DocketNumber： Docket No. 4370-95
Judges： CHIECHI
Filed Date： 3/19/1997
Status： Non-Precedential
Modified Date： 4/18/2021
Decision will be entered under Rule 155.
MEMORANDUM FINDINGS OF FACT AND OPINION
CHIECHI,
| Additions to Tax | Accuracy-Related Penalties | ||
| Year | Deficiency | Sec. 6651(a)(1) Sec. 6662(a) | |
| 1989 | $ 7,083 | $ 2, 960 | $ 1,417 |
| 1990 | 6,916 | 3,156 | 1,033 |
| 1991 | 7,232 | -- | 1,446 |
The issues remaining for decision are: *167
(1) Is petitioner entitled for the years at issue to any deductions claimed for charitable contributions? We hold that he is not.
(2) Is petitioner entitled for 1990 and 1991 to any Schedule C (Profit or Loss from Business) deductions claimed with respect to *168 TFC Engineering? We hold that he is not.
(3) Is petitioner entitled for 1989 to treat (a) certain long-term capital losses from the sales of stocks as his losses, (b) certain transactions as giving rise to nonbusiness bad debts, and (c) certain stock as worthless? We hold that he is not.
(4) Is petitioner liable for 1989 and 1990 for the addition to tax under
(5) Is petitioner liable for the years at issue for the accuracy-related penalty under
FINDINGS OF FACT *169 *170
At the time the petition was filed, petitioner lived in Las Cruces, New Mexico.
Petitioner, who was an engineer working for the Department of the Army during the years at issue, filed returns for 1989, 1990, and 1991 on February 21, 1992, October 12, 1993, and February 5, 1992, respectively.
During 1989, 1990, and 1991, petitioner prepared checks totaling $ 15,092, *171 served as the bookkeeper for the collection of tithes and charitable contributions of Agape Assemblies, Inc. (Agape) and Body of Christ Church and had the authority to make deposits to, and withdrawals from, the TFC account.
Agape was an organization described in
Ms. Donna Dorris (Ms. Dorris) was the secretary of Agape and oversaw the work of Ms. Spiegel. Ms. Dorris drew no distinction between Agape and TFC because she considered both organizations to be one and the same.
During 1989, petitioner wrote a check (check 3448) to Professional Reprographics and a check (check 3534) to R.B. Design & Printing (R.B. Design & Printing) in the amounts of $ 86 and $ 874, respectively. The following handwritten notations appeared on the check stubs for check 3448 and check 3534, respectively: "Corrections to Poetry Text" and "Lee Mc's poetry books". A receipt from R.B. *172 Design & Printing indicated that check 3534 was used to pay a bill for 500 70-page poetry books, that a customer named "McWilliams" placed the order for those books, and that Nathanael Roman received those books.
Petitioner wrote two checks (checks 3597 and 3660) during 1989, one check (check 3974) during 1990, and one check (check 4494) during 1991 to Ms. Shirley A. Ridgway (Ms. Ridgway) in the amounts of $ 545, $ 550, $ 270, and $ 70, respectively. Ms. Ridgway and petitioner, who have known each other for approximately 25 years, are good friends. The following handwritten notations appeared on the check stubs for checks 3597, 3660, 3974, and 4494, respectively: "Tithes/mine", "Donation", "Donation Reimbursement", and "Agape Assemblies".
During 1989, petitioner wrote a check to Citizen's Bank (check to Citizen's Bank) in the amount of $ 540. The following handwritten notation appeared on the check stub for that check: "TFC Deposit/Donation". Return Treatment of Claimed Charitable Contributions
In Schedule A of petitioner's 1989, 1990, and 1991 returns, *173 petitioner claimed deductions for charitable contributions totaling $ 22,690, $ 15,456, and $ 15,210, respectively.
Dona Ana County, New Mexico, issued petitioner a Certificate of Business Registration for calendar year 1985 for an entity called TFC Engineering. That certificate stated in pertinent part: Whereas, a business registration application form has been completed on behalf of the above named individual, partnership or corporation, and the registration fee of $ 25 has been paid; Now, therefore, the County of Dona Ana, State of New Mexico, hereby acknowledges receipt of said fee for the calendar year ending December 31, 1985.
