T .C. Su m m ary Op i n io n 2 01 8 -4 6

UNITED STATES TAX COURT

J IN M AN PARK, Pet i ti o ner v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 5 4 18 -1 6 S. Fi l edSep t em b er 2 4 , 2 0 1 8
. J o h n A. Cl yn ch , J r., fo r p et i t i o ner. Co n no r J . M o ran an dM el i s s a D. Lan g , fo r res p o n d en t .

SUM M ARY OPINION GERBER, J u d g e: Th i s cas e was h eard p u rs u an tt o the p ro v i s i o n s o f s ect i o n 7 4 6 3 o f t h e In t ern al Rev en u e Co d e i n effect wh en th e p et i t i o n was fi l ed
. 1 Pu rs u an t t o s ect i o n 7 4 6 3(b ), th e d eci s i o n t o b e en t ered i s n o trev i ewab le b y an y

1 Un l es s o t h erwi s e i nd i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev enu e Co de i n effect atal l rel ev an tt i m es , an dal l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an dPro cedu re.- 2
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o t h er co u rt , an dth i s o p i ni o n s h al l n o t b e t reat ed as p reced en tfo r an y o th er cas e. Res po n d en td et erm i n eda $ 3 ,1 72 d efi ci en cy i n p et i t i o n er’ s 2 0 1 4 Fed eral i n co m e t ax . Th e d et erm i n at i on was b as edo n p et i ti o n er’ s recei p t o f an d fai lu re t o rep o rt $ 1 3 ,5 0 8 .3 8 recei v ed fro m Ban ko f Am eri ca (BOA) du ri n g 2 0 1 4 . Th e i s s u e fo r o u r co n si d erat io n i s wh eth er an y p arto f t h e $ 1 3 ,5 08 was i n co m e t o p et i t i o n er. Back g ro u nd 2 Pet i t i on er res i d edi n the St at e o f W as h i n gt o n wh en h i s p et i t i o n was t i m el y fi led
. He em i g rat edfro m So ut h Ko rea t o the Un i t ed St at es i n 1 9 8 8 . He b ecam e a U.S. ci t i zen aro u n d1 9 93 an djo i n ed t h e U.S. Arm y a co up le o f y ears l at er. Aft er s i x y ears o f act i ve du t y

h e jo i n edth e U.S. Arm

y Res erv e. Pet i t i o ner p u rch as ed a h ou s e du ri n g 2 0 0 8 an dt o o k o uta fi rs tan ds eco n d
m o rt g ag e wi t h BOA. Sev eral BOA acco u n ts were as s o ci at ed wi t h thes e
m o rt g ag es . Befo re t ak i n g o u t t h e m o rt g ag es , p et i t i o n er m ai n t ai neda ch eck i n g an d
s av i n g s acco u ntwi t h BOA. InOct o b er 2 01 1 p et i t i o n er’ s wi fe fi l ed fo r d i v o rce, an d p et i t i o n er’ s wi fe an dtwo ch i l dren m o v edo u to f th e h om e. Pet i t i o n er h ad fal l en b eh i n d o n t h e p aym en to f h i s m o rt g ag es ; h o wev er, b eg i n n i n g i n M ay 2 0 12

2 So m e o f t h e fact s are s t i p u l at edan dare s o fo un d . Th e s ti pu l at i o n o f fact s an d t h e at t ach edex h i b i t s are i n co rp o rat edh erei n b y th is referen ce.- 3
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h e res u m edp aym en to f t h e p ri nci p al an di n t eres t o n th e m o rt g ag es du ri n g h i s
m i l i taryd ep l oym en ti n Afri ca. Pet i t i o ner, du ri n g 2 0 14 , recei v edan dcas h eda $ 1 3 ,5 0 8 .3 8 ch eckfro m BOA’ s cu s t o m er s erv i ce. In cl u d edwi t h th e ch eckwas a l et t er s t at i ng th at ,

“ [b ] as ed o n a recen trev i ew o f y o u r acco u n t , we m ay n o th av e p ro v i d edy ou wi t h t h e l ev el o f s erv i ce y o ud es erv e, an dare p ro v i d i n g y o uwi t h th i s ch eck
. ” Th e l et t er fu rt h er s t at edthatp et i t i o n er m i g h twi sh t o co n s u l t wi t h s o m eo n e ab o u tan y p o s s i b l e t ax co n s eq u en ces o f recei v in g t h e fu nd s , i n cl u d eda n um b er fo r p et i t i o n er t o cal l if h e h adan y

