TAX COURT OPINION

Case: Sholom & Miriam Feigelstock
Docket Number: 21145-08
Judge: Colvin
Opinion Type: bench
Filed: 11/06/2009
Pages: 5

UNITED STATES TAX COURT WASHINGTON, DC 2021 7 SHOLOM & MIRIAM FEIGELSTOCK , Petitioner s V . Docket No . 21145-08 . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice an d 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 in the above case before Judge Joseph Robert Goeke at Los Angeles, California, on September 17,,2009, containing his oral findings of fact and opinion rendered at the conclusion of . the trial . In accordance with'the .'oral findings of fact and opinion, a decision will be entered under Rule 155, Tax Court Rules of Practice and Procedi ;V- (Signed) Joseph Robert Goeke Judge Dated : Washington, D .C . November 6, 2009 r\JEO N OV 1 2 2009 5 1 specifically felt that the property in Florida wa s 2 designed as a retirement property, and that given his 3 age and state in life, he had no intentions o f 4 occupancy of retirement property . Responden t 5 maintains the evidence in the record does not clearly 6 establish that the property was retirement property, 7 but we find Petitioner's testimony in regard to hi s 8 understanding to be credible . 9 The evidence in the record establishes that 10 Petitioner made payments with respect to the property 11 in the form of credit card payments and checks . 12 Respondent maintains that the checks are uncertain as 13 to the payee because they do not specifically stat e 14 the Petitioner's name and address . However, they came 15 from an account that Petitioner testified was hi s 16 account and they appear to have his signature . The 17 checks were issued in 2005, and the checks together 18 with the credit card payment approximate the tota l 19 amount claimed by Petitioners on their federal income 20 tax return as a deduction in the amount of $24,582 . 21 We find that the evidence in the record is 22 sufficient to establish the payment of the amount s 23 claimed on the return . And with respect to the 24 question concerning the factual issues to whethe r 25 Petitioner and his wife had the intent to purchase th e Heritage Reporting Corporation (202) 628-4888 1 property as investment, we find that they did, in 2 fact, intend it to be an investment for business 3 purposes and not for personal purposes . 4 Respondent has conceded that if such a 5 finding was made that the amounts would be deductible 6 under Section 212, subject to the gross incom e 7 limitations in Schedule A of Petitioners' 2006 federal 8 income tax return . Accordingly, we so find that those 9 amounts would be deductible, subject to the gros s 10 income limitations in Schedule A, as a result of our 11 holding that the Petitioners intent was to invest in 12 these real properties for business purposes . 13 With respect to Respondent's argument that, 14 in fact, the amounts in question were not abandoned by 15 the Petitioner and that the Petitioner had retaine d 16 the right to recover certain of the amounts pursuant 17 to the arrangements Petitioner had with Solovita, we 18 find that Petitioner's testimony was credible, that 19 Petitioner intended to abandon the investment in 2006, 20 and that the provision in the reply to his abandonment 21 letter from Solovita,that he would have one year i n 22 which to obtain a credit for the purchase of real 23 property was of no real significance and does no t 24 change the repercussions of Petitioners' abandonment 25 in 2006 as a factual and a legal matter . Heritage Reporting Corporation (202) 628-4888 7 1 In this regard, we find that the Petitioners 2 have established that they had an intention to abandon 3 the ownership of the asset and that they took a n 4 affirmative act to inform Solovita that they had such 5 an intention in 2006, pursuant to Treas . Reg . Section 6 1 .167(a-8)(a)(4) . We therefore find that Petitioners 7 did abandon the investment in 2006 . 8 Petitioners also made investments in several 9 pieces of property in Texas, which were included i n 10 the amounts deducted . And as we stated, we found that 11 Petitioners purchased those properties and mad e 12 initial payments on those properties with the intent 13 of having a business investment . And we also find 14 that Petitioners abandoned those investments in 2006 . 15 The final issue for decision is whether the 16 addition to tax under Section 6662(a) should apply to 17 any deficiency, which may result from Petitioners ' 18 concession of charitable contributions in 2006 . Until 19 a computation is made, we cannot determine if th e 20 requirements of Section 6662(a), relative to the 21 dollar amounts which would trigger the addition to tax 22 as being a substantial understatement, have bee n 23 reached .' Those amounts would be ten percent of th e 24 tax required to be shown on the return, or $5,000 . If 25 such threshold amounts are reached, we would uphol d Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 25 8 the addition to tax under Section 6662(a) as it applies to the deficiencies generated by the charitable contribution . Thus we find that although the Petitioner was credible in his testimony that he felt he had substantiation for the amounts in question, his failure to provide that substantiation and to provide a reasonable basis for the failure to provide the substantiation requires the application of the additional tax, should it be mathematically applicable after a Rule 155 computation in this case . Because of the concession of the Petitioner and for the reasons explained above, Rule 155 Computation will be necessary in this case . This concludes the Court's oral findings of fact and opinion . (Whereupon, at 2 :12 p .m ., the Bench Decision in the above-entitled matter was concluded .) // // Heritage Reporting Corporation (202) 628-4888