United States Tax Court

T.C. Summary Opinion 2022-19

ROBERT LESTER POWELL AND SVETLANA ALEKSEEVNA 

IAKOVENKO,

Petitioners

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

—————

Docket No. 20268-19S. Filed September 26, 2022.

—————

Robert Lester Powell and Svetlana Alekseevna Iakovenko, pro sese.

Evan K. Like, for respondent.

SUMMARY OPINION

COPELAND, Judge: This case was submitted pursuant to the 

provisions of section 7463 of the Internal Revenue Code in effect when 

the petition was filed.1 Pursuant to section 7463(b), the decision to be 

entered is not reviewable by any other court, and this opinion shall not 

be treated as precedent for any other case. Furthermore, this case was

submitted to the Court fully stipulated for a decision without trial

pursuant to Rule 122.

Petitioners, Robert Powell and Svetlana Iakovenko, received an

advance premium tax credit (APTC) in monthly installments during 

their 2017 tax year under the Patient Protection and Affordable Care 

1 Unless otherwise indicated, all statutory references are to the Internal 

Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references 

are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant 

times, and all Rule references are to the Tax Court Rules of Practice and Procedure. 

Monetary amounts are rounded to the nearest dollar. 

Served 09/26/22
2

Act.2 That year they claimed a $123,822 long-term capital loss

deduction, which the Internal Revenue Service (IRS) limited to $3,000

in a subsequent math error notice. As a result of the mathematical 

adjustment, petitioners’ household income exceeded the allowable limits 

for a Premium Tax Credit (PTC). Thus, the IRS determined that: they 

were not entitled to a PTC of $636 previously credited to them; they had 

an excess APTC of $17,652; and after allowing $4,000 of newly claimed

tuition and fee deductions, they had a resulting deficiency of $17,288 for

the 2017 tax year. Petitioners seek a redetermination of that deficiency,

which was set forth by the IRS in a statutory notice of deficiency dated 

August 23, 2019.

The issues3 for decision are:

(1) whether petitioners’ claimed $123,822 long-term capital loss

for 2017 is limited to $3,000 under section 1211(b); 

(2) whether petitioners are eligible for a 2017 PTC of $636 under 

section 36B; and 

(3) whether petitioners received an excess APTC of $17,652 for

2017, thereby increasing their tax under section 36B(f)(2)(A).

We note that the second and third issues are dependent on our 

determination of the first (i.e., the amount of capital loss for 2017).

2 The APTC is a payment made to individuals who enroll in qualified health 

plans during a year for which they are likely to qualify (at the end of such year) for the 

Premium Tax Credit (PTC) under section 36B. See Patient Protection and Affordable 

Care Act, Pub. L. No. 111-148, § 1412, 124 Stat. 119, 231–33 (2010). The PTC is a tax 

credit designed to offset the costs (for those who meet certain financial eligibility 

criteria) of enrolling in health insurance through a qualifying state or federal 

exchange. A taxpayer’s PTC is reduced by the total APTC received during the year, 

and the taxpayer’s federal income tax liability generally is increased by any excess of 

the APTC over the finally determined PTC. I.R.C. § 36B(f). 

3 Petitioners argue that the sole issue is limited to whether they are entitled to 

the full $123,822 capital loss reported on their 2017 return (i.e., whether or not the 

capital loss was limited to $3,000 under section 1211(b)). Because the capital loss 

adjustment was made in a section 6213(b)(1) math error notice that preceded the notice 

of deficiency and petitioners’ payment of the tax, we treat petitioners as claiming an 

overpayment. Petitioners’ overpayment claim was raised in the Petition and Amended 

Petition, and it was thoroughly briefed. We are not aware of any concessions or 

abandonment by respondent as to the limitation of capital losses, the disallowance of 

the PTC, or the repayment of the APTC. The remaining issues were raised in the 

statutory notice of deficiency and continually raised throughout the proceedings. 
3

Background

The following facts are based on the pleadings and the parties’ 

Stipulation of Facts, including the exhibits attached thereto. Petitioners 

resided in Ohio when they timely filed their Petition. Mr. Powell is a 

professional computer programmer. During the 2017 tax year 

petitioners were enrolled in health insurance provided by HMO 

Louisiana, which they purchased through the Health Insurance 

Marketplace. Petitioners’ health insurance premium was $1,524 per 

month from January 1, 2017, through December 31, 2017. A monthly 

APTC of $1,471 was paid to HMO Louisiana on behalf of petitioners for 

each month of 2017, totaling $17,652. 

