Before trial the Court ordered that paragraphs 1 through 12 of the IRS's proposed stipulation of facts be deemed admitted under Rule 90. The Court *134 reserved ruling on whether paragraphs 13 and 14 should be deemed admitted. The IRS has now conceded that paragraphs 13 and 14 are incorrect. Therefore, the Court will order that these paragraphs shall not be deemed admitted.

Jones resided in Florida when he filed the petition.

Jones worked as an independent sales associate for Pre-Paid Legal Services, a publicly traded company that provided legal insurance to businesses and individuals. Jones sold memberships 2013 Tax Ct. Memo LEXIS 134">*136 to the customers of Pre-Paid Legal Services and was entitled to commissions for these sales. He also recruited new sales associates for Pre-Paid Legal Services and, pursuant to its multilevel marketing arrangement, was entitled to a percentage of the revenue they generated. Jones received nonemployee compensation of $50,894 from Pre-Paid Legal Services.

Besides Pre-Paid Legal Services, Jones participated in other multilevel marketing arrangements. He did not earn any money, but his participation allowed him to meet people to recruit as sales associates for Pre-Paid Legal Services.

Jones worked from his house in the area of Orlando, Florida.

Jones did not file a federal income tax return for 2006 or 2007. For 2007 the IRS prepared a substitute for return on Jones's behalf, as authorized by section *135 6020(b). Jones did not make any payments of federal income tax or estimated tax for 2007.

In deficiency proceedings before the Tax Court, the burden of proof generally rests with the taxpayer. Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111">290 U.S. 111, 290 U.S. 111">115, 54 S. Ct. 8">54 S. Ct. 8, 78 L. Ed. 212">78 L. Ed. 212, 1933-2 C.B. 112 (1933). Section 7491 imposes the burden of proof on the IRS with respect to a given factual issue where a taxpayer (1) introduces 2013 Tax Ct. Memo LEXIS 134">*137 credible evidence with respect to that issue, (2) meets all applicable substantiation requirements, (3) complies with all recordkeeping requirements, and (4) cooperates with any reasonable requests for information. Sec. 7491(a); Higbee v. Commissioner, 116 T.C. 438">116 T.C. 438, 116 T.C. 438">440-441 (2001). The record reflects that Jones did not meet recordkeeping and substantiation requirements. Thus, the burden of proof remains on Jones.

Section 162(a) provides that "[t]here shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including * * * (2) traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the *136 pursuit of a trade or business". No deduction is allowed for personal, living, or family expenses. Sec. 262(a). The cost of a taxpayer's own meals, unless the taxpayer is on overnight business travel, is a nondeductible personal expense. United States v. Correll, 389 U.S. 299">389 U.S. 299, 389 U.S. 299">299-307, 88 S. Ct. 445">88 S. Ct. 445, 19 L. Ed. 2d 537">19 L. Ed. 2d 537 (1967); Strohmaier v. Commissioner, 113 T.C. 106">113 T.C. 106, 113 T.C. 106">114-116 (1999). Taxpayers are required to maintain records sufficient 2013 Tax Ct. Memo LEXIS 134">*138 to establish the amounts of allowable deductions and to enable the IRS to determine the correct tax liability. Sec. 6001; Shea v. Commissioner, 112 T.C. 183">112 T.C. 183, 112 T.C. 183">186 (1999).

It is a general rule, established in Cohan v. Commissioner, 39 F.2d 540">39 F.2d 540, 39 F.2d 540">543-544 (2d Cir. 1930), that if the trial record provides sufficient evidence that the taxpayer has incurred a deductible expense, but the taxpayer is unable to fully substantiate the precise amount of the deduction, the Court should estimate the amount of the deductible expense and allow a deduction to that extent. In making such estimates, the Court may bear heavily against the taxpayer, who caused the inexactitude. 39 F.2d 540">Id. at 544. For the Court to estimate the amount of an expense, there must be some basis on which an estimate may be made. Williams v. United States, 245 F.2d 559">245 F.2d 559, 245 F.2d 559">560 (5th Cir. 1957); Vanicek v. Commissioner, 85 T.C. 731">85 T.C. 731, 85 T.C. 731">742-743 (1985).

