TAX COURT OPINION

Case: Adriana B. Martinez-Guzman
Docket Number: 19254-18S
Judge: Nega
Opinion Type: bench
Filed: 10/24/2019
Pages: 12

SD UNITED STATES TAX COURT WASHINGTON, DC 20217 ADRIANA B. MARTINEZ-GUZMAN, Petitioner, v. ) ) ) ) Docket No. 19254-18S. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant to Rule 152(b) of the Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of the proceedings in the above case before Judge Joseph W. Nega at Albuquerque, New Mexico, on September 24, 2019, 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 under Rule 155. (Signed) Joseph W. Nega Judge Dated: Washington, D.C. October 24, 2019 SERVED Oct 24 2019 IN THE UNITED STATES TAX COURT 1 In the Matter of: ) ADRIANA B. MARTINEZ-GUZMAN, ) Docket No. 19254-18s Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) Bernalillo County Metropolitan Court 401 Lomas Boulevard, N.W. Albuquerque, New Mexico 87102 September 24, 2019 The above-entitled matter came on for bench opinion, pursuant to notice at 1:50 p.m. BEFORE: HONORABLE JOSEPH W. NEGA Judge APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance 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 P R O C E E D I N G S 2 (1:50 p.m.) THE CLERK: Recalling from the calendar docket number 19254-18S, Adriana B. Martinez-Guzman. (Whereupon, a bench opinion was rendered.) 1 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 73)406-2250 operations@escribe<5met wwwescnbennet Bench Opinion by Judge Joseph W. Nega SePtember 24, 2019 Adriana B. Martinez-Guzman v. Commissioner Docket No. 19254-18s 3 THE COURT: The Court has decided to render oral Findings of Fact and Opinion in this case. The following represents the Court's oral Findings of Fact and Opinion. This bench opinion is made pursuant to section 7459(b) and Rule 152. 1 2 3 4 5 6 7 8 9 10 This case was heard pursuant to the provisions 11 of section 7463 of the Internal Revenue Code in effect 12 13 14 15 16 17 when the petition was filed. Pursuant to section 7463(b), the decision to be entered is not reviewable by any other court, and this opinion shall not be treated as precedent for any other case. Unless otherwise indicated, all section references are to the Internal Revenue Code (Code) in effect for the taxable year at issue, and all Rule 18 references are to the Tax Court Rules of Practice and 19 Procedure. All monetary amounts are rounded to the 20 21 22 23 24 25 nearest dollar. By a notice of deficiency dated July 2, 2018, respondent determined a deficiency in petitioner's Federal income tax for tax year 2016. After concessions, the sole issue for decision is whether petitioner is entitled to education credits under section 25A for the tax year 2016 ||Lenbers (973)406-2250 operations@escrkertnet www.escribers.net in amounts greater than respondent has allowed. After 4 trial, respondent conceded that petitioner substantiatedC $985 in qualified tuition and related expenses. This amount represents five tuition payments of $415, $114, $228, $219, and $296 less a refund of $287. This case was tried on September 23, 2019, in Albuquerque, New Mexico. Joel Cruz-Esparza appeared on behalf of Adriana B. Martinez-Guzman. Michael T. Garrett appeared on behalf of respondent. FINDINGS OFF ACT Some of the facts have been stipulated, and the stipulated facts are incorporated in our findings by this reference. At the time the petition was filed, petitioner resided in New Mexico. Petitioner timely filed a Form 1040, U.S. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Individual Income Tax Return, for 2016. On the tax return 17 18 she reported wages totaling $25,497 from her employment as a Teller. Petitioner attached to the return a Form 8863, 19 Education Credits (American Opportunity and Lifetime 20 Learning Credits), and claimed an American Opportunity Tax 21 Credit of $1,754, of which she treated $702 as refundable 22 and $1,052 as nonrefundable. According to the form, the 23 credit is attributable to petitioner's education expenses 24 25 at Santa Fe Community College in 2016. Following an examination of the 2016 tax return, cribers (973)406-2250loperations@escribersmetlwww.escribersaet 5 respondent disallowed petitioner's claimed education credit for lack of supporting documentation. On October 1, 2018, petitioner timely filed a