TAX COURT OPINION

Case: Dennis K. Iverson
Docket Number: 31012-14
Judge: Buch
Opinion Type: bench
Filed: 07/05/2016
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 DENNIS K. IVERSON, Petitioner, v. KVC ) ) ) ) Docket No. 31012-14. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit with this order to petitioner and respondent a copy of the pages of the transcript of the trial in this case before Judge Ronald L. Buch at Salt Lake City, Utah 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 for respondent. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. July 5, 2016 SERVED Jul 05 2016 Capital Reporting Company 3 1 2 3 4 5 Bench Opinion by Judge Ronald L. Buch June 21, 2016 Dennis K. Iverson v. Commissioner Docket No. 31012-14 THE COURT: The following represents the 6 Court's oral findings of fact and opinion. The oral 7 8 9 10 11 12 13 14 15 16 findings of fact and opinion may not be relied upon as preced.ent in any other case. This opinion is in conformity with Internal Revenue Code Section 7459(b) and Rule 152(a) of the Tax Court Rules of Practice and Procedure. Any section references refer to the Internal Revenue Code or Treasury Regulations in effect during the year at issue. Any rule references are to the Tax Court Rules of Practice and Procedure. The first issue before the Court is a 17 motion by Mr. Iverson for a directed verdict alleging 18 19 20 21 22 that Respondent did not respond sufficiently or perhaps at all to his discovery requests. Mr. Iverson, I refer you to Rule 104(b) of our Rules of Practice and Procedure. You referred to the Federal Rules of Civil Procedure but the Tax 23 Court has its own rules of practice and procedure. 24 25 Our Rule 104(b) says that if a person fails to answer a question or interrogatory propounded!or submitted 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 10 11 12 in accordance with Rule 71, 74, 81, 82, 83 or 84, or fails to respond to a request to produce or inspect or fails to produce or permit the inspection in accordance with Rule 72 or 73, or fails to make a designation in accordance with Rule 74(b) or (c) or Rule 81, the aggrieved party -- that would be you in this instance -- may within the time for completion of discovery under Rule 70(a)(2) move the Court for an order compelling an answer, or response, or compliance with the request, as the case may be. Had you made a motion with the Court in a timely fashion, you could have perhaps gotten the 13 Court to order Respondent to compel discovery. In 14 15 16 17 18 . 19 20 21 22 23 24 25 the midst of a trial is not the time to move with respect to what would be characterized as a discovery violation. So the motion is denied. FINDINGS OF FACT In the notice of deficiency the only income charged to Mr. Iverson is income from Federal Express. Mr. Iverson challenges the IRS's determinations based on his mistrust of IRS computer systems, but the evidence that we have in the record is, in fact, evidence received from Federal Express, showing that the income has been received. 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 5 Income from services is taxable. Mr. Iverson has given no evidence that the income that he received from Federal Express was not taxable. Again, he only challenges the IRS's computer system but he has no evidence related to his case to say that those systems are incorrect and, again, the evidence concerning the income comes from Federal Express and Mr. Iverson admitted on the record to having received it. OPINION As a general matter the Commissioner's determinations in the notice of deficiency are presumed to be correct and it is the taxpayer who bears the burden of proving an error. Rule 142(a) of our Rules of Practice and Procedure, and a Supreme 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Court case dating all the way back to 1933, Welch v. 17 Helvering, 290 U.S. 111 at page 115. 18 19 20 21 22 23 24 25 Further, although not directly relevant here, income tax deductions are considered a matter of legislative grace and it is the taxpayer who bears the burden of proving the entitlement to any claimed deduction or credit. Also Rule 142(a) and also a Supreme Court case INDOPCO, Inc. v. Commissioner, 503 U.S. 79 at Page 84, 1992. In this case Mr. Iverson has offered only 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 frivolous arguments, and as we' ve said in Crañe versus Commissioner, "We perceive no need to refute these rivolous arguments with somber reasoning and copious citation of precedent. To do so might suggest that these arguments have some colorable 6 merit." 737 F. 2d, 1417 at Page 1417, Fifth Circuit, 7 8 9 1984. And as we' ve also said in Wnuck versus Commission it is doubtful whether tax jurisprudence 10 will be much advanced by issuing yet another opinion 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 affirming the obvious truisms about tax law. 136 T.C. 498 at Page 511, 2011. Mr. Iverson has questioned the notion that he should bear the burden of proof but, after all, these are tax matters that are before the Court. The issues are the income that he received. He is the person who would be in the possession of that evidence. That is why taxpayers bear the burden of proof in tax cases. In contrast to the income, it is the Commissioner who bears the burden of production with respect to penalties. What we have in the record concerning penalties are certifications of lack of record. That indicates that Mr. Iverson did not file a tax return, did not make estimated tax payments and 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 did not pay taxes before the due date. When provided the opportunity to put