Petitioners timely filed a joint 2017 Form 1040, U.S. Individual 

Income Tax Return, where they reported the following items, most of 

which are not in dispute: wage income of $61,234; taxable interest of 

$953; ordinary dividends of $245; taxable individual retirement account

distributions of $38,392; unemployment compensation of $10,112; Social 

Security benefits of $13,982, of which $11,885 was reported as taxable; 

and a $123,822 long-term capital loss. The capital loss was reported on 

Schedule D, Capital Gains and Losses, attached to the 2017 Form 1040.

Petitioners reported −$1,001 of adjusted gross income (AGI) for 

2017 as a result of the capital loss. Because they reported no taxable 

income, they claimed a $10,873 refund, the amount of federal income tax 

withheld from their wages. They reported no PTC or APTC receipts,

and they did not attach the required Form 8962, Premium Tax Credit,

to their 2017 Form 1040. 

On June 18, 2018, the IRS mailed to petitioners a Notice CP11, 

Changes to your 2017 Form 1040 (math error notice), notifying them 

that their 2017 Form 1040 was adjusted to limit their capital loss to 

$3,000. The limitation resulted in an increase to petitioners’ AGI from

−$1,001 to $119,820, and a corresponding increase in taxable income 

from $0 to $94,970. Consequently, the IRS determined that petitioners

were not entitled to a refund but instead bore an additional income tax 

liability of $4,311, plus interest. On or about June 22, 2018, petitioners 

paid the amount shown on the math error notice.

At or around this time, the IRS examined petitioners’ 2017 

return. During the examination, petitioners submitted a revised Form 

1040 for 2017, but the IRS did not process it. The revised Form 1040 

was not submitted with a Form 1040X, Amended U.S. Individual Income 
4

Tax Return, so it is not referred to as an amended return. The revised 

Form 1040 included Form 8917, Tuition and Fees Deduction, claiming

an additional $4,000 deduction, which the IRS subsequently allowed 

during the examination. In concluding the examination, the IRS 

determined that petitioners were not entitled to the PTC,4 and 

accordingly they were required to repay the APTC they received during 

2017. This adjustment increased their income tax liability by $17,652. 

The examination sustained the previous mathematical adjustment to

capital losses but allowed the newly claimed tuition and fees deduction.

Reflecting these determinations, the IRS issued a statutory notice of 

deficiency determining a proposed deficiency of $17,288.

Discussion

I. Burden of Proof

While the parties submitted this case for decision under Rule 

122(a), such a submission “does not alter the burden of proof, or the 

requirements otherwise applicable with respect to adducing proof, or the 

effect of failure of proof.” Rule 122(b).

Generally, the Commissioner’s determinations in a statutory 

notice of deficiency are presumed correct, and the taxpayer bears the 

burden of proving that those determinations are erroneous. Rule 

142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). In certain 

circumstances, if the taxpayer introduces credible evidence with respect 

to a factual issue relevant to ascertaining the proper tax liability, section 

7491(a)(1) shifts the burden of proof to respondent. Petitioners do not 

contend, and the evidence does not establish, that the burden of proof 

shifts to respondent as to any issue of fact. See Higbee v. Commissioner, 

116 T.C. 438, 442 (2001).

II. Capital Loss

The parties do not dispute that petitioners’ long-term capital 

losses exceeded their long-term capital gains in 2017, resulting in a 

$123,822 net loss. But they do disagree as to how much of this loss

petitioners may claim on Schedule D, and ultimately the 2017 Form 

1040. 

4 While the date of receipt is not clear from the record, petitioners’ account was 

credited at some point with a PTC of $636.
5

Petitioners argue they overpaid their 2017 taxes as a result of the 

$123,822 loss they incurred. Importantly, the overpayment claim stems 

from amounts claimed on the original return they filed, the revised 

return, and the math error notice. 

Section 6213(b) governs assessments arising out of mathematical 

or clerical errors; it requires notice to the taxpayer under 

subsection(b)(1) and abatement under subsection (b)(2) if the taxpayer 

so requests within 60 days of the notice. Petitioners did not request 

abatement after receiving the math error notice, and they paid the tax 

due. However, that payment does not end our inquiry. As we stated in 

Winter v. Commissioner, 135 T.C. 238, 243–44 (2010):

Section 6213 gives the Tax Court jurisdiction to 

redetermine a deficiency when a petition is filed timely in 

response to a notice of deficiency. Such jurisdiction does 

not depend on whether the Commissioner’s determination 

in the notice of deficiency is correct as “it is not the existence

of a deficiency but the Commissioner’s determination of a 

deficiency that provides a predicate for Tax Court 

jurisdiction.” Hannan v. Commissioner, 52 T.C. 787, 791 

(1969). Once we have jurisdiction, it generally covers all 

items necessary to determine the correct tax. Section 

6214(a) gives the Tax Court jurisdiction to “redetermine 

the correct amount of the deficiency even if the amount so 

redetermined is greater than the amount * * * [in the 

notice]”.