During 1990 and 1991, petitioner provided financial support to his son Matthew Roman (Matthew Roman) who was, as of the fall of 1990, a 20-year old college student. Petitioner and Matthew Roman's mother Gloria J. Maldonado (Ms. Maldonado) were divorced sometime in 1974 or 1975. During 1990 and 1991, Matthew Roman generally resided at petitioner's house during the weekends and at Ms. Maldonado's house during the weekdays. Pursuant to the divorce decree relating to petitioner's divorce from Ms. Maldonado, petitioner's obligation to support *174 his son ended when his son turned 18 years old.
During 1990 and 1991, petitioner and his son had an agreement under which petitioner was to pay Matthew Roman approximately $ 130 every several weeks in exchange for, inter alia, bookkeeping, filing, and automobile detailing by Matthew Roman. The following handwritten notation appeared on the check stubs for most of the checks that petitioner's son received from petitioner during 1990 (Matthew Roman's checks): "Matt's Rm. & Bd.". Most of Matthew Roman's checks were written either to Ms. Maldonado or the payee lines were left blank; several of those checks were payable to New Mexico State University, University of Nebraska, William T. Baker, D.O, P.A., and Wal-Mart Pharmacy; and none of them was payable to Matthew Roman.
During 1990 and 1991, petitioner wrote 17 checks to Ms. Ridgway (Ms. Ridgway's checks) totaling $ 2,582. One of the following handwritten notations appeared on the check stubs for each of 16 of those checks: "RX-7 Repairs", "Taillights RX-7", "RX-7/Chrysler Ins.", "RX-7 Oil change", "auto advertisement", "Toyota Repair", "Car Insurance", "Auto Repairs", "Auto Tax/Tune-up", "Auto (RX-7) Repair", and "Auto Supplies". One *175 of Ms. Ridgway's checks, dated January 26, 1990, was for $ 1,100, and the following handwritten notation appeared on the check stub for that check: "Business". None of the handwritten notations on the check stubs for those checks indicated that it was a payment for services rendered by Ms. Ridgway.
In Schedule C of petitioner's 1990 return (1990 Schedule C), petitioner indicated that TFC Engineering's "Principal business" was "Engineering Services" and that it was the first Schedule C filed for TFC Engineering. The 1990 Schedule C showed a net loss of $ 6,246, comprised of no gross income, $ 4,207 in claimed bad debts, and $ 2,039 in claimed "Wages". The return that petitioner filed for 1991 did not include a Schedule C for TFC Engineering.
From at least the last quarter of 1987 through April 27, 1989, petitioner as custodian for Matthew Roman under the Uniform Gifts to Minors Act (UGMA) of New Mexico maintained an account (Vanguard account) at Vanguard Discount Brokerage Services (Vanguard). The Social Security number that Vanguard listed for that account was [TEXT REDACTED BY THE COURT]. Petitioner's *176 Social Security number is [TEXT REDACTED BY THE COURT]. Vanguard sent a statement for the last quarter of 1987 (1987 Vanguard statement) to petitioner as custodian for Matthew Roman under the UGMA of New Mexico that indicated that 45 shares of Daisy Systems Corp. stock (Daisy stock) and 200 shares of Gibraltar Financial Corp. stock (Gibraltar stock) had been purchased for $ 304 and $ 700, respectively. Vanguard sent another statement for the last quarter of 1988 (1988 Vanguard statement) to petitioner as custodian for Matthew Roman under the UGMA of New Mexico that showed that those stocks were still being held. (Hereinafter, the 1987 Vanguard statement and the 1988 Vanguard statement shall be referred to collectively as the Vanguard statements.) Vanguard sent to petitioner as custodian for Matthew Roman under the UGMA of New Mexico a form in lieu of Form 1099-B for 1989 (Vanguard 1099) that indicated that on April 27, 1989, the Daisy stock and the Gibraltar stock were sold for $ 157 and $ 60, respectively.
