TAX COURT OPINION

Case: Thomas A. Ricca
Docket Number: 26922-10S
Judge: Carluzzo
Opinion Type: bench
Filed: 04/17/2012
Pages: 6

UNITED STATES TAX COURT 20 217 WASHINGTON, D . C . THOMAS A. RICCA, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Re spondent . ) ) ) ) ) ) ) ) Docket No. 26922-10S O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith the pages of the findings of to petitioner and to respondent a copy of transcript of Trial Judge Lewis R. Carluzzo at Philadelphia, Pennsylvania, on March 14, 2012, containing his oral fact and opinion rendered at the above case before Special the conclusion of trial. the trial of In accordance with the oral findings of fact and opinion, an appropriate order and decision will be entered for respondent. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. April 17, 2012 SERVED APR 1 9 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 Bench Opinion by Special Trial Judge Lewis R. Carluzzo Ricca v. Commissioner Docket No. 26922-10S March 14, 2012 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). This proceeding for the redetermination of a deficiency is a small tax case subject to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 175 of the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Except as provided in Rule 152(c) of the Tax Court Rules of Practice and Procedure, this bench opinion shall not be relied upon as precedent. Subsequent section references contained in this bench opinion are to sections of the Internal Revenue Code of 1986, as amended, in effect for 2009, and Rule references are to the Tax Court Rules of Practice and Procedure. Thomas A. Ricca is self-represented in this Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 case. He lived in Pennsylvania at the time the petition was filed. Daniel C. Munce appeared on behalf of respondent. In a notice of deficiency dated November 24, 2010 (notice), respondent determined an $8,000 deficiency in petitioner's 2009 Federal income tax. The issue for decision is whether petitioner is entitled to the first-time home buyer credit (FTHB credit) allowed by section 36. This case is before the Court on respondent's Motion for Summary Judgment, filed January 11, 2012. A hearing was conducted on respondent's motion on March 13, 2012, in Philadelphia, Pennsylvania. The parties appeared and were heard. Petitioner was assisted at the hearing by Ira Feldman, a Pennsylvania Certified Public Accountant. As a result of the hearing, the Court is satisfied that there are no material facts in dispute in this case. Consequently, disposition of the case upon summary judgment is appropriate. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd. 17 F.3d 965 (7th Cir. 1994). Reciting the facts necessary to the disposition of respondent's motion is easily done. Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5 During 2009 petitioner purchased his grandmother's house (house). He claimed a FTHB credit for doing so on his 2009 Federal income tax return. Petitioner's tax basis in the house is computed with reference to its cost, see section 1012 (a), not determined in whole or in part by reference to his grandmother's adjusted basis in the house. Respondent disallowed the credit upon the ground that the house was acquired from a related party. Subject to a variety of conditions and limitations that we need not discuss here, section 36(a) allows a credit to a taxpayer in connection with the purchase of a residence in the United States. The term "purchase" as used in the section 36 means "any acquisition", but only if "the property is not acquired from a person related to the person acquiring such property", and, as relevant here "the basis of the property in the hands of the person acquiring the property" is not determined "in whole or in part by reference to the adjusted basis of the property in the hands of the person from whom acquired". Section 36(c) (3) (A) (I) and (ii) (I). According to respondent, because petitioner acquired the house from his grandmother, it was not Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6 "purchased" within the meaning of section 36, and he is not entitled to the FTHB here in dispute. In effect, respondent views the provisions of section 36(c) that address property basis as irrelevant under the circumstances of this case. According to petitioner, because petitioner's tax basis in the house is its cost and not determined with reference to his grandmother's adjusted basis in the house, petitioner's acquisition of the house was a purchase within the meaning of section 36(c) that otherwise entitles petitioner to a FTHB credit. In effect, petitioner takes the position that a taxpayer is entitled to a FTHB credit for the acquisition of otherwise qualifying property regardless of whether the property was acquired from a related person, as long as the tax basis in the hands of the taxpayer acquiring the property is not determined by reference to the adjusted basis in the property in the hands of the person from whom the property was acquired. Arguably, the repeated use of negatives in the provisions of section 36(c) (3) can lead to a misinterpretation of those provisions, but we simply cannot accept petitioner's stained interpretation. As we have observed in simple terms, the FTHB credit "is Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 7 not available to a taxpayer who purchases a home from a related person". Rodriguez v. Commissioner, T.C. Memo. 2011-122. The "two part test" that petitioner suggests contemplated by section 36(c) (for simplicity's sake we'll call the tests the relationship test and the basis test), must be satisfied to establish entitlement to the credit, but the failure to satisfy either the relationship test or the basis test operates to deny the credit. Here, petitioner has failed the relationship test. Because petitioner acquired the house from a related party, he is not entitled to the FTHB here in dispute. To reflect the foregoing, an appropriate order and decision will be entered. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 10:55 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // // Heritage Reporting Corporation (202) 628-4888