*137 In an exception to the Cohan rule, section 274(d) provides that a taxpayer must satisfy strict substantiation requirements for certain kinds of expenses, such as for travel away from home, for entertainment, for gifts, and for "listed property" (as that term is defined in section 280F(d)(4)). To 2013 Tax Ct. Memo LEXIS 134">*139 deduct these expenses the taxpayer "[must] substantiate[] by adequate records or by sufficient evidence corroborating the taxpayer's own statement" the amounts, times, places, and purposes related to the expenses. Sec. 274(d); 26 C.F.R. sec. 1.274-5T(b), (c)(1) and (2) (2010); Dowell v. United States, 522 F.2d 708">522 F.2d 708, 522 F.2d 708">715 (5th Cir. 1975) (holding each separate expense must be substantiated).

The expenses of traveling away from home are subject to strict substantiation requirements. Sec. 274(d)(1); 26 C.F.R. sec. 1.274-5T(a)(1), (b)(2) (2010). To deduct travel expenses the taxpayer must substantiate the amount of each expense, the dates of departure and return for each trip, the destination of travel, and the business reason for the trip. Sec. 274(d); 26 C.F.R. sec. 1.274-5T(b)(2) (2010).

Entertainment expenses are subject to strict substantiation requirements. Sec. 274(d)(2). Entertainment expenses include the costs of business meals. See Sanford v. Commissioner, 50 T.C. 823">50 T.C. 823, 50 T.C. 823">827 (1968), aff'd, 412 F.2d 201">412 F.2d 201 (2d Cir. 1969). To deduct entertainment expenses the taxpayer must substantiate the *138 amount of each expense, the date of the entertainment, the place where the entertainment occurred, 2013 Tax Ct. Memo LEXIS 134">*140 the business reason for the entertainment, the nature of any business discussion or activity, and enough information about the person entertained to establish the business relationship of that person to the taxpayer. Sec. 274(d); 26 C.F.R. sec. 1.274-5T(b)(3) (2010).

Gift expenses are subject to strict substantiation requirements. Sec. 274(d)(3). To deduct gift expenses, the taxpayer must substantiate the cost of the gift, the date of the gift, a description of the gift, the business reason for the gift, and enough information about the recipient of the gift to establish the business relationship of that person and the taxpayer. Sec. 274(d); 26 C.F.R. sec. 1.274-5T(b)(5) (2010).

Passenger automobile expenses require strict substantiation. Secs. 274(d)(4), 280F(d)(4)(A)(i). ³ A taxpayer is permitted to use the standard mileage rate in lieu of substantiating the actual cost of using a passenger automobile. See26 C.F.R. sec. 1.274-5(j)(2) (2010). A taxpayer who opts to use the standard *139 mileage rate is not relieved of the obligation to substantiate the amount of business mileage and the time and place of each business use of the passenger vehicle. Id. Thus, these items of information (the 2013 Tax Ct. Memo LEXIS 134">*141 amount of business mileage and the time and place of each business use of the passenger vehicle) must be substantiated through adequate records or sufficient evidence corroborating the taxpayer's own statement. See26 C.F.R. sec. 1.274-5T(b)(2), (c) (2010).

Cellular telephone expenses are subject to strict substantiation requirements. Secs. 274(d)(4), 280F(d)(4)(A)(v). ^{42013 Tax Ct. Memo LEXIS 134">*142} To deduct cell phone expenses a taxpayer must substantiate the amount of business use and the total use for the cell phone. See Trupp v. Commissioner, T.C. Memo. 2012-108, slip op. at 14; 26 C.F.R. sec. 1.274-5T(b)(6)(i)(B) (2010).