On October 5, 1988, Richard L. Parra (Mr. Parra) signed a note that stated that he was to repay Nathanael Roman $ 5,351 *177 at an annual percentage interest rate of 12.5 percent (October 5 note). Mr. Parra was to repay that note in monthly installments of principal and interest totaling $ 179. On October 7, 1988, Mr. Parra signed another note that stated that he was to repay Nathanael Roman $ 5,020 at an annual percentage interest rate of 18.2 percent (October 7 note). Mr. Parra was to repay that note in monthly installments of principal and interest totaling $ 182.
On or about October 5, 1988, petitioner borrowed $ 5,351, the same principal amount as the October 5 note, from Air Defense Center Federal Credit Union (ADCFCU loan). The ADCFCU loan bore the same annual percentage interest rate as the October 5 note. On October 7, 1988, petitioner borrowed $ 5,020, the same principal amount as the October 7 note, from Norwest Financial New Mexico, Inc. (Norwest loan). The Norwest loan bore the same annual percentage interest rate as the October 7 note. During 1989, petitioner repaid the ADCFCU loan and the Norwest loan by using $ 9,966 that he borrowed from White Sands Federal Credit Union (White Sands loan) at an annual percentage interest rate of 13 percent.
On *178 December 15, 1987, Robert L. McWilliams (Mr. McWilliams) signed a note (Mr. McWilliams' note) that stated that he was to repay Nathanael Roman $ 4,500 at an annual percentage interest rate of 12 percent in monthly installments of principal and interest totaling $ 275. Mr. McWilliams did not pay any principal or interest on that note. When petitioner learned during 1989 that Mr. McWilliams was unable to pay certain creditors, he determined that Mr. McWilliams did not intend to pay the principal and interest on Mr. McWilliams' note.
On May 19, 1989, petitioner gave Linda Parra (Ms. Parra), Mr. Parra's wife, a check for $ 500 (Ms. Parra's check). The check stub for that check included the following handwritten notation: "Linda will repay at the rate of $ 50.00 per week starting 27 May 1989". Ms. Parra did not repay petitioner the amount of Ms. Parra's check.
One or more individuals associated with Agape whose identity is not disclosed in the record asked petitioner to pay during 1988 and 1989 that portion of the premium under a group health insurance policy maintained *179 by Agape that was attributable to health coverage for Ms. Parra and/or Mr. Parra and their daughter (insurance payment). Petitioner made one insurance payment during 1988 and two such payments during 1989. Mr. Ridgway
On October 6, 1988, petitioner gave James B. Ridgway (Mr. Ridgway) a check for $ 300 (Mr. Ridgway's check) that included the following handwritten notation on the check stub for that check: "Auto Purchase Loan". Mr. Ridgway did not repay the amount of Mr. Ridgway's check.
On April 17, 1987, petitioner paid $ 1,000 in return for 1,000 shares of $ 1 par value common stock of Celebration Products (Celebration), and he received a stock certificate representing those shares. On May 14, 1988, petitioner paid $ 2,000 to purchase an additional 2,000 shares of $ 1 par value Celebration common stock. However, petitioner received a stock certificate representing only 1,000 of those 2,000 shares.
At all relevant times, Mr. Parra was a principal officer of *180 Celebration. During 1989, petitioner determined that Mr. Parra was unable to make Celebration into a successful business.
In Schedule D (Capital Gains and Losses) of petitioner's 1989 return (1989 Schedule D), petitioner claimed the following as short-term capital losses:
| Promissory Note -- Robert L. Parra | $ 7,500 |
| Promissory Note -- Robert L. Parra | 7,500 |
| Promissory Note -- Robert L. McWilliams | 6,000 |
| Celebration Products Stock | 2,500 |
| Total | 23,500 |
He claimed no short-term capital gains and no long-term capital gains or losses in his 1989 Schedule D. Because of the $ 3,000 limitation imposed by section 1211(b) for each taxable year on the amount of net capital loss by which an individual may reduce income, petitioner reduced the income reported in his 1989 return by $ 3,000 of the claimed short-term capital losses reported in his 1989 Schedule D. He carried over the remaining $ 20,500 of such claimed losses to Schedule D of his 1990 return and reduced the income reported in that return by $ 3,000 of that claimed loss carryover. Petitioner carried over the remaining $ 17,500 of that claimed loss carryover to *181 Schedule D of his 1991 return and reduced the income reported in that return by $ 3,000 of that claimed loss carryover.