qu es t i o n s , an dco n cl u d edb y t h an k in g h i m fo r h i s m i l i t ary s erv i ce. Pet i t i on er cal ledth e p h o n e n u m b er p ro v id edo n s ev eral o ccas i o n s , b u th e was u nab l e t o o bt ai n an y

fu rt h er i n fo rm at i o n . Co n s i d eri n g al l th e i n fo rm at i o n av ai l ab l e, p et i t i o n er co n cl u dedth ath e h ad o v erp ai dh i s m o rt g ag es du ri n g t h e t i m e o f h i s o v ers eas m i l i t ary

d ep l o ym en t . Acco rd i ng l y , h e d i d n o t rep o rtan y p o rt i o n o f t h e $ 1 3,5 0 8 .3 8 o n h i s 2 0 1 4 Fed eral i n co m e t ax retu rn . W i t h reg ardt o p et i t i o ner, res p o n d en trecei v ed a Fo rm 1 09 9 -M ISC, M i s cel lan eo u s In co m e, rep o rt i n g o t h er i n co m e o f $ 1 2,7 8 9 , an da Fo rm 1 0 9 9 -INT, In t eres t In co m e, rep ort i n g i n t eres ti n co m e o f $ 7 1 9 fro m BOA fo r t h e 2 0 1 4 t ax y ear. Becau s e p et i ti o n er d i d n o trep o rt t ho s e am o u n t s o n h i s retu rn , res p o n d en to n J u n e 6 , 2 0 1 6 , i s s u eda n o t i ce o f d efi ci en cy d et erm i n i n g t h atp et it i on er h adfai l edt o- 4
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rep o rti n co m e fro m

BOA. On J u l y

1 , 2 01 6 , p et i ti o n er t i m el y fi l eda p et i t i o n wi t h t h i s Co u rts t at i n g t h ath i s u n ders t an d i n g was th atth e fu n d s were n o t t ax ab l e i n co m e. Pet i t i o ner i s s u eda s ubp o en a t o BOA fo r reco rd s rel at edt o th e ch eck
. BOA res p o n d edv i a l et t er s tat i n g th at“ [t ] he b an k i s u n ab l e t o l o cat e an y acco u n t s o r reco rd s req ues tedwi t h th e i nfo rm at i on p ro v i d ed .” Di s cu ss i o n Pet i t i o ner co n ten d s th atth e BOA fu n d s rep ort edo n the Fo rm s 1 0 9 9 -M ISC
an d 1 0 9 9 -INT were n o ti n co m e b ecau s e t h ey were a refu n d o f o v erp aym en t s h e
m ad e o n th e p ri nci p al o f h i s m o rt g ag e acco u nt s wh i l e h e was d ep l o y edo vers eas . Res po n d en targ u es th atp et it i o n er h as fai ledt o p ro v i d e an y cred i b l e ev i d en ce s h o wi n g th atres p o nd en t ’ s d et erm i n at i o n was i n co rrect . Gen eral ly th e Co m m is s i o n er’ s d et erm i n at i o n s i n a n o ti ce o f d efi ci en cy are p res u m edco rrect , an dth e t ax p ay er b ears th e b urd en o f p ro v i n g t h atth o s e d et erm i n at i o n s are erro n eo u s . Ru l e 1 4 2 (a)(1 ); W el ch v . Hel v eri n g , 2 9 0 U.S. 1 1 1 , 1 1 5 (1 93 3 ). In cas es i nv o l v i ng u n rep o rt ed i n co m e, t he U.S. Co u rto f Ap p eal s fo r t h e Ni n t h Ci rcu i th as h el d t h at i n o rd er fo r t h e p res u m p t i o n o f co rrect n es s t o at t ach t o the n o t i ce o f d efi ci en cy i tm u s tb e s up p o rt edb y

“ s om e ev i d en t i ary

fo u n d at i o n ” l i nk i ng th e t ax p ay er t o th e i n co m e-p ro du ci n g act i v i t y . See W ei m ers k i rch v . Co m m i s s i o n er, 5 9 6 F.2 d3 5 8 , 3 6 1 -3 6 2 (9 th Ci r. 1 97 9 ), rev ’ g 6 7 T.C. 6 7 2 (1 9 7 7).- 5
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Res po n d en ts at i s fi ed h i s b u rd enb y m ean s o f t h e Fo rm s 1 09 9 b y wh i ch a t h i rd p art y rep o rt edt o res p o n d en tthatp et i t i on er h ad recei v ed a p aym en t . See Ban i s t er
v . Co m m i s s i o n er, T.C. M em o . 2 0 0 8 -2 0 1 , aff’ d , 4 1 8 F. Ap p ’ x 6 3 7 (9 t h Ci r. 2 0 1 1 ). Th u s, p et i t io n er m