(Footnote omitted.) (Alteration in original.) Furthermore, section 

6512(b) clarifies that the Court also has jurisdiction to determine 

overpayments.

Because we have jurisdiction to determine the correct amount of 

tax, we analyze the allowable amount of capital loss, despite the fact 

that petitioners did not properly contest the math error notice.

When calculating their capital loss, petitioners argue that part of 

the text included in the Schedule D controls. They suggest this Court 

use an “If-Then-Else” conditional approach to determining the loss. This 

approach is a common command in many programming languages and

works in the following way: if a condition is met, then take action X, else
6

take action Y.5 Petitioners argue this approach comports with “well 

established, published and readily available authorities on English 

language, logic (both classic conditional reasoning and computer 

programming) and mathematics.” Using this approach, petitioners

interpreted line 21 of Schedule D as directing them to deduct a capital 

loss of $123,822 because negative $123,822 is mathematically smaller 

than negative $3,000.

We begin our analysis with section 1211(b), which limits capital 

losses as follows: 

In the case of a taxpayer other than a corporation, losses 

from sales or exchanges of capital assets shall be allowed 

only to the extent of the gains from such sales or exchanges, 

plus (if such losses exceed such gains) the lower of—

(1) $3,000 ($1,500 in the case of a married 

individual filing a separate return), or

(2) the excess of such losses over such gains.

We then turn to the text of Schedule D, line 21, for the 2017 tax year,

which states as follows:

If line 16 is a loss, enter here and on Form 1040, line 13, or 

Form 1040NR, line 14, the smaller of:

• The loss on line 16 or

• ($3,000), or if married filing separately, ($1,500)

Note: When figuring which amount is smaller, treat 

both amounts as positive numbers. 

Accordingly, Schedule D required petitioners to treat the amounts as 

positive numbers when determining whether their loss was greater or 

less than $3,000, which would have resulted in a maximum reportable 

capital loss for 2017 of $3,000.6 

Consequently, Schedule D comports with section 1211(b); but 

more importantly, the statutes control—not the language of the IRS

5 See, e.g., The Java Tutorials, The if-then and if-then-else Statements, Oracle,

https://docs.oracle.com/javase/tutorial/java/nutsandbolts/if.html (last visited July 28, 

2022).

6 The remainder would carry forward to the succeeding taxable year, here 2018, 

under section 1212(b).
7

form. When the statute is clear, as here, we look no further than the 

statute to determine the meaning. Sullivan v. Stroop, 496 U.S. 478, 482 

(1990); United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241–42

(1989). We have consistently held that Form 1040 and its instructions 

“cannot affect the operation of the tax statutes or [a taxpayer’s]

obligations thereunder.” Weiss v. Commissioner, 129 T.C. 175, 177 

(2007) (citing Casa De La Jolla Park, Inc. v. Commissioner, 94 T.C. 384, 

396 (1990)). Likewise, Schedule D and its instructions cannot affect 

petitioners’ obligations because “even if the instructions were 

misleading, the sources of authoritative law in the tax field are the 

statute and regulations and not government publications.” See Casa De 

La Jolla Park, Inc., 94 T.C. at 396.

Section 1211(b) likewise refers to losses as positive numbers and

limits the amount of capital losses deductible on Form 1040, whereas 

section 1212(b)(1) allows for the excess to be carried over to the 

succeeding taxable year. Section 1211(b) specifically provides that when

the taxpayer’s7 losses exceed gains from the sale or exchange of capital 

assets, the taxpayer may claim only the “lower of” two numbers, $3,000 

or the excess of such losses over such gains. (Emphasis added.) An 

example of the mechanics of section 1211(b) was illustrated in 

Musselwhite v. Commissioner, T.C. Memo. 2022-57, at *9, wherein we 

stated as follows:

Mr. Musselwhite’s $137,780 loss from the sale of the 

condominium on August 3, 2012 (i.e., “SALE OF 

INVESTMENT CONDO”) was reported, together with a 

net long-term capital gain of $108,500, on an attached 

Schedule D; but because of section 1211(b), [the taxpayers’]

total income included only the maximum amount allowed 

for a net capital loss (−$3,000). 