In his returns for the years at issue, petitioner did not claim any losses attributable to the sales of the Daisy stock and the Gibraltar stock, the amount of Ms. Parra's check, the amount of the insurance payments, and the amount of Mr. Ridgway's check.
OPINION
Petitioner bears the burden of proving that respondent's determinations in the notice are erroneous and that he is entitled to the tax treatment that he is claiming for the items in dispute. See
Petitioner testified with respect to the stock sale losses, nonbusiness bad debts, and worthless stock that he is claiming. He did not testify about any other issue in this case. We presume that if he had testified truthfully about those other issues, his testimony would not have been favorable to his position on them. See
Petitioner contends that he is entitled to deductions for 1989, 1990, and 1991 for charitable contributions that he made to or for the use of Agape in the amounts of $ 22,690, $ 15,456, and $ 15,210, respectively.
To support his position, *183 petitioner introduced into evidence (1) check stubs containing, inter alia, the information that appeared on the blank checks and the additional checks; *184 and those checks were deposited into the bank account of TFC *185 she drew no distinction in her testimony between Agape and TFC because she considered both organizations to be one and the same. To illustrate, Ms. Dorris testified that petitioner gave her petitioner's lists to review about six weeks prior to trial, that she reviewed those lists, that those lists corresponded with a ledger of contributions to Agape, which was not introduced into evidence, and that the amounts reflected in those lists were deposited into the TFC account.
On the instant record, we find that petitioner has failed to carry his burden of showing that the amounts of the blank checks that he claims he contributed to Agape during each of the years at issue were, in fact, contributed during each such year to or for the use of that organization within the meaning of
With respect to check 3448 in the amount of $ 86, the following handwritten notation appeared on that check: "Corrections to Poetry Text". There is no reliable evidence in the record that "Corrections to Poetry Text" was related to a project of Agape.
With respect to check 3534 in the amount of $ 874 that was payable to R.B. Design & Printing, the following handwritten notation appeared on that check: *186 "Lee Mc's Poetry Books". A receipt from R.B. Design & Printing indicated that check 3534 was used to pay a bill for 500 70-page poetry books, that a customer named "McWilliams" placed the order for those books, and that Nathanael Roman received those books. Ms. Dorris testified that Mr. McWilliams was one of the "members of the ministry". Assuming arguendo that Mr. McWilliams were a member of the ministry of Agape, *187 contributions that she made on his behalf to Agape during 1989, 1990, and 1991. We do not have an explanation from Ms. Ridgway, who testified with respect to another issue in this case, about the purposes of those checks, nor do we know if she deducted in her returns the funds that petitioner claims she contributed to Agape on his behalf.
With respect to the check to Citizen's Bank, the following handwritten notation appeared on that check: "TFC Deposit/Donation". Even petitioner's own notation suggests that petitioner made a deposit to a bank account of TFC, and not Agape, at Citizen's Bank.
On the instant record, we find that petitioner has failed to carry his burden of showing that the additional checks (i.e., checks 3448, 3534, 3597, 3660, 3974, and 4494 and the check to Citizen's Bank) represent amounts that petitioner contributed during 1989, 1990, and/or 1991 to or for the use of Agape within the meaning of
Based on the entire record before us, we find that petitioner has failed to carry his burden of proving that the amounts of the blank checks and the additional checks (as well as any cash) that he claims he contributed to or for the use of Agape during *188 1989, 1990, and/or 1991 were, in fact, contributed during each such year to or for the use of that organization within the meaning of
Petitioner claims on brief (1) that TFC Engineering was engaged during 1990 and 1991 in the business of purchasing, repairing, and reselling automobiles and (2) that that alleged business generated losses during those years of $ 6,246 and $ 7,562, respectively. *189 Respondent disputes petitioner's claims. *190 (3) receipts for certain of the expenses shown in those summaries that indicated that the following customers were responsible for the expenses incurred: Number of Receipts Customer Name Listing Customer Name Nathanael Roman 11 Shirley Ridgway 8 Matthew Roman 1 Aunt Shirley's Auto Sales 1 Robert's Auto Repair 6
We are unwilling to rely on petitioner's self-serving summaries to establish that during 1990 and 1991 he was in the business of purchasing, repairing, and reselling automobiles. Although certain check stubs of petitioner and receipts for repairs that are in evidence support petitioner's position that during 1990 and 1991 he paid the repair and other expenses for certain automobiles, we are not persuaded by the documentary (and other) evidence introduced by petitioner on this issue that during those years he owned the automobiles listed in petitioner's summaries and that he attempted to, and/or did, sell any of those automobiles for profit during those years.
