TAX COURT OPINION

Case: Jordana Elaine Davis
Docket Number: 20548-19S
Judge: Goeke
Opinion Type: bench
Filed: 03/31/2021
Pages: 5

United States Tax Court Washington, DC 20217 Petitioner(s), JORDANA ELAINE DAVIS, Commissioner of Internal Revenue, Respondent v. Docket No. 20548-19S. ) ) ) ) ) ) ) ) ) ) ) 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 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 Mobile, Alabama 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 Served 03/31/21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Bench Opinion by Judge Joseph Robert Goeke 3 March 22, 2021 Jordana Elaine Davis v. Commissioner of Internal Revenue Docket No. 20548-19S THE COURT: This is the proceeding for the redetermination of a deficiency. It is a Small Tax case, subject to the provisions of section 7463 and Rules 170 through 174. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority. And pursuant to section 7463(b), the Decision entered in this case shall not be treated as precedent for any other case, and is not reviewable by any other 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 opinion is rendered pursuant to the authority in section 7459(b) of the Internal Revenue Code applicable to the year before 20 the Court. 21 22 23 24 25 This opinion is also authorized by Rule 152 of the Tax Court Rules of Practice and Procedure, and Rule references in the remaining portion of this opinion are to the Tax Court Rules of Practice and Procedure. FINDINGS OF FACT 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 As stated, this is a deficiency case, and the 4 IRS issued a Notice of Deficiency for the year 2017 to the Petitioner, Ms. Davis, and she timely petitioned this Court. She filed a Federal Income Tax return for 2017. She received two Forms W-2 for that year, but only reported income from one of those forms. She also did not report income and expense from her business selling women's clothing. This case was tried remotely, and the parties worked very hard to stipulate the facts of this case and agree on the matters which they could agree upon. The Stipulation of Facts with exhibits, together with Ms. Davis' testimony, represents the record in the case. After a procedural ruling, at the beginning of the trial, the income items in dispute relayed only to specific expenses related to Ms. Davis' business. Respondent conceded the majority of the expenses associated with Ms. Davis' business in a supplement to Respondent's trial memorandum. Ms. Davis' business was on a cash basis. The items remaining in dispute at trial were Ms. Davis' cell phone expense, which she originally asserted was for $1,440. A renovation expense, for which she claimed $9,000, and a portion of her lease expense. Based upon her testimony at trial, and exhibits stipulated by the parties, the lease expense was resolved 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 before the record was closed in the case. To determine 5 the availability of the additional expenses in the case, we've applied the principles of section 162(a). Based upon Ms. Davis' testimony, which we find to be very credible, the allowable cell phone expense is $720, or one half of the amount of the expense incurred in 2017. Regarding the remuneration expense, we find that Ms. Davis actually incurred a cash expense of $3,250. This expense is based upon one half of the $6,500 which was actually paid to the contractor for remuneration through a credit card expense. The credit card company canceled $2,500 of the original $9,000 debt, leaving $6,500 as the amount which was paid. This payment, based upon Ms. Davis' testimony, came from funds from a bank account which was jointly owned by Ms. Davis with her sister. Therefore, she is only entitled to one half of the allowable expense, since she did not provide 100 percent of the $6,500 through her 19 own funds. 20 21 22 23 24 25 OPINION Respondent at trial conceded the additions to tax under section 6662(a) and 6664(c). They are no longer in dispute in this case. The deficiency will have to be recomputed based upon the application of Rule 155. This concludes the Court's oral findings of fact and opinion in this case. 6 (Whereupon, at 4:06 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