T.C. M em o . 2 0 1 8 -1 7

UNITED STATES TAX COURT
GARY E. KRANTZ, Pet i ti o ner v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 2 8 9-1 7. Fi l edFeb ru ary 1 4 , 2 0 1 8
. Gary E. Kran t z, p ro s e. Ev an K. Li k e an d Lo u is H. Hi l l , fo r res p o nd en t
.

M EM ORANDUM FINDINGS OF FACT AND OPINION
RUW E , J ud g e: Res p o n den td et erm i n eda d efi ci en cy o f $ 3 ,1 17 i n p et i t i o n er’ s 2 0 14 Fed eral i n co m e t ax . Aft er co n ces s i o n s b y res p o n den t , th e s o l e i s su e rem ai n i n g fo r d eci s io n i s wh et her p et i t i o n er i s l i ab l e fo r a d efi ci en cy i n Fed eral i nco m e t ax o f $ 1 ,5 0 0 fo r 2 0 1 4 s t emm i ng fro m h is recei p to f $ 9 , 9 9 9 o f
u n rep o rt edwag es .- 2
-

[* 2 ] FINDINGS OF FACT So m e o f t h e fact s h av e b een s ti p u lat ed an dare s o fo u n d. Th e s t ip u l at i o n o f fact s an dth e at t ach ed ex h i b i ts are i n co rp o rat ed h erei nb y th i s referen ce. Pet i t i o ner res i dedi n Oh i o wh en h e fi l ed h i s p et i t i o n. In 2 0 1 4 p et i t i o n er recei v ed$ 4 1,0 6 2 o f wag es . Pet i ti o n er t im el y fi ledh i s Fed eral i nco m e t ax return fo r 2 0 1 4. He rep ort edwag es o f $ 3 1,0 6 3 an d t ax o wed
o f $ 6 28 , an dh e p ai dth e rep ort edt ax o wed
. Onh i s retu rn , p et i t i o n er fai l edt o cl ai m th e s t an dardd edu ct io n o f $ 6 ,2 0 0
. Res po n d en tm ad e a m at hem at i cal ad ju s tm en tt o p et i t i o n er’ s retu rn t o g i v e h i m th e b en efi to f t h e s t an d ardd edu ct i o n , an d o nJ u n e 8 , 2 0 1 5 , h e i s su edp et it i on er a refu ndo f $ 9 3 0. In 2 0 1 6 res p o n d en td et erm i n edth atfo r 2 0 1 4 p et i t io n er h adfai l edt o rep o rt : (1 ) wag es o f $ 9 ,9 99 ; (2 ) can cel l at i on o f i n d eb t ed n es s i n co m e o f $ 7 ,7 6 5 ; an d(3 ) a t ax ab l e h eal th s av i n g s acco u n t d i s tri b u t i on o f $ 6 8 . OnOct o b er 3 1, 2 0 16 , res p o n d en t i s s uedp et i t i o n er a n o t i ce o f d efi ci en cy fo r 2 0 1 4 . OnJ an u ary 3 0 , 2 0 1 7 , p et i t i o n er t i m el y

fi l eda p et i t i o nwi th th is Co u rt
. OnFeb ru ary 2 4 , 2 0 1 7, res p o n d en t i s s uedp et i t i o n er a No ti ce CP2 0 00 , Pro p os edCh an ges t o Yo ur 2 01 4 Fo rm 1 0 40 , i nwh i ch h e co n ced edth atp et i t i o n er d i dn o t recei v e can cel l at i o no f i n d eb t ed n es s i n co m e o f $ 7 ,7 6 5 an d th atth e $ 6 8- 3
-

[* 3 ] h eal th s av i ng s acco un td i s tri b u ti o n was n ei th er i n cl u d i b l e i ng ro s s i n co m e n o r
s ub jectt o t h e earl y d i s tri b u t i o np en al ty . Inth e No t i ce CP2 0 0 0 , res p o n d en t
reco m pu t edthe d efi ci en cy

t o b e $ 1,5 0 0
.