u s treb u tthe p res u m

p ti o n b y p ro vi n g thatal l o r p arto f t h o s e fu n d s are n o tt ax ab l e i n co m e. See To k ars k i v . Co m m i s s i on er, 8 7 T.C. 7 4 (1 9 8 6 ). Gro s s i n co m e i n cl u d es “ al l i n co m e fro m wh at ev er s o u rce d eri v ed ”. Sec. 6 1 (a). Pay m en t s th atare “ u n d en i ab l e acces s i o n s t o weal t h, cl earl y real i zed , an d
o v er wh i ch th e t ax p ay ers h av e co m p l et e d o m i n i o n ” are t ax ab l e i n co m e u nl es s an ex cl u s i o n ap p l i es . See Co m m i s s i o n er v . Gl en s h aw Gl as s Co ., 3 4 8 U.S. 4 2 6 , 4 3 1 (1 9 5 5). On e s uch way

o f p ro v i n g th atan i t em

s h o u l d h av e b een ex cl u d edwo u l d b e t o s h ow t hat th e d ep o s i ti s d eri v edfro m a n o n t ax ab l e s ou rce. Th e ret u rn o f p ri n ci p al i s g en eral l y

n o ti n cl u d i b l e i n t ax ab le i n co m e. See, e.g ., Nat ’ l Ban ko f Co m m erce o f Seat t le v . Co m

m i s s i o n er, 1 1 5 F.2 d8 75 , 8 76 (9 t h Ci r. 1 9 40 ), aff’ g 4 0 B.T.A. 7 2 (1 9 3 9 ). Pet i t i o ner d o es n o td en y

th ath e recei v edth e fu n d s fro m BOA t hatg av e ri s e t o res p o n d en t ’ s d et erm i n at io n. Rat h er, h e co n t en d s th atBOA erro n eo u s l y i s s u ed t h e Fo rm s 1 09 9 an dth atthe fu n d s rep o rt edare n o t t ax ab l e i n co m e. Pet i t i on er t es t i fi edth atwh il e h e was d ep lo y edo v ers eas h e p ai db ot h th e p ri n ci p al an dth e i n t eres to n h i s m o rt g ag es , an dh e arg u es o n b ri ef t h atth e BOA ch eckwas- 6
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rei m b u rs em en tfo r o v erp aym en t s o f p ri nci p al h e m ad e o n h i s m o rt g ag e acco u n t s . Hi s t es t i m o n y

was s ub ject edt o cro s s -ex am i n at i o n an dwas b o t h p l au s i b le an d cred i b l e. Sup p o rt i n g p et i t i o n er’ s p o s i t i on , th e reco rd i ncl u d es the l et t er th at
acco m pan i edth e ch eckfro m

BOA, wh i ch i nd i cat es th atBOA h adm ad e a m i s t ak e reg ard i n g p et i ti o n er’ s acco u n t s . BOA’ s l et t er ad m i t s i twas co rrect i ng a wro n g i t h ad co m m i t t edreg ard in g p et it i o n er’ s acco u n ts an dwas retu rn i n g h i s m o n ey an d t h e i n t eres tth ath adaccru edo n i t . Res p o nd en t d o es n o to ffer an y arg u m en tt o the
co n traryan dap p ears i ns t eadt o rel y o n the p res u m

pt i o n o f co rrect n es s wh i ch at t ach es t o a n ot i ce o f d efi ci en cy t o s up p o rtth e p ro po s i t i on th at p et i t io n er’ s recei p t o f t he BOA ch eckwas a t ax ab l e ev en t . W e h o ldth atp et i t i o n er p res en t ed cred i b l e ev i d en ce t h atth e $ 12 ,7 8 9 was a rei m b u rs em en tfo r a m i s t ak e t h atBOA h adm ad e o n h i s acco u n ts . Th i s retu rn o f $ 1 2 ,7 8 9 o f p et it i o n er’ s m o rt g ag e p aym en t s was n o ta t ax ab l e ev en t an dth e am o u n t i s t herefo re n o ti n cl u d i b le i n i n co m e. Ad d i t i o n al l y , we h o ldth e $ 7 1 9 o f i n t eres t t h ataccru ed o n t h e erro neo u s l y co l l ect ed p aym en t s i s i n t eres t i n co m e wi t h i n th e
m ean i n g o f s ect i o n 6 1 (a)(4 ) an di ncl u d ib l e i n p et i t i o n er’ s 2 01 4 i n co m e.- 7
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To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t eredu n d er Ru l e 1 5 5
.