TAX COURT OPINION

Case: Michael J. Ditmer
Docket Number: 2482-19
Judge: Goeke
Opinion Type: bench
Filed: 10/06/2020
Pages: 5

UNITED STATES TAX COURT WASHINGTON, DC 20217 PA MICHAEL J. DITMER, Petitioner(s), v. ) ) ) ) ) Docket No. 2482-19. 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 herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke containing his oral findings of fact and opinion rendered at the remote St. Paul, Minnesota trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. October 6, 2020 SERVED Oct 07 2020 1 2 Bench Opinion by Judge Joseph Robert Goeke September 22, 2020 3 Michael J. Ditmer v. Commissioner 4 5 6 7 8 9 Docket No. 2482-19 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. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. This 10 opinion is rendered pursuant to Rule 152 of the Tax Court 11 Rules of Practice and Procedure, and section 7459 (b) of 12 the Internal Revenue Code. Section references here and 13 after are to the Internal Revenue Code as applicable to Ac A beGR us. 14 15 Our jurisdiction over the present case is 16 provided by section 6213(a), because this is a case based 17 upon the petition filed by the Taxpayer upon receipt of a 18 Notice of Deficiency. The parties have stipulated certain 19 20 21 22 23 24 facts and the Petitioner testified. The Petitioner was a resident of Wisconsin when he filed his petition in this case. The Petitioner received a Notice of Deficiency for the year 2011 on October 29th, 2019. The deficiency was in the amount of $14, 988. Also included were additions to tax under section 6651(a) (1) in the amount of $3,372.30; 25 section 6654 (a) in the amount of $296.72; and section Cribers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 6651(a)(2) in the amount of $3,747. Respondent prepared substitute returns pursuant to section 6020(b) because the Petitioner failed to file a return for 2011. The Petitioner made no estimated tax payment in 2011. During 2011 the Petitioner was self-employed and received nonemployee compensation of $59,794 for property restoration services he provided. He testified about those services and he also testified about the expenses he would incur in providing those services. Generally these expenses were not subject to the limitations of strict substantiation requirements of section 274(d). He testified 44 he hed-believed he had incurred expenses A conservatively of roughly $25,000, but he failed to produce any records to support those claimed expenses 15 pursuant to our pre-trial orders. Among the items he 16 claimed expenses were required in his activities were for 17 18 19 locks and other items to repair the buildings and for certain expenses associated with trash removal. After hearing his testimony we noted at trial 20 that Cohan v. Commissioner, 23 F.2d 540, 543-44 (2d Cir. 21 22 23 24 1930) might be applicable to estimate certain of his expenses. After some discussion, the parties agreed that it was appropriate for the Court to make an attempt to apply the Cohan rule to all the expenses which were not 25 associated with travel or other strictly scrutinized 1 2 3 4 5 6 7 8 9 expenses under section 274(d). We note that in applying the Cohan rule, we must take a heavy view of the Taxpayer's claimed expenses, as described by the great Judge Learned Hand when he wrote this opinion. Given that mandate which goes back aLL-t-he-way-back to 1930 by Judge Hand, we determine that Petitioner is allowed $10,000 of expense to offset his income in 2011. We now turn to the additions to tax which were asserted in the Notice of Deficiency. We note that these 10 additions to tax are not subject to the requirements of 11 12 13 14 15 16 supervisory approval in section 6751(b)(2)(A), and they are specifically excluded from the application of that section. Petitioner testified vaguely about why he failed to file a return, but Respondent's cross-examination demonstrated that the Petitioner has a pattern of failur 3 to file e-returns and that Petitioner has failed to 17 establish reasonable cause for his failure to file, and 18 19 therefore, the additions to tax under section 6651(a)(1) and (a)(2) are applicable. In addition the addition to 20 tax under section 6654(a) is mandated by Petitioner's 21 22 failure to make estimated tax payments. Accordingly, we sustain all the additions to tax 23 based upon the revised numbers which will have to be 24 25 computed under Rule 155. Therefore, a Rule 155 computation will be necessary in this case. cribers This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 1:10 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 cribers