evidence in the record that he did file a tax return or that he did pay taxes or that he did make estimated tax payments, Mr. Iverson did not provide any such evidence. Accordingly, the Commissioner has satisfied its burden concerning the penalties and Mr. Iverson offered no defenses as to the penalties. So the Commissioner's determinations as to the tax liability and the penalties will be sustained. The Commissioner has raised the question of 13 whether a sanction should be imposed under Section 14 15 16 17 6673. Section 6673 of the Internal Revenue Code is titled Sanctions and Costs Awarded by Courts, and basically what this rule says is whenever it appears to the Court that a proceeding has been instituted or 18 maintained by the taxpayer primarily for delay or the 19 20 21 22 taxpayer's position in such a proceeding is frivolous or groundless, or the taxpayer unreaovñabic failed to un «_as om b q vö-6 pursue administrative remedies, the Tax Court in its decision may require the taxpayer to pay to the 23 United States a penalty of up to $25,000. 24 25 It is my practice, Mr. Iverson, not to impose sanctions on somebody who has not been 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 8 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 previously warned by the Court. So I am giving you that warning today and it will be in the bench opinion that will be printed up from today. Not only in our court, but if you were to have brought this case in another court -- you could have brought it in Federal District Court by paying the tax first and suing for a refund, or you could have brought it in the Court of Federal Claims by paying the tax first and suing for a refund. In any of those jurisdictions you would have had the burden of proof. It's no different here. And what it is that needs to be proved are the tax matters from the year at issue, so did you receive income, are you entitled to the options that you claimed. In this instance because you didn't file a return there were no proof issues concerning deductions, but did you or didn't you receive the income? You offered no evidence on that. Had you been in any other court, the result woùld have been the same. So I am not going to impose a sanction under section 6673 so Respondent's motion in that regard is denied. However, you can take this bench opinion as your caution that if you bring frivolous arguments in our court again, it is possible or 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 perhaps even likely that the Judge in a future case would impose sanctions under Section 6673. So with that a decision will be entered for Respondent and I'll ask either party if they have anything further they'd like to add at this time? MR. BOUWHUIS: No, Your Honor. THE COURT: Mr. Iverson? MR. IVERSON: I was put off just a little 1 2 3 4 5 6 7 8 9 bit when Respondent made their closing remarks. He 10 mentioned that I made wages, but when I was on the 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stand he asked if I received compensation. Just now in your opinion I mentioned there I had made compensation and you used the word income, and neither of those terms were defined on the record. So I'm a little confused as to how the word I used got twisted into wages or got twisted into income, when that's not what was previóusly talked about. So that's -- that was my big súrprise. THE COURT: That's okay. Again, the bench opinion is concluded. I'm happy to clarify for you on the record, take a look at Section 61, income includes income from whatever source derived. It's defined very broadly. It includes compensation for services. Anything further, Mr. Iverson? MR. IVERSON: What is it I'm allowed to say 866.488.DEPO www.CapitalReportingComparíy.com Capital Reporting Company that would mean anything? THE COURT: Well, if there is -- I'm giving you the opportunity to say what you would like in 10 terms of -- MR. IVERSON: But -- THE COURT: -- affecting the outcome of this case, there will be a printed copy of a bench opinion followed by the decision of the Court, from 1 2 3 4 5 6 7 8 9 which you may take an appeal or file a written motion 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for reconsideration. MR. IVERSON: Okay. So then my question would be, how did Section 83 of the Internal Revenue Code, Chapter 1, apply when the notice of deficiency was calculated? THE COURT: Explain to me why Section 83 is relevant in your view at this point, which by the way, I'd add this is the first time you're raising it. MR. IVERSON: Well, like I said, this is my first time and I really didn't think I'd be expected to learn everything that these ladies and gentlemen have been doing every day for Lord knows how many years. My point being is that Section 83 discusses how compensation in exchange for services rendered is to be taxed. I noticed on the notice of deficiency 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 11 that there had been no applicability of Section 83 of Chapter 1, regarding my receiving compensation for services rendered, and yet that is the section of Chapter 1 of the IRC that deals with how compensation in exchange for services is to be taxed. It was not included in the calculations on that NOD. So if I've got one thing you're going to let me say, that's what I would like to say. THE COURT: My answer to you is take a re- read of Section 83. It's not at all relevant to this case. Anything else? MR. IVERSON: No, I'm through. THE COURT: Okay. Thank you very much. We are off the record and we're adjourned. (Whereupon, at 2:58 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 24 25 866.488.DEPO www.CapitalReportingCompany.com