OPINION Th e Co m m is s i o n er’ s d et erm i n at i o n s i na n o t i ce o f d efi ci en cy are g en eral l y 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 e d et erm i n at i o n s are i n co rrect . See Ru l e 1 4 2 (a); 1 W el ch v . Hel v eri n g , 2 9 0 U.S. 1 11 (1 9 3 3). Pet i t i o ner s ti p u l at edth ati n 2 0 1 4 h e recei v ed u n rep ort edwag es o f $ 9 ,9 9 9
. Sect i o n6 1 (a) d efi n es g ro s s i nco m e as “ al l i n co m e fro m wh at ev er s o u rce d eri v ed ”. Th i s i n cl u d es co m

p en s at i on fo r s erv i ces , s u ch as wag es . See s ec. 6 1 (a)(1 ). Al th o u g h p et i t i o n er s t ip ul at ed th ath e h adrecei v ed$ 9 ,9 9 9 o f u nrep o rt ed wag es i n 2 0 1 4 , h e rai s es s ev eral arg u m en t s as t o wh y h e i s n o t l i ab le fo r t he d efi ci en cy . Pet i t i o ner fi rs tap p ears t o co n t en d t h atres p o nd en t ’ s co n ces s i on s i nth e No t ice CP2 0 00 ren d er th e n o t i ce o f d efi ci en cy i n v al i db ecau s e t h ey

were m ad e

1 Un l es s o th erwi s e i nd i cat ed , al 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, an dal l s ect i on referen ces are t o t h e In t ern al Rev en u e Co d e i neffect atal l rel ev an t t i m es .- 4
-

[* 4 ] aft er p et i t i o n er fi l edh i s p et i t i o n . 2 Res p o nd en t’ s co n ces s io no f an i s s ue o r i s su es d o es n otd es tro y

th e p res u m

p t i o no f co rrect n es s o f t h e n o ti ce o f d efi ci en cy
as t o th e rem ai n i n g i s s u es . U.S. Ho l d i n g Co . v . Co m m i s s i on er, 4 4 T.C. 3 2 3 , 3 2 8 (1 9 6 5); Wy co ff v
. Co m

m i s si o ner, T.C. M em o . 2 0 1 7-2 0 3 , at* 3 5 ; Hal l e v . Co m m i s s i o n er, T.C. M em o . 1 9 9 6 -1 1 6 , 1 9 96 Tax Ct . M em o LEXIS 1 1 1 , at* 1 1
. Th u s, p et i t io n er’ s co nt en t i o nth atth e n o t i ce o f d efi ci en cy i s i nv al i di s i n co rrect
. Pet i t i o ner n ex t ap p ears t o co n t en dth atres p o n d en ti s p recl u d ed fro m
as s es s i n g a d efi ci en cy

fo r 2 0 1 4 b ecau s e h e i s s uedp et i t i o ner a refu n d fo r t h e s am e t ax ab l e y ear. A refu n di s n o tb i n d i n g o nth e Co m m i s s i o n er i nthe ab s en ce o f a cl o s i ng ag reem en t , v al i dco m p ro m i s e, o r fi n al ad

ju d i cat i o n . M eri d i an M u t. In s . Co . v . Co m

m i s s i o n er, 4 4 T.C. 3 7 5 , 3 7 9 (1 9 6 5), aff’ d, 3 6 9 F.2 d5 08 (7 th Ci r.

2 Onb ri ef p et i t i o n er ap p ears t o o b jectfo r t h e fi rs t t im e t o th e ad m i s s i b i l i ty o f th e No t i ce CP2 0 0 0
. Th e No t i ce CP2 0 0 0 was a jo i n tex h i b i twh i ch p et i ti o n er an d res p o n d en t s t i p u l at ed . Th e p art i es s t i p u l at ed that“ [a] n y rel ev an ce o b

ject i o nm ay b e m ad e wi th res p ectt o al l o r an y p arto f t h i s s t i p u l at i o nato r b efo re t h e t im e o f tri al , b u t al l o th er ev id en t i ary o b ject i o n s are wai v edu n l es s s p eci fi cal ly ex p res s ed i nthi s s ti p u l at io n .” Pet it i on er h as n o to b ject edo nrel ev an ce g ro u nd s an dh as th erefo re wai v edan y

