TAX COURT OPINION

Case: Eric Alexis, Sr. & Georgiana Alexis
Docket Number: 2244-09S
Judge: Colvin
Opinion Type: bench
Filed: 05/19/2010
Pages: 6

S U3m U-r -ua o - S-T3- cR rz-L tAZZ UNITED STATES TAX COURT WASHINGTON , D .C . 2021 7 ERIC ALEXIS, SR . AND GEORGIANA ALEXIS , Petitioners , V . Docket No . 2244-09 S COMMISSIONER OF INTERNAL REVENUE, Respondent . O R D E R Pursuant to Rule 152(b), Tax Court Rules of_ Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewith to petitioners and to respondent a copy of the pages of the transcript of the trial of the above case before Special Trial Judge Lewis R . Carluzzo at Atlanta, Georgia, on May 5, 2010, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed) Lewis R. Carluzzo Special Trial Judge Dated : Washington, D .C . May 19, 2010 SERVED MAY 2 0 2010 3 Bench Opinion by Special Trial Judge Lewis R : Carluzzo 2 Alexis v .' Commissioner Docket No . 2244-09 S 3 May 5, 201 0 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion in this case, an d 6 the following represents the Court ' s oral findings of 7 fact and opinion . The oral findings of factland 8 opinion shall not be relied upon as precedent in any 9 other case . 10 The proceeding for the redetermination of a 11 deficiency is a Small Tax Case conducted pursuant to 12 the provisions of Section 7463 of the Internal Revenue 13 Code of 1986, as amended , and Rules 170 through 174 of 14 the Tax Court Rules of Practice and Procedure . 15 This bench opinion is made pursuant to the 16 authority granted by Section 7459 ( b) of the Internal 17 Revenue Code of 1986 , as amended , and Rule 152 of the 18 Tax Court Rules of Practice and Procedure . 19 Hereinafter in this bench opinion, unless 20 otherwise indicated , section references are to the 21 Internal Revenue Code of 1986, as amended , in effect 22 for 2006 . 23 Eric Alexis , Sr ., and Georgians Alexi s 24 appeared pro sese . Courtney Bacon appeared on behalf 25 of respondent . Heritage Reporting Corporation (202) 628-4888 4 1 In a notice of deficiency dated October 29, 2 2008, respondent determined a $4,407 deficiency i n 3 petitioners' 2006 federal income tax . The deficiency 4 results entirely from respondent's disallowance of the 5 nonconventional source fuel credit (the FNS credit ) 6 claimed on their 2006 joint federal income tax return . 7 The issue for decision is whether they are entitled t o 8 that credit . Some of the facts have been stipulated and 10 are so found . At the time the petition was filed, 11 petitioners resided in Georgia . 12 Displaced from their home in Louisiana by 13 Hurricane Katrina, petitioners moved from Louisiana to 14 Georgia sometime during 2006 . As had been their 15 practice over the many years of their marriage, they 16 filed a joint federal income tax return for that year . 17 That return was prepared by Consuella Kinney,, a paid 18 income tax return preparer who conducted an income tax 19 preparation business under the name Superior Mortgage 20 and Tax Services, in Harvey, Louisiana . 21 As relevant here, included with their 2006 22 joint return are a Form 3800, General Business Credit, 23 and Form 8097, Nonconventional Source Fuel Credit . 24 Together these forms show a credit of $4,409 which, 25 after a limitation, is used to offset completely the Heritage Reporting Corporatio n (202) 628-4888 5 1 $4,407 federal income tax liability otherwise shown on 2 petitioners' return . Taking into account the FN S 3 credit, as limited, and other credits not here in 4 dispute, petitioners claimed and received a $5,143 5 income tax refund for 2006 . 6 At the direction of Ms . Kinney and pursuant 7 to an agreement that Mr . Alexis entered into with her, a large portion of the refund, specifically $3,526 , 9 was used to purchase a cashiers check made payable to 10 National Tax, Inc . This was the fee charged t o 11 petitioners, or at least one of them, "to participate" 12 in a program described in the agreement as the "Funds 13 for Non-conventional Sources (FNS) Credits . " 14 Apparently this program was the source of the FNS 15 credit here in dispute . 16 Petitioners' 2006 joint return also includes 17 a Schedule C, Profit or Loss From Business . Tha t 18 schedule shows Mr . Alexis as the proprietor of a 19 business described as "alternative energy ." Taking 20 into account the gross income and a deduction for 21 "production costs," a $29 net profit is reported on 22 that schedule and included in the adjusted gros s 23 income shown on petitioners' 2006 joint return . The 24 "activity" to which the Schedule C relates supposedly 25 gave rise to the FNS credit claimed on petitioners ' Heritage Reporting Corporation (202) 628-4888 6 1 2006 joint return . 2 Petitioners did not engage in any activity, 3 directly or indirectly, during 2006 that would have 4 generated the FNS credit claimed on their 2006 joint 5 return . They now understand that they were misled by 6 Ms . Kinney, who convinced them that, as victims o f 7 Hurricane Katrina, they were entitled to a reductio n of their 2006 federal income tax liability by claiming 9 the FNS credit . 10 In the above-referenced notice o f 11 deficiency, respondent disallowed the FNS credit and 12 essentially treated the Schedule C as a nullity by 13 reversing the net profit shown . on that schedule . 14 Petitioners do not challenge these ' 15 adjustments . Instead, they now believe themselves, in 16 effect, to have been victimized a second time as a 17 result of the hurricane, this .time by an unscrupulous 18 tax return preparer . From their presentation at trial 19 it would appear that petitioners are looking to th e 20 Court for some form of relief, even if on other than 21 technical grounds . 22 That being so and other than to note that 23 the FNS credit is based upon the amount of fue l 24 produced and attributable to the taxpayer, we see 25 little point in including in this bench opinion a Heritage Reporting Corporation (202) 628-4888 7 1 technical discussion explaining how the credit works . 2 See Section 45K (formerly Section 29) ; Finney v . 3 Commissioner , T .C . Memo . 2009-298, and the cases cited 4 therein . 5 As in Finney v . Commissioner , Id . ,!and othe r 6 than to sympathize with petitioners, there is nothin g 1 7 that the Court can do for them . Whether curren t 8 efforts to regulate income tax return preparers will 9 successfully eliminate situations such as this in the 10 future remains to be seen . See, for example, sec . 11 1 .6109-2, Proposed Income Tax Regs ., 75 Fed . Reg . 12 14539 (Mar . 26, 2010) . In this case, as in Finney , 13 the record establishes that respondent's adjustments 14 are correct . 15 To reflect the foregoing, decision will be 16 entered for respondent . 17 This concludes the Court's oral findings of 18 fact and opinion in this case . 19 (Whereupon, at 1 :45 p .m ., the bench opinion 20 in the above-entitled matter was concluded . ) 21 22 23 2 4 25 Heritage Reporting Corporation (202) 628-4888