Similarly, here we ask whether petitioners’ total $123,822 loss as a

positive number is lower than a $3,000 loss, which it is not. Therefore, 

petitioners may claim only a $3,000 capital loss on their 2017 Form 1040 

and must carry over the excess to the succeeding year pursuant to 

section 1212(b)(1). 

When section 1211(b) is read with section 1212(b)(1), Congress’ 

intent is even more clear. Under section 1212(b)(1), taxpayers who 

deduct a capital loss under section 1211(b) must carry forward the 

7 Section 1211(b) does not apply to corporations.
8

excess loss to the succeeding tax year and use that loss to calculate the 

capital loss or gain for that succeeding tax year. Treas. Reg. § 1.1212-

1(b)(1); see Sham v. Commissioner, T.C. Memo. 2020-119, at *48 

(“Pursuant to sections 1211(b)(1) and 1212(b)(1), [the taxpayer] is 

entitled to a capital loss deduction of $3,000 for 2015, and a 

corresponding reduction in the short-term capital loss (i.e., from $35,542 

to $32,542) available as a carryforward.” (citing I.R.C. 

§ 1212(b)(2)(A)(i))). If we read section 1211(b) as petitioners propose, it 

would render section 1212(b) meaningless because no carryforward 

would ever exist. Therefore, we hold that petitioners are only entitled 

to a $3,000 capital loss, consistent with the math error notice, and must 

carry forward the excess capital loss to their 2018 tax year pursuant to 

section 1212(b). Consequently, petitioners’ AGI for tax year 2017 is 

$119,820,8 and they do not have an overpayment.

III. Petitioners’ Premium Tax Credit Eligibility 

Petitioners argue that they were entitled to a PTC of $636 and an 

APTC of $17,652 for tax year 2017. 

The Patient Protection and Affordable Care Act § 1401, 124 Stat. 

at 213 (codified as amended at I.R.C. § 36B), added section 36B to the 

Internal Revenue Code, which subsidizes the cost of health insurance 

for those who qualify. See Treas. Reg. § 1.36B-2(a). A taxpayer9 with a 

household income between 100% and 400% of the federal poverty line

who enrolls in a qualified health plan may receive a PTC to subsidize

the cost of that health plan. I.R.C. § 36B(a)-(c); Treas. Reg. § 1.36B-2(a)

and (b); see McGuire v. Commissioner, 149 T.C. 254, 258–62 (2017). 

Household income is defined as the sum of the taxpayer’s modified AGI

plus any family member’s modified AGI.10 I.R.C. § 36B(d)(2); Treas. 

8 When we account for the overall adjustments, we calculate an adjusted gross 

income of $119,821, but we rely on the parties’ stipulation that the adjusted gross 

income is $119,820, which is likely a rounding difference. 

9 Married taxpayers must file joint federal returns (which petitioners did) in 

order to qualify for the PTC. See I.R.C. § 36B(c)(1)(C).

10 Family members include people (1) for whom the taxpayer properly claims 

deductions for personal exemptions and (2) who are required to file a federal income 

tax return under section 1. I.R.C. § 36B(d)(2)(A); see also Treas. Reg. § 1.36B-1(e)(1). 

While petitioners claimed a personal exemption deduction for their child on their 2017 

return, respondent makes no claim that this child was required to file a federal return 

or earned any income. 
9

Reg. § 1.36B-1(e)(1). Modified AGI means the AGI, as defined by section 

62, increased by three kinds of income:

(i) any amount excluded from gross income under 

section 911 [relating to foreign earned income and housing 

costs for U.S. citizens living abroad],

(ii) any amount of interest received or accrued by the 

taxpayer during the taxable year which is exempt from tax, 

and

(iii) an amount equal to the portion of the taxpayer’s 

social security benefits (as defined in section 86(d)) which 

is not included in gross income under section 86 for the 

taxable year.

I.R.C. § 36B(d)(2)(B); see also Treas. Reg. § 1.36B-1(e)(2). “Federal 

poverty line” means the most recently published poverty guidelines in 

effect on the first day of the regular enrollment period for coverage by a 

qualified health plan for a calendar year—in this case, November 1, 

2016. I.R.C. § 36B(d)(3)(B); Treas. Reg. § 1.36B-1(h) (first citing 42 

U.S.C. § 9902(2); and then citing 45 C.F.R. § 155.410).