The testimonial evidence regarding the claimed Schedule C losses for TFC Engineering consists of the testimony of Ms. Ridgway and Matthew Roman. Ms. Ridgway testified that around 1989 she managed mobile homes and automobile sales for *191 petitioner. We question Ms. Ridgway's testimony. Indeed, petitioner acknowledges on brief that Ms. Ridgway was mistaken when she testified that she performed those functions for him around 1989. Petitioner claims that Ms. Ridgway did not manage mobile homes for him until 1991. Petitioner also claims that Ms. Ridgway first managed automobile sales for him during 1990. Ms. Ridgway also testified that she received around $ 2,900 during 1990 and some undisclosed amount during 1991 from TFC Engineering for "sales and organizing the mobile homes, making collections, taking care of repairs, also leasing the mobile homes--taking care of all those things for you." The documentary evidence shows that during 1990 and 1991 petitioner wrote 17 checks to Ms. Ridgway totaling $ 2,582, 16 of which appear to relate to certain repair and other expenses regarding certain automobiles, one of which for $ 1,100 contained the handwritten notation "Business", and none of which establishes that those checks were payments for services rendered during those years by Ms. Ridgway to petitioner in the conduct of a business of purchasing, repairing, and reselling automobiles. In short, we are not persuaded by Ms. *192 Ridgway's testimony (and the other pertinent evidence) that petitioner was engaged in such a business during 1990 and 1991.
Nor did we find the testimony of Matthew Roman, petitioner's son, particularly helpful to petitioner's position that during 1990 and 1991 he was engaged in the business of buying, repairing, and reselling automobiles. Indeed, although he testified that during 1990 petitioner paid him for "bookkeeping, filing, automobile detailing * * * and long-range business planning", Matthew Roman did not even know the nature of the business in which petitioner was allegedly engaged and for which he allegedly worked during 1990 and 1991. On cross-examination, respondent's counsel asked petitioner's son to describe the type of business in which his father was engaged during 1990. Petitioner's son replied: "I believe the -- well, at that time the name of his business was TFC Engineering. And the scope of that is beyond my knowledge."
Based on the entire record before us, we find that petitioner has failed to satisfy his burden of proving that during 1990 and 1991 he was engaged under the name TFC Engineering (or under any other name) in a trade or business within the meaning *193 of
Petitioner claims that during 1989 he realized long-term capital losses of $ 147 and $ 640 on the respective sales of the Daisy stock and the Gibraltar stock. At trial, petitioner presented the Vanguard statements and the Vanguard 1099 for 1989, the year in which the Daisy stock and the Gibraltar stock were sold. Those documents show that at least during the last quarter of 1987 to April 27, 1989, those stocks were held in an account at Vanguard by Nathanael Roman as custodian for his son Matthew Roman under the UGMA of New Mexico. The Social Security number listed on the Vanguard statements and the Vanguard 1099 for the Vanguard account was [TEXT REDACTED BY THE COURT]. Petitioner's Social Security number is [TEXT REDACTED BY THE COURT]. The Vanguard 1099 indicated that on April 27, 1989, Nathanael Roman as custodian for Matthew Roman under the UGMA of New Mexico sold the Daisy stock and the Gibraltar *194 stock. No evidence was offered at trial to contradict the Vanguard statements and the Vanguard 1099, although we note that, pursuant to the UGMA of New Mexico, petitioner should have delivered the Daisy stock and the Gibraltar stock to his son when he became 18 on December 3, 1987. See
Under New Mexico law in effect during all relevant times, "A gift made in a manner prescribed in the Uniform Gifts to Minors Act * * * is irrevocable and conveys to the minor indefeasibly vested legal title to the security".
