T.C. Summary Opinion 2011-39

UNITED STATES TAX COURT

JEFFREY LAURENCE MARCHISIO, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 30806-09S. Filed March 30, 2011. 

Jeffrey Laurence Marchisio, pro se.

James R. Bamberg, for respondent.

PANUTHOS, Chief Special Trial Judge: This case was heard

pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect when the petition was filed. 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. Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code,
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and all Rule references are to the Tax Court Rules of Practice

and Procedure.

Respondent determined a deficiency of $1,170 in petitioner’s

2007 Federal income tax. The issue for decision is whether

petitioner received cancellation of indebtedness income of

$5,358.

Background

Some of the facts have been stipulated and are so found. 

The stipulation of facts and the attached exhibits are

incorporated herein by this reference. Petitioner resided in

Florida at the time the petition was filed. 

Petitioner and his former spouse married in 1990. In 1997

petitioner’s spouse apparently sold her automobile and purchased

a new vehicle. She signed a retail installment contract

(financing contract). The financing contract listed petitioner

and his spouse as buyers and included two signatures. The amount

of the loan reflected in the financing contract was $14,423.01. 

Petitioner was unaware of this transaction, did not sign the

financing contract, and never saw the new vehicle. Petitioner

and his spouse divorced in 2005. 

In 2007 Wells Fargo Financial Acceptance, Inc. (Wells

Fargo), issued a Form 1099-C, Cancellation of Debt, to petitioner

reflecting the cancellation of the outstanding loan balance of

$5,358. Petitioner did not report the cancellation of
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indebtedness amount as income on his 2007 individual Federal

income tax return.

On September 28, 2009, the IRS issued a notice of deficiency

to petitioner determining a deficiency of $1,170. Petitioner

timely filed a petition contesting the deficiency. Petitioner

has consistently denied knowledge of a canceled loan.

Petitioner made multiple requests to Wells Fargo to obtain

information regarding the financing contract. Petitioner

ultimately obtained a copy of the financing contract from Wells

Fargo. Petitioner then contacted an Appeals officer (AO) about

the deficiency and informed the AO that he had no knowledge of a

loan with Wells Fargo but had been able to obtain a copy of the

financing contract. The AO informed petitioner that he would

make a notation in the administrative file regarding their

conversation, and petitioner faxed a copy of the financing

contract to the AO to include in the administrative file. 

Discussion

In general, the Commissioner’s determination set forth in a

notice of deficiency is presumed correct, and the taxpayer bears

the burden of showing that the determination is in error. Rule

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

certain circumstances, the burden may shift where a taxpayer

introduces credible evidence with respect to any factual issue
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relevant to ascertaining the income tax liability of the

taxpayer. Sec. 7491(a)(1). 

Gross income includes any income from whatever source

derived, including income from discharge of indebtedness. Sec.

61(a)(12). Section 6201(d) provides that in any court

proceeding, where a taxpayer asserts a reasonable dispute with

respect to any item of income reported on an information return

and the taxpayer has fully cooperated with the Secretary, the

Secretary has the burden of producing reasonable and probative

information concerning the deficiency in addition to the

information on the information return. 

Petitioner disputes that he borrowed money from Wells Fargo

or that he was a signatory to a financing agreement. Petitioner

provided a copy of the financing contract to respondent, and the

parties provided a copy of the financing contract to the Court. 

The financing contract includes two signatures, that of

petitioner’s former spouse and a purported signature of Jeffrey

Marchisio. Petitioner asserts that the purported signature is

not his. The Court notes that the purported signature on the

financing contract does not appear to match petitioner’s

signature on the petition or on the stipulation of facts. 

Petitioner credibly testified that he did not own, never

saw, and could not identify the vehicle listed in the financing

contract. Petitioner testified that he never saw his former
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spouse with the vehicle during the 8-year period from 1997, the 

date of the financing contract, until the divorce in 2005. A

third-party witness corroborated petitioner’s testimony. We

conclude that petitioner has asserted a reasonable dispute as to

the Form 1099-C.1 Accordingly, the burden shifts to respondent

under section 6201(d). 

Respondent has not produced any evidence to show that

petitioner borrowed funds from Wells Fargo or purchased the

vehicle which was the subject matter of the financing contract. 

Nor has respondent rebutted any of the testimony provided by

petitioner or the witness. Respondent has failed to produce

reasonable and probative information beyond the information

return. We note that the evidence of the existence of the loan

was initially provided by petitioner to respondent with an

explanation that the financing contract was not signed by

petitioner. On the basis of this record, we conclude that

petitioner did not receive income from discharge of indebtedness

from Wells Fargo in 2007.

To reflect the foregoing,

Decision will be entered

for petitioner.

1Respondent has not argued and the record does not

demonstrate that petitioner failed to fully cooperate with

respondent. Additionally, respondent has not refuted the

application of sec. 6201(d).