in the context of a business
                              - 21 -

operation, means ‘to put or keep in operation,’ ‘to control or

direct the functioning of,’ ‘to conduct the affairs of; manage,’”

(citations omitted)).   For the reasons discussed above, we

concluded that petitioner did not own the pay phones in which he

invested and had no involvement in their operation.   Thus,

petitioner did not own, lease, lease to, or operate anything as a

result of his investment in the pay phones and was never under

any obligation to comply with the requirements of ADA title III

during 2001.   We reach this conclusion without deciding whether

pay phones constitute public accommodations within the meaning

given that term by the ADA.

     ADA title IV requires common carriers providing telephone

voice transmission services to provide “telecommunications relay

services” throughout the area in which they offer service.    47

U.S.C. sec. 225(c).   Telecommunications relay services are

defined as telephone transmission services that provide the

ability for an individual who has a hearing impairment or speech

impairment to engage in communication by wire or radio with a

hearing individual in a manner that is functionally equivalent to

the ability of an individual who does not have a hearing

impairment or speech impairment to communicate using voice

communication services by wire or radio.   47 U.S.C. sec.

225(a)(3).   For purposes of ADA title IV, a common carrier is any

person engaged as a common carrier for hire, in intrastate or
                              - 22 -

interstate communication by wire or radio.    See 47 U.S.C. sec.

225(a)(1); see also 47 U.S.C. sec. 153(10).

     It has long been held that “‘a common carrier is such by

virtue of his occupation,’ that is by the actual activities he

carries on”.   Natl. Association of Regulatory Util. Commrs. v.

FCC, 

, 608 (D.C. Cir. 1976) (quoting Washington ex

rel. Stimson Lumber Co. v. Kuykendall, 

, 211-212

(1927)); see also United States v. California, 

, 181

(1936).   Furthermore, under common law principles, the “primary

sine qua non of common carrier status is a quasi-public

character, which arises out of the undertaking ‘to carry for all

people indifferently’”.   Natl. Association of Regulatory Util.

Commrs. v. FCC, supra at 608 (quoting Semon v. Royal Indem. Co.,

, 739 (5th Cir. 1960)).    Accordingly, a person is not

a common carrier unless the person is actively engaged in the

provision of services to others.   Because petitioner did not own

the pay phones in which he invested and had no involvement in

their operation, petitioner was not actively engaged in the

provision of services to anyone as a result of his investment in

the pay phones.   Therefore, petitioner was under no obligation to

comply with the requirements set forth in ADA title IV during

2001.

     Because petitioner’s pay phone activities did not obligate

him to comply with the requirements set forth in either ADA
                                - 23 -

title III or title IV, his $10,000 investment in the pay phones

is not an eligible access expenditure.    Therefore, petitioner is

not entitled to claim the disabled access credit under section 44

for his investment in the pay phones in 2001.

Section 6673

     Whenever it appears to the Court that proceedings before it

have been instituted or maintained primarily for delay, the

Court, in its decision, may require the taxpayer to pay to the

United States a penalty not in excess of $25,000.      Sec.

6673(a)(1)(A).   In this case, petitioner was advised that the

purpose of filing the petition was to delay the collection

process.   Petitioner engaged in the required stipulation process

but did not appear for trial.    We have decided not to impose a

section 6673 penalty in this case, but taxpayers are warned that

sanctions may be appropriate if the Court concludes that a

petition was filed with no intention to prosecute the case and

merely to delay the collection process.

     To reflect the foregoing and the concessions of the parties,


                                          Decision will be entered

                                     under Rule 155.