Daoud v. Commissioner

FILED
NOT FOR PUBLICATION DEC 09 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
EDWARD DAOUD; ODETTE DAOUD, No. 12-70637
Petitioners - Appellants, CIR No. 12070-04
v.
MEMORANDUM*
COMMISSIONER OF INTERNAL
REVENUE,
Respondent - Appellee.
Appeal from a Decision of the
United States Tax Court
Submitted November 19, 2013**
Before: CANBY, TROTT, and THOMAS, Circuit Judges.
Edward and Odette Daoud appeal pro se from the Tax Court’s decision
upholding the Commissioner of Internal Revenue Services’s notice of deficiency
and penalties against them for tax years 2000 and 2001. We have jurisdiction
under 26 U.S.C. § 7482(a)(1). We review de novo the Tax Court’s legal
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
conclusions, Hongsermeier v. Comm’r, 621 F.3d 890, 899 (9th Cir. 2010), and for
clear error its factual determinations, including the imposition of accuracy-related
penalties, Sparkman v. Comm’r, 509 F.3d 1149, 1161 (9th Cir. 2007), and fraud
penalties, Edelson v. Comm’r, 829 F.2d 828, 832 (9th Cir. 1987). We affirm.
The Tax Court properly upheld the Commissioner’s deficiency
determination because the Daouds failed to offer evidence that clearly showed a
right to the claimed deductions. See Sparkman, 509 F.3d at 1159 (taxpayer bears
burden of “clearly showing” right to claimed deduction); see also 26 U.S.C.
§ 274(d) (deductions for “any traveling expense” and “for any item with respect to
an activity which is of a type generally considered to constitute entertainment,
amusement, or recreation” requires substantiation of: (1) the amount of such
expense; (2) the time and place of the travel, entertainment, amusement, or
recreation; (3) the business purpose of the expense; and (4) the business
relationship to the taxpayer of the persons entertained).
The Tax Court did not clearly err in imposing a civil fraud penalty under 26
U.S.C. § 6663(a) because Edward Daoud’s underpayment of his tax liability in
2000 was attributable to fraud. See Bradford v. Comm’r, 796 F.2d 303, 307 (9th
Cir. 1986) (holding that fraud may be inferred from circumstantial evidence,
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including such “badges of fraud” as understatement of income, inadequate records,
and implausible or inconsistent explanations of behavior).
The Tax Court did not clearly err in imposing an accuracy-related penalty
for the Daouds’ underpayment of tax due to negligence or disregard of the rules
and regulations and their substantial understatement of income tax. See 26 U.S.C.
§ 6662(a), (b)(1) & (2) (authorizing penalty not to exceed 20% of the
underpayment for, among other things, negligence or disregard of rules or
regulations or a substantial understatement of income tax); id. § 6662(c) (defining
negligence and disregard); id. § 6662(d)(1)(A) (defining substantial
understatement).
The Daouds’ contentions that the revenue agent violated their due process
rights are unpersuasive.
We do not consider matters raised for the first time on appeal. See Padgett
v. Wright, 587 F.3d 983, 985 n.2 (9th Cir. 2009) (per curiam).
AFFIRMED.
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