DocketNumber: No. 9960-04S
Citation Numbers: 2005 T.C. Summary Opinion 78, 2005 Tax Ct. Summary LEXIS 52
Judges: \"Armen, Robert N.\"
Filed Date: 6/8/2005
Status: Non-Precedential
Modified Date: 11/20/2020
*52 PURSUANT TO INTERNAL REVENUE CODE SECTION 7463(b), THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY OTHER CASE.
ARMEN, Special Trial Judge: This case was heard pursuant to the provisions of
Respondent determined a deficiency in petitioners' Federal income tax for the taxable year 2001 of $ 4,498. The deficiency is attributable solely to the 10-percent additional tax under
After respondent's concession, 2 the issue for decision is whether petitioners are liable under
Background
Some of the facts have been stipulated, and they are so found. We incorporate by reference the parties' stipulation of facts, supplemental stipulation of facts, and accompanying exhibits.
At the time that the petition was filed, petitioners resided in Menlo Park, California.
Mr. El-Bibany obtained a Ph.D. from Stanford University in 1992 and joined the faculty at Penn State University in 1993, until his job ended in 1999. At that time, petitioners had two*54 small children, and petitioner Salma Hassan Kandil (Mrs. Kandil) wanted to obtain her teaching credentials, so they returned to California. 3
In the fall of 2000, Mrs. Kandil became a full-time graduate student at San Jose State University (SJSU). As part of her studies, Mrs. Kandil became a student teacher at Jordan Middle School in August 2001, and she obtained her teaching credentials in elementary education in April 2002. Currently, Mrs. Kandil is a sixth-grade teacher of math and science at Jordan Middle School.
During the high-tech bubble in 2000, Mr. El-Bibany worked in "some nonemployment type of activities" related to high-tech investments. In the beginning of September 2001, Mr. El-Bibany left the United States on an employment contract as an international faculty member in the United Arab Emirates. Mr. El-Bibany, however, soon returned to the United States because of the general atmosphere resulting from the terrorist events of September 11, 2001. Aside*55 from the 2 weeks he worked in the United Arab Emirates, Mr. El-Bibany remained unemployed during 2001. At a time not disclosed in the record, Mr. El-Bibany applied for unemployment compensation, but was not eligible because he had not worked in California for a specified period of time.
In 2001, Mr. El-Bibany withdrew $ 48,720 from his retirement fund. 4
Respondent does not dispute that petitioners incurred the following expenses in 2001: 5
Room and board for petitioners' | |
family collectively | |
Apartment rent | $ 33,875 |
Utilities | 1,200 |
Food | 7,200 |
Subtotal | $ 42,275 |
Health insurance for petitioners' | |
family collectively | |
(including health insurance | |
premiums and health care expenses) | $ 1,800 |
Transportation for Mrs. Kandil | 1,981 |
Books and supplies for Mrs. Kandil | 846 |
Total | $ 46,902 |
Petitioners timely filed a Form 1040, U.S. Individual Income Tax Return, for 2001. On their return, petitioners disclosed the $ 48,720 distribution and reported $ 44,982 as the taxable amount. Petitioners did not report the 10-percent additional tax imposed by
In the notice of deficiency, respondent determined that petitioners are liable for the 10-percent additional tax on an early distribution from a qualified retirement plan.
Petitioners*57 timely filed a petition with the Court disputing the determined deficiency.
Discussion 6
As relevant herein,
A distribution qualifies under
Respondent does not dispute that petitioners incurred health insurance expenses of $ 1,800. Respondent contends, however, that the exception under
The record is clear that Mr. El-Bibany did not receive any Federal or State unemployment compensation at any relevant time. See
In view of the foregoing, we conclude that petitioner does not satisfy the requirements under
Qualified higher education expenses for purposes of The amount treated as qualified higher education expenses by reason of the preceding sentence
As of August 20, 1996, and as applicable to the issue in this case, the term "cost of attendance" was defined as: an allowance (as determined by the institution) for room and board costs incurred by the student which -- (A) shall be an allowance of not less than $ 1,500 for a student without dependents residing at home with parents; (B) for students without dependents residing in institutionally owned or operated housing, shall be a standard allowance determined by the institution based on the amount normally assessed most of its residents for room and board; and (C) for all other students shall be an allowance based on the expenses reasonably incurred by such students for room and board, except that the amount may not be less than $ 2,500. [Emphasis added.]