The expenses of internet service are not subject to strict substantiation requirements. See Bogue v. Commissioner, T.C. Memo. 2011-164, slip op. at 41 (strict substantiation does not apply to utility expenses, such as home internet service).

*140 Section 280A(a) provides that for individual taxpayers "no deduction otherwise allowable under this chapter [which includes section 162] shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence." Section 280A(c)(1) contains an exception to section 280A(a). It provides: "Subsection (a) shall not apply to any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis * * * (A) as the principal place of business for any trade or business of the taxpayer". Some portion of the dwelling unit must be used exclusively for business; otherwise, no deductions for expenses related to the dwelling unit are excepted by section 280A(c)(1). 2013 Tax Ct. Memo LEXIS 134">*143 See Sam Goldberger, Inc. v. Commissioner, 88 T.C. 1532">88 T.C. 1532, 88 T.C. 1532">1557 (1987).

The expense of telephone service (other than cellular telephone service) is not subject to strict substantiation requirements. See, e.g., Lang v. Commissioner, T.C. Memo. 2010-152, slip op. at 14-15; Aref v. Commissioner, T.C. Memo. 2009-118, slip op. at 11. Section 262(b) provides that the expense of the first telephone line in a taxpayer's residence is treated as a personal expense.

Jones had only one bank account, which was at Bank of America. He had two credit cards: an American Express card and a Chase card. Neither the bank account nor the two credit cards were used exclusively for business expenses.

*141 At trial Jones moved for the admission of a spreadsheet that the Court marked as Exhibit 13-P and received into evidence for the limited purpose of illustrating Jones's litigating position. The spreadsheet lists 58 categories of expenses that Jones claims are the business expenses of his work for Pre-Paid Legal Services. Each category has an associated amount. The total of the amounts for all 58 categories is $45,011.72. ⁵ By contrast, the notice of deficiency determined (and the IRS contends) that Jones is entitled 2013 Tax Ct. Memo LEXIS 134">*144 to zero in business-expense deductions. At trial Jones's monthly statements from the two credit cards were received into evidence. Jones moved that some statements for his bank account be received into evidence, but these statements were excluded from evidence. Jones moved for the admission of an auto mileage log, but it was excluded from evidence. With the possible exception of the auto mileage log, Jones did not maintain any contemporaneous records that showed which of his expenses were business expenses. The only witness at trial was Jones himself. He testified that he incurred the expenses in the amounts listed in 58 categories in Exhibit 13-P. He also testified in some detail about the nature of these expenses.

*142 The table below sets forth the 58 categories and corresponding amounts Jones listed in the spreadsheet identified as Exhibit 13-P. The first column, "Expense category", has the headings Jones listed for each category. The second column, "Amount claimed", has 2013 Tax Ct. Memo LEXIS 134">*145 the amounts Jones listed as deductible business expenses for each category. The third column, "Amount deductible", has the amounts we find that Jones paid during 2007 for ordinary and necessary business expenses that are deductible under section 162. The fourth column, "Court's description of amount; reasons not deductible", is (1) our description of the amounts listed in the second column, and (2) the reasons that we determine that the difference between the amount claimed and the amount deductible in each category, for those categories for which there is a difference, is not deductible. The factual conclusions in the third and fourth columns constitute findings of fact.

¹We 2013 Tax Ct. Memo LEXIS 134">*146 note that there is a 10-cent difference between the total on Exhibit 13-P, $45,011.72, and computer-generated total in the table above. We assume that the total listed on Exhibit 13-P contained an error of 10 cents.

The burden of production with respect to the imposition of each addition to tax rests with the IRS. Seesec. 7491(c); Higbee v. Commissioner, 116 T.C. 438">116 T.C. 446-447. With respect to the section 6651 additions to tax, the IRS's burden does not require it to establish the absence of reasonable cause. See Higbee v. Commissioner, 116 T.C. 438">116 T.C. 447; Davis v. Commissioner, 81 T.C. 806">81 T.C. 806, 81 T.C. 806">820 (1983), aff'd without published opinion, 767 F.2d 931">767 F.2d 931 (9th Cir. 1985).