Petitioners’ PTC and APTC arguments hinge on this Court’s

allowing a deduction of their total $123,822 capital loss, which we held 

above was limited to $3,000. See supra pp. 4–8. Because section 1211(b) 

reduces petitioners’ capital loss to $3,000, we must evaluate whether 

petitioners’ modified AGI increased beyond the level of eligibility for the 

PTC and the APTC (i.e., whether it increased beyond 400% of the federal 

poverty line).

As discussed, petitioners’ total $123,822 capital loss is limited to 

$3,000 under section 1211(b), and their 2017 AGI is increased to

$119,820. See I.R.C. § 62. This change also increases petitioners’

modified AGI to $121,917,11 which in turn increases their household 

income to the same amount because they had no additional family 

members with income.

11 When calculating petitioners’ modified AGI, we include the $2,097 in 

nontaxable Social Security benefits received and reported on petitioners’ 2017 Form 

1040. See I.R.C. § 36B(d)(2)(B)(iii); Treas. Reg. § 1.36B-1(e)(2)(iii). Consequently, 

petitioners’ modified AGI is $121,917. 
10

We next compare petitioners’ $121,917 household income to the 

federal poverty line in effect on the first day of the regular enrollment 

period for 2017 coverage by a qualified health plan to determine whether 

they met the section 36B requirements. The federal poverty line is 

updated periodically in the Federal Register by the Secretary of Health 

and Human Services (HHS) under the authority of the Community 

Opportunities, Accountability, and Training and Educational Services 

Act of 1998, Pub. L. No. 105-285, § 201, 112 Stat. 2702, 2729 (codified at 

42 U.S.C. § 9902(2) (2012)). The first day of the regular enrollment 

period for 2017 was November 1, 2016. 45 C.F.R. § 155.410(e)(2) (2016). 

On that date, the federal poverty line for a family of three living in the 

48 contiguous states was $20,160. See Annual Update of the HHS 

Poverty Guidelines, 81 Fed. Reg. 4036 (Jan. 25, 2016); see also I.R.C. 

§ 36B(d)(3)(B); Treas. Reg. § 1.36B-1(h). Thus, 400% of the federal 

poverty line for a family of three was $80,640. Because petitioners’

household income was well above that amount (at $121,917), petitioners

failed to meet the federal poverty line requirements under section 

36B(c)(1) and were not eligible for the PTC in 2017. See Treas. Reg. 

§ 1.36B-2(b)(1); see also McGuire, 149 T.C. at 258–62. 

Taxpayers who received an APTC are instructed by the IRS to use 

Form 8962 to reconcile (1) the amount of the APTC the taxpayer received 

during the year (which was based on their estimated eligibility) with 

(2) the amount of the PTC to which the taxpayer is actually entitled 

(which is based on household income when the taxpayer files his or her 

annual income tax return). See I.R.S. Publication 17, Your Federal 

Income Tax, 245–47 (Dec. 12, 2017). This reconciliation is done when 

the taxpayer files his or her annual income tax return and submits Form 

8962 therewith. If the amount of the APTC is more than the amount of 

the PTC to which the recipient is ultimately entitled, the taxpayer owes 

back to the Government the excess credit, which is reflected as an 

increase in tax. See I.R.C. § 36B(f)(2)(A); Keel v. Commissioner, T.C. 

Memo. 2018-5, at *5–6. Here, petitioners’ APTC of $17,652 exceeded the 

amount of the PTC to which they were entitled ($0). Consequently, 

respondent correctly included the $17,652 APTC in petitioners’ federal

income tax liability for the 2017 tax year.

IV. Conclusion

In reaching this decision, the Court has considered all the parties’ 

arguments, and to the extent not mentioned or addressed, they are 

irrelevant or without merit. We conclude that petitioners (1) are not 

entitled to a refund based on the claimed $123,822 capital loss, which 
11

was limited to $3,000 for 2017 (the remainder of which could have been 

carried forward to 2018); (2) were ineligible for the PTC for the 2017 tax 

year because their household income exceeded 400% of the federal 

poverty line; and (3) must repay the APTC received in 2017.

Furthermore, the Court notes that to the extent petitioners claim 

that paying the deficiency would be a hardship, they are free to explore 

collection alternatives with the IRS, such as an installment agreement 

or offer-in-compromise.

To reflect the foregoing,

Decision will be entered for respondent.