Based on the entire *195 record before us, we find that petitioner has failed to satisfy his burden of proving that he owned the Daisy stock and the Gibraltar stock on April 27, 1989, the date on which those stocks were sold. Accordingly, we reject petitioner's claim that during 1989 he realized long-term capital losses on the sales of those stocks.
Only a bona fide debt qualifies as debt for purposes of
The following factors have been taken into account by this Court and other courts in determining whether such a good faith intention of repayment exist: (1) Whether a note or other evidence of indebtedness exists,
In general, the determination of whether a debt is worthless is a question of fact, and all pertinent evidence must be considered, including the value of collateral, if any, securing the debt and the financial condition of the debtor.
At the conclusion of the trial in this case, respondent conceded that the October 5 and the October 7 notes were loans and that petitioner is entitled to treat the respective principal amounts of those notes as nonbusiness bad debts for 1989. As we understand petitioner's position, he contends that, in addition to the principal amounts conceded by respondent with respect to the October 5 and October 7 notes, he is entitled for 1989 to treat as a nonbusiness bad debt the interest due on the October 5 and the October 7 notes. *198 Respondent disputes petitioner's contention. We agree with respondent.
The record does not establish that petitioner, a cash basis taxpayer, included in income for any year interest payments, if any, on the October 5 and the October 7 notes. Consequently, petitioner has failed to show that he has any basis in that interest.
On the record before us, we find that petitioner has failed to prove that he is entitled for 1989 to treat as a nonbusiness bad debt the interest on the October 5 and the October 7 notes.
Petitioner contends that the aggregate amount of principal and interest on Mr. McWilliams' note is a bona fide debt that became worthless during 1989. Petitioner introduced into evidence a note signed by Mr. McWilliams on December 15, 1987, which stated that Mr. McWilliams was to repay Nathanael Roman $ 4,500 at an annual percentage interest rate of 12 percent in monthly installments of principal and interest totaling $ 275. In addition, petitioner testified that: (1) He lent Mr. McWilliams the amount represented by Mr. McWilliams' note, (2) during 1989 Mr. McWilliams was unable to pay certain *199 creditors, and (3) he determined that Mr. McWilliams was unable to pay the aggregate amount of the principal and interest on Mr. McWilliams' note.
Based on petitioner's documentary and testimonial evidence regarding Mr. McWilliams' note, we find that the aggregate amount of the principal and interest on Mr. McWilliams' note is a bona fide debt within the meaning of
Based on our review of the instant record, we find that petitioner has failed to carry his burden of proving that Mr. McWilliams' note became worthless during 1989. Accordingly, we sustain respondent's determination that petitioner is not entitled for that year to treat any amount of Mr. McWilliams' note *200 as a nonbusiness bad debt.
Petitioner contends that he is entitled for 1989 to treat the following as nonbusiness bad debts under
Based on our review of the instant record, we find that petitioner has failed to carry his burden of proving (1) that the amounts of Ms. Parra's check, the insurance payments, and Mr. Ridgway's check were bona fide debts within the meaning of
Petitioner contends that the 3,000 shares of Celebration common stock that he purchased on April 17, 1987, and May 14, 1988, became worthless during 1989 and that he is entitled for that year to treat that stock as worthless stock under
The only evidence presented by petitioner about the worthlessness of the Celebration stock is his testimony that he determined during 1989 that Mr. Parra was unable to make Celebration into a successful business. Petitioner's belief that the Celebration stock at issue became worthless during 1989 is not enough to persuade us that that stock did become worthless during that year. See
On the instant record, *202 we find that petitioner has failed to satisfy his burden of proving that the Celebration stock became worthless during 1989. Accordingly, we sustain respondent's determination that petitioner is not entitled for that year to treat that stock as worthless under
Respondent determined that petitioner is liable for each of the years 1989 and 1990 for the addition to tax under
On the instant record, we find that petitioner has failed to satisfy *204 his burden of proving that his failure to file timely his returns for 1989 and 1990 was due to reasonable cause, and not willful neglect. Accordingly, we sustain respondent's determinations for those years imposing the addition to tax under
The accuracy-related penalty under
Respondent determined that petitioner's substantial understatement of income tax (1) for 1989 and 1990 is attributable to the $ 3,000 capital loss deduction and the charitable contribution deduction claimed by petitioner for each of those years and (2) for 1991 is attributable to those claimed deductions as well as the $ 7,633 deduction for wages and salaries that petitioner claimed in his 1991 Schedule E.