*64 Petitioners contend that their total room and board expenses of $ 42,275 qualify as higher education expenses. In contrast, respondent contends that the amount of room and board expenses that qualify as higher education expenses is limited under
There is no dispute that room and board expenses related to Mrs. Kandil's education qualify as higher education expenses. The amount that can qualify as higher education expenses, however, is specifically limited by statute. As stated earlier,
We recognize that college and graduate students may incur expenses beyond those projected by the educational institution.12Congress, however, has imposed limitations on the amount of room and board expenses that qualify for favorable tax treatment. However unfair this statute might seem to petitioners, the Court is bound to apply*65 the law as written. See
With regard to transportation expenses, respondent, at trial and in his trial memorandum, conceded that Mrs. Kandil's qualified higher education expenses included transportation costs up to the amount allowed as determined by SJSU. On brief, however, respondent argues that the concession was in error. In essence, respondent now contends that petitioners are not entitled to an allowance for transportation expenses because such expenses do not qualify as higher education expenses under
Respondent's change in position raises the issue of equitable estoppel against respondent. "Equitable estoppel is a judicial*66 doctrine that 'precludes a party from denying his own acts or representations which induced another to act to his detriment.'"
The doctrine of estoppel is not applicable unless the party relying on it establishes all of the following elements at a minimum: (1) A false representation or wrongful, misleading silence by the party against whom estoppel is to be invoked; (2) an error in a statement of fact and not an opinion or statement of law; (3) ignorance of the true facts; (4) the party claiming estoppel must be adversely affected by the acts or statements of the person against whom an estoppel is claimed; and (5) detriment suffered by the party claiming estoppel because of his or her adversary's false representation or wrongful, misleading silence.
The doctrine of equitable estoppel was raised for the first time by respondent on brief. 13 Initially, respondent conceded that qualified higher education expenses*68 include transportation costs. In respondent's trial memorandum, respondent relied on
*69 For purposes of
Conclusion
We have considered all of the other arguments made by petitioners, and, to the extent that we have not specifically addressed those arguments, we conclude that they are without merit.
Reviewed and adopted as the report of the Small Tax Case Division.
To reflect our disposition of the disputed issue, as well as respondent's concession,
Decision will be entered under Rule 155.
1. Unless otherwise indicated, all subsequent section references are to the Internal Revenue Code in effect for 2001, the taxable year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. Respondent concedes that petitioners are entitled to an exception from the early distribution penalty under
3. Mrs. Kandil has a bachelor's degree in civil engineering.↩
4. There is no evidence in the record describing Mr. El-Bibany's retirement fund. In respondent's trial memorandum and on brief, respondent indicated that this fund was a "qualified retirement fund with TIAA-CREF". But see Rule 143(b) regarding ex parte statements in briefs and the like.↩
5. Mrs. Kandil received a scholarship that covered her tuition expense.↩
6. We decide the issue in this case without regard to the burden of proof because the issue is essentially one of law.↩
7. Although the record does not describe Mr. El-Bibany's retirement plan, the parties have proceeded on the basis that the distribution was from an individual retirement plan within the scope of
8.
9. As described in the conference report, the Taxpayer Relief Act of 1997, Pub. L. 105-34, sec. 211(a), 111 Stat. 810, expands the definition of "qualified higher education expenses" under
10. The Higher Education Act of 1965, Pub. L. 89-329, 79 Stat. 1219,
11. We note that the Higher Education Amendments of 1998, Pub. L. 105-244, sec. 471(2)(B), 112 Stat. 1729, deleted the phrase "except that the amount may not be less than $ 2,500", effective for tax years beginning after Dec. 31, 2001. This amendment, however, does not apply in the instant case.↩
12. For example, SJSU's cost of attendance for a student living off-campus for the academic year 2001-2 was $ 7,613.↩
13. Although the Court offered petitioners the opportunity to file a response to respondent's brief, petitioners did not do so.↩
14. Sec. 221 and the regulations thereunder set forth the criteria to deduct interest paid on qualified education loans.↩
15. The Higher Education Act of 1965 sec. 472, currently codified at
Dimitrious J. Lignos and Evelyn Lignos v. United States , 439 F.2d 1365 ( 1971 )
norfolk-southern-corporation-and-affiliated-companies-norfolk-western , 140 F.3d 240 ( 1998 )
John Manocchio v. Commissioner of Internal Revenue , 710 F.2d 1400 ( 1983 )
Estate of Ralph D. Cowser, Deceased, Patricia Ann Tucker v. ... , 736 F.2d 1168 ( 1984 )
Alvin v. Graff v. Commissioner of Internal Revenue , 673 F.2d 784 ( 1982 )
melba-schuster-formerly-melba-d-baker-v-commissioner-of-internal , 312 F.2d 311 ( 1962 )
Automobile Club of Mich. v. Commissioner , 77 S. Ct. 707 ( 1957 )
Dixon v. United States , 85 S. Ct. 1301 ( 1965 )
Graff v. Commissioner , 74 T.C. 743 ( 1980 )
Zuanich v. Commissioner , 77 T.C. 428 ( 1981 )