TAX COURT OPINION

Case: Michael Kevin Curry
Docket Number: 20358-13S
Judge: Carluzzo
Opinion Type: bench
Filed: 05/18/2015
Pages: 8

RMM UNITED STATES TAX COURT WASHINGTON, DC 20217 MICHAEL KEVIN CURRY, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) Docket No. 20358-13S ) ) ) ) ORDER Pursuant to the determination of the Court as set forth in its bench opinion rendered on May 1, 2015, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Special Trial Judge Lewis R. Carluzzo at Miami, Florida, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. May 18, 2015 SERVED May 18 2015 Capital Reporting Company 3 1 2 Bench Opinion by Special Trial Judge Lewis Carluzzo May 1, 2015 3 Michael Kevin Curry v. Commissioner 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Docket No. 20358-13S THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion (bench opinion). Section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant periods, and Rule references are to the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. This proceeding for the redeterminations of a deficiencies is a small tax case subject to the provisions of section 7463 and Rules 170 through 175. Pursuant to section 7463(b) the decision entered in this case shall not be treated as precedent for any other case. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority. Michael Kevin Curry appeared on his own behalf. Derek P. Richmond appeared on behalf of respondent. In a notice of deficiency dated October 10, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 2013 (notice), respondent determined deficiencies in, and imposed additions to tax and/or a penalty with respect to petitioner's 2008 and 2009 Federal income taxes. The issues for decision are: (1) whether for 2008, petitioner is liable for a section 6651(a)(1) addition to tax - this issue depends upon 8 whether petitioner's 2008 Federal income tax return 9 was filed when due; and (2) whether for either year 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in issue, petitioner is entitled to various deductions not claimed on a Federal income tax return or referenced in the petition. Some of the facts have been stipulated and are so found. Petitioner resided in Florida at the time the petition was filed. Given the manner in which this case has progressed, we think it appropriate to start our discussion with a review of the notice. The adjustments made in the notice for each year in issue take into account petitioner's Federal income tax return for each of those years and each of those returns includes a Schedule C, Profit or Loss From Business. For each year in issue the notice contains an adjustment entitled "Schedule C net profit", and for each year petitioner's income is increased by an 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 amount shown for that adjustment. Otherwise and with respect to both years in issue, all of the other adjustments made in the notice allow petitioner deductions apparently not claimed on this return. The increase to petitioner's "Schedule C net profit" for 2008 apparently resulted, at least in part, from an examination of petitioner's bank records and respondent's determination that certain, or all of the deposits made to one or more of petitioner's bank accounts constitute gross receipts from the trade or business to which the Schedules C relate. According to the petition, respondent considered "every deposit" made into petitioner's bank accounts "as income". According to the petitioner, some or all of these deposits consist of 16 proceeds from "loans from family members" or 17 18 19 20 21 22 23 24 25 "repayments of loans" that petitioner had made to others. The petition goes on to allege that "There is no basis for the IRS to consider any bank deposits as income". Nothing in the petition references any other of the adjustments made in the notice or respondent's imposition of the additions to tax or penalty. Issues not raised in the petition are deemed conceded. See Rule 134(b)(4); Nis Family Trust v. Commissioner, 115 T.C. 523, 538-539 (2000). 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 Mindful that the petition was prepared by a self- 2 represented petitioner, had the case progressed 3 differently, we might not have limited the issues we 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would consider to those raised in the petition, but given the manner in which petitioner has proceeded, it would be unfair to do otherwise. According to petitioner, other of his obligations prevented him from devoting the time and attention to this case necessary to properly have prepared for trial. The case was continued once at petitioner's request, because, as he explained, he "had no time to prepare for this case". This statement was made by petitioner when the case was recalled from the calendar for trial on October 28, 2014, and despite the fact that the parties had been given notice of that trial date at least five months earlier. Between that date that the petition was filed, September 3, 2013, and April 29, 2015, the date that time case was recalled from the calendar for trial petitioner apparently changed his position. At trial on April 29th petitioner abandoned his challenge to the deficiencies here in dispute upon the ground raised in the petition, that is, deposits to his bank account or accounts do not represent 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company income; instead for each year he argued for a reduced deficiency upon the ground that he was entitled to deductions not claimed on one or the other of his 7 returns. In support of his recently raised claim for deductions, at trial petitioner offered into evidence what would best be described as a "shoe box" full of records consisting of bank statements and cancelled checks (copies as well as originals) that petitioner claims support his entitlement to previously unclaimed deductions. (Exhibits 6-P and 7-P). The records are not organized in a meaningful fashion and the Court has rejected evidence presented in unorganized ways in previous cases. See e.g. Patterson v. Commissioner, T.C. Memo. 1979-362. The 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Court reserved ruling on the admissibility of the 17 18 19 20 21 22 23 24 25 evidence pending consideration of whether the items to which the evidence purportedly related are properly in issue. Upon further review of the procedural history and the record in this matter, which includes two motions to dismiss the case for lack of prosecutions, we find that any issues to which the above-referenced trial exhibits might relate have not been properly raised. Otherwise, the evidence is not 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 probative of any of the issues properly placed in dispute by the notice and the pleadings. It follows that the respondent's objections to those exhibits 4 will be sustained, and the exhibits will not be taken 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 as evidence. As noted, petitioner has made the small tax case election in this case, see section 7463, and such proceedings are intended to be conducted as informally as possible. See Rule 174(b). Informality, however, does not condone the lack of preparation, and a taxpayer's section 7463 election does not supercede principles of fundamental fairness. It would be unfair to respondent to allow petitioner to appear at trial, abandon a position clearly raised in the petition, and raise new issues based upon information not previously provided to respondent's counsel during the long pretrial history of this case. Instead, we proceed as though petitioner has conceded issues contemplated in the notice but not addressed in the petition. This is so not only 22 with respect to the deficiencies, but to the 23 24 25 additions to tax and penalty as well. See Swain v. Commissioner, 118 T.C. 358 (200). That being so, because petitioner no longer challenges the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 deficiencies in the manner suggested in the petition, and except for the concession made by respondent in his pretrial memorandum, the deficiencies determined in the notice will be sustained. To the extent this result seems harsh it should be noted that it flows directly from petitioner's behavior. Nevertheless, a taxpayer should not be subject to an income tax liability greater than due. Petitioner is free to pursue audit reconsideration of the liabilities resulting from the decision to be entered in this case. To the extent he decides to do so, and to the extent that Exhibits 6-P and/or 7-P contain information that might assist him if he does, we will direct the Clerk of the Court to return those exhibits to him in due course. To reflect the foregoing, and respondent's concession, an appropriate order will be issued and decision will be entered under Rule 155. This concludes the Court's bench opinion in this case. (Whereupon, at 2:08 p.m., the above- entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 2 4 25 866.488.DEPO www.CapitalReportingCompany.com