Section 6651(a)(1) imposes an addition to tax for failure to timely file a required return, ⁶ unless the taxpayer can establish that the failure is due to reasonable cause and not due to willful neglect.

Jones admitted that he did not file an income tax return for tax year 2007. Therefore the IRS has met its 2013 Tax Ct. Memo LEXIS 134">*147 burden of proof.

Jones's explanation for not filing a return is that the "Internal Revenue Code is so complex and confusing no one can understand it or comply with its multitudinous provisions." Jones did not make reasonable efforts to determine his *156 tax liability under the Internal Revenue Code. There is no evidence that he even calculated his tax liability, and we find that he did not. We find that he did not have reasonable cause for failing to file his 2007 tax return. He is liable for the addition to tax under section 6651(a)(1).

Section 6651(a)(2) imposes an addition to tax for failure to pay the tax shown on a return on or before the date prescribed for payment, unless such failure is due to reasonable cause and not willful neglect. For each month the taxpayer fails to pay the tax shown on the return, the addition to tax is 0.5% of the portion of the tax shown that is unpaid at the beginning of each month, not to exceed 25% in the aggregate. Sec. 6651(a)(2), (b)(2). ⁷ When a taxpayer does not file a return, the IRS may prepare a substitute for return. Sec. 6020(b). Such a return is treated as the return 2013 Tax Ct. Memo LEXIS 134">*148 filed by the taxpayer for purposes of the section 6651(a)(2) addition to tax. Secs. 6020(b), 6651(g)(2).

Reasonable cause for the failure to timely pay tax exists if "the taxpayer has made a satisfactory showing that he exercised ordinary business care and prudence *157 in providing for payment of his tax liability and was nevertheless either unable to pay the tax or would suffer an undue hardship * * * if * * * [the taxpayer] paid on the due date." 26 C.F.R. sec. 301.6651-1(c)(1) (2012).

The IRS has met its burden of production for the section 6651(a)(2) addition to tax. We find that the IRS prepared a valid substitute for return for Jones's 2007 tax year and that he failed to timely make any tax payments. Jones has not shown that he had reasonable cause for failing to timely pay his 2007 tax. We hold that Jones is liable for the section 6651(a)(2) addition to tax.

Section 6654(a) imposes an addition 2013 Tax Ct. Memo LEXIS 134">*149 to tax for failure to make timely and sufficient payments of estimated tax. A taxpayer has an obligation to pay estimated tax for a particular year only if the taxpayer has a "required annual payment" for that year. Sec. 6654(b)(1), (c)(1), (d). A required annual payment is equal to the lesser of: (1) 90% of the tax shown on the taxpayer's return for the year in issue (or, if no return is filed, 90% of the tax for such year); or (2) 100% of the tax shown on the return for the immediately preceding taxable year (clause (2) does not apply if the taxpayer did not file a return for the immediately preceding *158 taxable year). Sec. 6654(d)(1)(B). Generally, section 6654 provides no exception for reasonable cause. 26 C.F.R. sec. 1.6654-1(a)(1) (2012). The IRS's burden of production under section 7491(c) requires it to produce, for each year for which the addition to tax is asserted, evidence that the taxpayer had a required annual payment under section 6654(d).

Jones made no estimated tax payments for 2007, had a tax liability for 2007, and failed to file a 2006 tax return. Therefore, Jones had a required annual payment for 2007 and is liable for the section 6654(a) addition to tax.

We have considered 2013 Tax Ct. Memo LEXIS 134">*150 all other arguments the parties have made, and to the extent that we have not discussed them, we find them to be moot, irrelevant, or without merit.

To reflect the foregoing,

An appropriate order will be issued regarding paragraphs 13 and 14 of respondent's proposed stipulation of facts, and decision will be entered under Rule 155.