DocketNumber: Docket No. 11582-91
Citation Numbers: 64 T.C.M. 1430, 1992 Tax Ct. Memo LEXIS 735, 1992 T.C. Memo. 690
Judges: SCOTT
Filed Date: 12/3/1992
Status: Non-Precedential
Modified Date: 11/21/2020
*735 Decision will be entered under Rule 155.
MEMORANDUM OPINION
SCOTT,
OPINION OF THE SPECIAL TRIAL JUDGE
PATE,
Petitioner was a resident of Kennewick, Washington, at the time he filed his petition. Some of the facts have been stipulated and they are so found. The Stipulation of Facts and attached exhibits are incorporated herein by this reference.
During all of the years in issue, petitioner was employed as a mechanical designer by Hughes Aircraft in Tucson, Arizona. He received the following amounts of gross income during those years:
(1) For 1984, wages of $ 37,072 and interest income of $ 35;
(2) For 1985, wages of $ 43,485 and interest income of $ 17;
(3) For 1986, wages of $ 36,632; and
(4) For 1987, wages of $ 5,711 and other income of $ *737 2,106.
Nonetheless, petitioner failed to file Federal income tax returns for 1984, 1985, 1986, and 1987.
After concessions by the parties, the only issues for our decision are: (1) Whether petitioner may deduct a capital loss of $ 660 sustained from the sale of a mobile home in 1985; (2) whether the Internal Revenue Service's negotiation of a check dated November 26, 1985, constitutes an accord and satisfaction of petitioner's Federal income tax liabilities for 1984 and 1985; (3) whether petitioner is liable for additions to tax under
In 1985, petitioner sold the mobile home in which he lived, thereby sustaining a loss of $ 660. Petitioner claims the loss is deductible, whereas respondent maintains that the loss is personal and, therefore, not deductible.
In general,
Petitioner admittedly used the mobile home at issue as his residence. Consequently, we hold that he may not deduct the loss he sustained when he sold his mobile home.
In November 1985, petitioner tendered a check to the Internal Revenue Service (hereinafter the IRS) in the amount of $ 1,177.67, on the back of which he had written "Endorsement of this draft constitutes agreement that all taxes, interest, penalties, or other indebtedness is paid in full through 11/30/85." The IRS negotiated the check. Petitioner contends that the IRS's acceptance of his check constitutes*739 an accord and satisfaction of his 1984 and 1985 income tax liabilities and that, therefore, he is not liable for the deficiencies determined by respondent for those years.
Petitioner did not follow the procedures set forth in those regulations, nor did respondent agree to conclude any closing agreement or compromise as set forth in the regulations. Consequently, there was no closing agreement or compromise effectuated between the parties and, therefore, respondent is not bound by the payment made by petitioner in November 1985.
Nevertheless, *740 petitioner argues that his submission of the check with the endorsement language contained thereon together with the negotiation of the check by the IRS constitutes an accord and satisfaction under the Uniform Commercial Code. However, the United States Government, as the sovereign, is not bound by such State statutes as the Uniform Commercial Code. See
Petitioner contends that he is not liable for the additions to tax under
In case of failure --
(1) to file any return * * * unless it is shown that such*741 failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on such return 5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 5 percent for each additional month * * * not exceeding 25 percent in the aggregate * * *
To be absolved of the liability, the taxpayer must show that his failure to file was due to reasonable cause and not due to willful neglect.
Petitioner admits that he did not file income tax returns for any of the years in issue, but argues that he had reasonable cause for not doing so. He claims that he was severely depressed during all of those years, and that his mental state was so extreme that he could not cope with*742 the negative reaction he had when contemplating such filing. However, the fact that petitioner worked as a mechanical designer for Hughes Aircraft on a full-time basis at a substantial salary during this time period refutes his contention. Consequently, we hold that petitioner has not shown that he had reasonable cause for not filing his income tax returns. Accordingly, we sustain respondent's determination on this issue.
Next, petitioner contends that he is not liable for the additions to tax under
Negligence has been defined as the lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances.
Petitioner again argues that his mental condition precluded him from acting prudently with regard to filing income tax returns and, therefore, we should absolve him of the addition to tax. Again, we disagree. His employment during the years in issue evidences far too much ability on his part to cope with the ordinary requirements of the business world for us to accept his reasoning. Furthermore, there is evidence in this record, such as *744 the small amount of the tax withheld from petitioner's wages and the allegations contained in the petition, that indicates that petitioner was a tax protestor and intentionally did not file his returns. For these reasons, we uphold respondent's determination on this issue.
Next, petitioner asks this Court to absolve him of the additions to tax under
It is clear on this record that petitioner paid no estimated tax for the years in issue although he was required to do so. The imposition of an addition to tax under
Finally, petitioner claims that he is entitled to a refund of $ 100 for 1987. The parties agree that, due to concessions, petitioner's taxable income for 1987 is zero and that he had withholding*745 credits of $ 100 for that year. However, respondent maintains that petitioner is not entitled to have his withholding credits refunded to him because the period of limitations on such refund had expired at the time the notice of deficiency was issued.
In general,
All of the tax paid by petitioner for 1987 was withheld from his wages. Withheld taxes are deemed to have been paid by a taxpayer on the 15th day of the 4th month following the close of the taxable year. Sec. 6513(b);
Where a taxpayer fails to file a return and a notice of deficiency has been*746 issued, the taxpayer is entitled to a credit or refund of amounts paid within 2 years preceding the mailing of the notice.
Because of concessions by both parties,
1. All section references are to the Internal Revenue Code in effect for the years in issue. All Rule references are to the Tax Court Rules of Practice and Procedure.↩
Carlos and Jacqueline Marcello v. Commissioner of Internal ... , 380 F.2d 499 ( 1967 )
Texas Learning Technology Group v. Commissioner of Internal ... , 958 F.2d 122 ( 1992 )
Aleksandrs v. Laurins Cathie Laurins v. Commissioner ... , 889 F.2d 910 ( 1989 )
George v. Zmuda and Walburga Zmuda v. Commissioner of ... , 731 F.2d 1417 ( 1984 )
J.R. Betson, Jr. And Joan Sue Betson v. Commissioner of ... , 802 F.2d 365 ( 1986 )