With respect to the $ 3,000 capital loss deduction that petitioner claimed for each of the years at issue, respondent concedes that petitioner is entitled to treat the October 5 and the October 7 notes in the respective principal amounts of $ 5,351 and $ 5,020 as nonbusiness bad debts for 1989. Pursuant to respondent's concession, petitioner is entitled to a $ 3,000 capital loss deduction for each of the years at issue. Secs. 1221(b), 1212(b). Consequently, there is no substantial understatement of income tax for each of those years that is attributable to the $ 3,000 capital loss deduction *206 claimed by petitioner for each such year.
With respect to the charitable contribution deduction that petitioner claimed for each of the years at issue, petitioner contends that he is entitled to those deductions and that therefore respondent erred in imposing the accuracy-related penalty with respect to them. We disagree. We have sustained herein respondent's determinations disallowing the charitable contribution deductions claimed by petitioner for the years at issue. On the record before us, we sustain respondent's determinations imposing the accuracy-related penalty for each such year to the extent that it is attributable to those claimed deductions.
With respect to the $ 7,633 deduction for wages and salaries claimed by petitioner in his 1991 Schedule E, that claimed deduction resulted in a 1991 Schedule E "total loss" of $ 6,951 that petitioner used to reduce his income for 1991. Petitioner concedes that he is not entitled to the $ 7,633 deduction for wages and salaries and the $ 6,951 "total loss" that he claimed in his 1991 Schedule E. However, he contends (1) that, in addition to the other deductions that he claimed in that schedule, he is entitled to deduct $ 595 for contract *207 labor expenses and $ 60 for automobile and travel expenses and (2) that he has 1991 Schedule E "total income" of $ 26. On the record before us, we sustain respondent's determination imposing the accuracy-related penalty for 1991 to the extent that it is attributable to the $ 7,633 expense deduction, and resulting "total loss", that petitioner claimed in his 1991 Schedule E.
To reflect the foregoing and the concessions of the parties,
1. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue. All Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. Respondent determined in the notice of deficiency (notice) that petitioner is not entitled to the deduction for wages and salaries of $ 7,633 claimed in Schedule E (Supplemental Income and Loss) (1991 Schedule E) of his 1991 U.S. individual income tax return (return) and that, consequently, he is not entitled to the "total loss" of $ 6,951 claimed in that schedule, but instead has 1991 Schedule E total income of $ 682. Petitioner concedes that he is not entitled to a 1991 Schedule E deduction for wages and salaries in the amount of $ 7,633 and that he does not have a 1991 Schedule E "total loss" of $ 6,951. However, he claims with respect to his 1991 Schedule E (1) that, in addition to the other expenses claimed in that schedule, he is entitled to deduct expenses for (a) contract labor and (b) automobile and travel of $ 595 and $ 60, respectively, and (2) that he has "total income" of $ 26. In response to those claims, respondent states on brief: "While respondent does not concede that petitioner is entitled to rental expenses in the specific categories or in the specific amounts now claimed, respondent will not dispute that petitioner realized a Schedule E rental gain for 1991 in the amount of $ 26". Since respondent does not dispute that petitioner has 1991 Schedule E "total income" of $ 26, we shall not address petitioner's contentions regarding the deductions to which he claims he is entitled in arriving at that "total income" amount.