petition with this Court. After filing the petition, petitioner provided to respondent a copy of Form 1098-T, Tuition Statement, issued to her by Santa Fe Community College for 2016. This Form had no entry in box 1, captioned "Payments Received." It showed an entry of $2,234 in box 2, captioned "Amounts billed for qualified tuition and related expenses." It showed an entry of $175 in box 4, captioned "Adjustments," which is for discounted fees for fitness center use, service fees, student government fees, and a "Tuition In State/In District" 1 2 3 4 5 6 7 8 9 10 11 12 13 14 discount. It showed an entry of $1,250 in box 5, 15 16 captioned "scholarship or grants". The Form 1098-T shows that none of the qualifying tuition billed for 2016 was 17 paid. 18 19 Respondent advised petitioner that, based upon Form 1098-T, petitioner could not have paid the $1,754 in 20 qualified education expenses reported on the tax return. 21 Based upon the amounts reflected on the Form 1098-T, 22 petitioner at best could have paid only $810 in qualified 23 education expenses ($2,234 billed less $175 in adjustments 24 25 less $1,250 in scholarships equals $810). Respondent stated that this calculation presumes petitioner can Criber$ (973)4064250|operationseescrbersnet j www.escsbers.net actually prove she paid any tuition and related expenses 6 in 2016. In response, petitioner provided: (1) a partial unofficial transcript from Santa Fe Community College; (2) two eTextbook rental receipts from Chegg for $75; and (3) Amazon shopping cart printouts showing a list of books that cost $686 that was prepared in August 2019. Petitioner asserts that she would have needed these books . for her classes in 2016 but she has no receipts proving she actually purchased or rented these books. OPINION I. Burden of Proof The determination in a notice of (_, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 deficiency are generally presumed correct, and the 15 16 17 18 19 20 taxpayer bears the burden of proving them erroneous. Rule 142(a) (1); Welch v. Helvering, 290 U.S. 111, 115 (1933). Like deductions, tax credits are a matter of legislative grace, and the taxpayer bears the burden of proving that he or she is entitled to any credit claimed. See Rule 142(a); Deputy v. du Pont, 308 U.S. 488, 493 (1940); New 21 Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). 22 Pursuant to section 7491(a), the burden of proof as to 23 24 factual matters shifts to the Commissioner under certain circumstances. Petitioner did not allege or otherwise 25 show that section 7491(a) applies. See sec. 7491(a)(2) (A) cdbers (973)406-2250|operationspescribers.net[wwùesedben.net 7 and (B). Therefore, petitioner bears the burden of proof. See Rule 142(a). II. Education Credits The Code allows for a variety of education credits, including the American Opportunity Credit, a 1 2 3 4 5 6 modified version of the Hope Scholarship Credit that was 7 8 9 10 11 in effect for tax year 2015. See sec. 25A(i). The American Opportunity Credit provides for a credit against tax equal to 100% of qualified tuition and related expenses paid by a taxpayer during the taxable year up to $2,000, plus 25% of such expenses paid that exceed $2,000 12 but do not exceed $4,000, allowing for a maximum credit of 13 14 15 $2,500. Sec. 25A(i)(1). Up to 40% of the credit may be refundable. Sec. 25A(i)(5). The credit is allowed for the first four years of post secondary education for 16 qualified tuition and expenses including required course 17 materials. Sec. 25A(i)(2) and (3). To be eligible for 18 19 20 21 22 23 24 25 the credit a student must be enrolled in at least one academic period and must be taking at least one-half of a normal full-time workload for a student in that course of study. Sec. 25A(b)(2) (B) and (3)(B). Generally, "qualified tuition and related expenses means tuition and fees required for enrollment or attendance". Sec. 1.25A-2(d) (1), Income Tax Regs. A "required" fee is one that is "required to be paid to the cribers 9733406-2250|opentions@escribetsstet|www.escribersmet 8 eligible educational institution as a condition of the student's enrollment or attendance at the institution." Id. subpara. (2)(i). Amounts paid for books, supplies, and equipment are eligible only if the fees must be paid to the institution for the student's enrollment or attendance. Id. subdiv. (ii). For example, if students are required to purchase books and reading materials for a course but can purchase them from another source such as an off-campus bookstore, they are not required to be purchased from the institution for enrollment or attendance. See id. subpara. (6), Example (2). A taxpayer ordinarily must maintain adequate records to substantiate the amounts of his or her income and entitlement to any deductions or credits claimed. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. When a 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 taxpayer establishes that he or she paid or incurred a 17 deductible expense but does not establish the amount of 18 19 the expense, we may estimate the amount allowable in some circumstances. Cohan v. Commissioner, 39 F.2d 540 (2d A 20 Cir. 1930). There must be sufficient evidence in the 21 22 23 24 25 record, however, to permit us to conclude that the taxpayer paid or incurred a deductible expense in at least the amount allowed. See Williams v. United States, 245 F.2d 559, 560 (5th Cir. 1957); Vanicek v. Commissioner, 85 T.C. 731, 743 (1985). In estimating the amount allowable, ÜÍcribers f9733406-2250|operationsee5albers.net|wwwasaíbersoet we bear heavily upon the taxpayer who failed to maintain required records and to substantiate deductions as the Code requires. See Cohan v. Commissioner, 39 F.2d at 544; Keenan v. Commissioner, T.C. Memo. 2006-45, aff'd, 233 F. 9 App'x 719 (9th Cir. 2007). After trial respondent conceded that petitioner substantiated $985 in qualified tuition and related exPenses. Petitioner, however, has not produced records of tuition payments or educational expenses greater than 1 2 3 4 5 6 7 8 9 10 those conceded by respondent. The only evidence 11 petitioner offered to support her claim that she paid the 12 13 14 15 remaining $769 expenses was her generalized testimony on that point. Petitioner did not provide any Canceled checks, credit card statements, bank account statements, account statements from Santa Fe Community College, or any 16 other document that shows that she paid any of the 17 18 19 20 remaining qualified tuition and related expenses shown on the Form 8863. In fact petitioner testified that she could not find the original records showing payment. Nor is there sufficient evidence in the record to provide a 21 basis for estimating the expenses. See Cohan v. 22 Commissioner, 39 F.2d at 543-544; Vanicek v. Commissioner, 23 24 25 85 T.C. at 742-743. Moreover, there is no evidence that petitioner was required to purchase the books directly from Santa Fe cdbe (973)406-2250loperatiom®escribertnetlwww.escribers.net Community College. 10 Instead petitioner was able to and in fact did purchase and rent the books from a third party. Thus the cost of the books is not an expense that ' qualifies for the education credit. See id. subpara. (6), Example (2). Petitioner has not met her burden of proving entitlement to the American Opportunity Credits. Accordingly, we sustain respondent's disallowance of the education credits. III. Conclusion 1 2 3 4 5 6 7 8 9 10 Accordingly, a decision will be entered under 11 Rule 155. This concludes the Court's oral findings of 12 fact and opinion in this case. In reaching our holdings 13 herein, we have considered all arguments made, and, to the extent not mentioned above, we conclude they are moot, irrelevant, or without merit. That concludes the bench opinion, (whereupon, at 2:02 p.m., the above-entitled matter was concluded.) 14 15 16 17 18 19 20 21 22 23 24 25 Cribeß (973)406.2250loperationseescribersnetivnywascribersnet CERTIFICATE OF TRANSCRIBER AND PROOFREADER 11 CASE NAME: Adriana B. Martinez-Guzman v. Commissioner DOCKET NO.: 19254-18S We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 11 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Jaqueline Denlinger on September 24, 2019 before the United States Tax Court at its session in Albuquerque, NM, in accordance 1 2 3 4 5 6 7 8 9 10 with the applicable provisions of the current verbatim 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. Meribeth Ashley, CET-507 Transcriber 10/1/19 Date Traci Fine, CDLT-169 Proofreader 10/7/19 Date . cribers $973)406-2250|operationseescribermetlwwyr.escribermet