s u ch o b ject i o n . See Fed . R. Ev i d . 1 0 3 (a)(1 ); Park s v . Co m m i s s i o n er, 1 4 5 T.C. 2 7 8 , 2 9 5 n .2 5 (2 01 5 ), aff’ d , 1 2 0 A.F.T.R.2 d(RIA) 1 7
- 6 8 5 7 (9 th Ci r. 2 01 7 ); Es t at e o f Sm i th v . Co m m i s s i o ner, T.C. M em o. 2 0 01 -3 0 3 , 2 0 0 1 Tax Ct . M em o LEXIS 3 4 2 , at* 3 3 n .1 4 , aff’ d , 5 4 F. Ap p ’ x 4 1 3 (5 th Ci r. 2 0 0 2 ). Ad d i t i o n al l y , a fu n dam en t al ru l e o f ev i d en ce i s th at an o b ject i o n n o tt i m el y m ad e i s wai v ed . See Fed
. R. Ev i d . 1 0 3 (a)(1 ); Es t at e o f Sm i th v . Co m m i s s i o n er, 2 0 0 1 Tax Ct . M em o LEXIS 3 4 2 , at* 3 3 n .1 4 (ci t i ng Un i t edSt at es v . J am ers o n , 5 4 9 F.2 d1 2 63 , 1 2 6 6 -1 2 6 7 (9 th Ci r. 1 9 7 7 )). Pet i t i o n er wai v edh i s ri gh tt o co n t es t th e ad m is s i o no f t h e No ti ce CP2 0 0 0 wh en h e d i dn o tm ak e a t i m el y o b ject i o n .- 5
-

[* 5 ] 1 9 6 6 ). It i s wel l s et t l edth atth e g ran ti n g o f a refu n dd o es n o t p recl u de t h e Co m m i s s i o n er fro m

i s s u i n g a n o t i ce o f d efi ci en cy m erel y b ecau s e h e accep t eda t ax p ay er’ s return an di ss u eda refu n d . Beer v . Co m m i s s io n er, 7 3 3 F.2 d4 3 5 , 4 3 7 (6 th Ci r. 1 9 8 4 ), aff’ g T.C. M em o . 1 9 8 2 -7 3 5 ; W arn er v . Co m m i s s i o ner, 5 2 6 F.2 d1 , 2 (9 th Ci r. 1 9 7 5 ), aff’ g T.C. M em o . 1 9 7 4 -2 4 3 . Fu rt h er, refu n ds are s ub j ectt o fi n al
au d itan dad

ju s t m en t , an dth us are n o tfi n al d et erm i n at i o n s thatwo u ldp recl u d e
s ub s equ en tad

j u s t m en t. Cl arkv . Co m

m i s si o n er, 1 5 8 F.2 d8 5 1 (6 th Ci r. 1 9 4 6 ), aff’ g a M em o ran du m

Op i ni o no f t h i s Co u rt ; Owen s v . Co m m i s si on er, 5 0 T.C. 5 7 7 (1 9 6 8). W e t h erefo re reject p et i t io n er’ s cl ai m th atres p o n den twas p recl u d edfro m i s su i ng h i m

a n o t i ce o f d efi ci en cy

b ecau s e h e was p rev i o u s l y i s s u eda refu n d
. Acco rd i ng l y , we s u s t ai nres p o n d en t ’ s d et erm i nat i on th at p et i t io n er i s l i ab l e fo r a $ 1 ,5 0 0 d efi ci en cy

res u l ti n g fro m

h i s fai lu re t o rep o rt$ 9 , 9 99 o f wag es . In reach i n g o u r d eci s i o n , we h av e co n s i d eredal l arg u m en t s m ad e b y th e p art i es , an d t o the ex t en tn o tm en t i o n edo r ad dres s ed , th ey are i rrel ev an to r wi th o utm eri t
. To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t ered
u n der Ru l e 1 5 5
.