3. Unless otherwise indicated, our findings of fact pertain to the years at issue.↩
4. Petitioner contends for the first time on brief (1) that, when this case was called for trial, respondent changed the position which she set forth in the stipulation of facts (stipulation) that the parties had lodged before trial with respect to certain exhibits of petitioner that were attached to that stipulation and which related to his claims for certain charitable contributions, business expenses, nonbusiness bad debts, and long-term capital losses and (2) that respondent therefore violated the terms of that stipulation, thereby resulting in an injustice to petitioner. We disagree. The stipulation contained respondent's evidentiary objections and/or statements of position with respect to the stipulated exhibits of petitioner. Respondent expressly stated therein that, in stipulating that petitioner was attaching certain exhibits to the stipulation, respondent does not stipulate that petitioner is entitled to any of the claimed items to which the exhibits of petitioner relate. Certain other portions of the stipulation and the exhibits of petitioner attached thereto were not clear to the Court, and at the beginning of the trial of this case the Court asked (1) respondent to clarify certain statements in the stipulation about respondent's position regarding the exhibits of petitioner that were attached to the stipulation, (2) the parties to clarify certain other statements about certain of those exhibits, and (3) the parties to address respondent's evidentiary objections to certain of those exhibits. The Court then (1) ruled on respondent's evidentiary objections and excluded certain portions of the stipulation and the exhibits of petitioner that were attached thereto and (2) received into evidence and made a part of the record in this case the remaining portions of the stipulation and the exhibits that were attached thereto.
5. Hereinafter, all dollar amounts are rounded to the nearest dollar.↩
6. Checks 3448, 3534, 3597, 3660, 3974, and 4494 and the check to Citizen's Bank are collectively referred to as the additional checks.↩
7. The record does not disclose the amounts of those insurance payments during 1988 and 1989.↩
8. The amounts claimed as charitable contributions to or for the use of Agape in petitioner's returns for the years at issue are greater than the total amounts of the blank checks and the additional checks for 1989, 1990, and 1991 that are part of the record in this case. That record does not establish the reason for those differences, although petitioner contends that they relate to cash contributions that he claims he made to Agape during those years.↩
9. Respondent does not dispute that the handwritten notations on the check stubs for the checks that petitioner wrote during the years at issue appeared on those checks. Hereinafter, for ease of reference, we shall discuss the handwritten notations on the check stubs that are in evidence as if they appeared on the checks to which those stubs relate.↩
10. Ms. Dorris testified that it was the policy of Agape that the payee lines on those checks be left blank. She did not explain the reason for that alleged policy.
11. Petitioner does not dispute that during the years at issue TFC was not an organization described in
12. In her testimony, Ms. Spiegel referred to Body of Christ Church. Except for its name, which suggests that Body of Christ Church may have had a ministry, the record discloses no facts about that organization.↩
13. Although petitioner reported no income in his 1990 Schedule C with respect to TFC Engineering, he is claiming herein that he did have income for 1990 attributable thereto. Although petitioner deducted certain expenses in his 1990 Schedule C with respect to TFC Engineering, he is claiming herein that he incurred different types and amounts of expenses during 1990 with respect thereto. In addition, although petitioner did not include a Schedule C for TFC Engineering in his return for 1991, he is claiming herein Schedule C gross income and expenses with respect thereto for that year.
14. Respondent also contends that, because the claimed automobile-related activity of TFC Engineering was not an activity engaged in for profit during 1990 and 1991, pursuant to sec. 183, petitioner is not entitled to deduct any expenses in excess of income. Petitioner does not address respondent's contention under sec. 183. On the record before us, we find that petitioner has failed to establish that the automobile-related activity in which he claims TFC Engineering engaged during 1990 and 1991 is an activity engaged in for profit within the meaning of sec. 183.↩
15. It is not clear from the record whether petitioner deducted the interest that he paid on the ADCFCU loan, the Norwest loan, and/or the White Sands loan under sec. 163(a), as limited by sec. 163(h). In any event, we do not understand petitioner to contend that he is entitled for 1989 to an interest expense deduction with respect to those loans.
Cohen v. Commissioner ( 1947 )
Aagaard v. Commissioner ( 1971 )
Clark v. Commissioner of Internal Revenue ( 1953 )
Jewell Ridge Coal Corporation v. Commissioner of Internal ... ( 1963 )
Clark v. Commissioner ( 1952 )
Wichita Term. El. Co. v. Commissioner of Int. R. ( 1947 )
Hans Zimmerman and Clara Zimmerman, Apellants v. United ... ( 1963 )
Cohen v. Commissioner of Internal Revenue ( 1949 )
commissioner-of-internal-revenue-v-joseph-c-lincoln-and-lesghinka ( 1957 )