TAX COURT OPINION

Case: Francisco & Maria Nassar
Docket Number: 1268-12S
Judge: Gale
Opinion Type: bench
Filed: 12/17/2012
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 RMM FRANCISCO & MARIA NASSAR, ) ) ) ) ) Docket No. 1268-12S. ) COMMISSIONER OF INTERNAL REVENUE, ) ) ) Respondent Petitioners, v. OR 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 petitioners and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph H. Gale at Los Angeles, California on December 4, 2012, 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 under Rule 155. (Signed) Joseph H. Gale Judge Dated: Washington, D.C. December 17, 2012 SERVED Dec 18 2012 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Bench Opinion by Judge Joseph H. Gale December 4, 2012 Francisco & Maria Nassar v. Commissioner Docket No.: 1268-12s 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 case was heard as a small tax case pursuant to the provisions of Section 7463 of the Internal Revenue Code in effect when the petit!ion was filed. This bench opinion is made pursuant to the authority granted by Section 7459(b) of the Internal Revenue Code and Rule 154 -- I'm sorry -- Rule 152 of the Tax Court Rules of Practice and Procedure. 18 Hereinafter, all section references are to the 19 20 21 22 23 Internal Revenue Code in effect for the year át issue, and all rule references are to the Tax Court Rules of Practice and Procedure. Petitioner Francisco Nassar appeared on his own behalf and on behalf of his spouse, Petitioner 24 Maria Nassar. Donna F. Herbert appeared on behalf of 25 Respondent. 866.488.DEPO www.CapitalReportingCompany.com ! Capital Reporting Company 1 2 3 4 5 Respondent determined a deficiency in petitioners' 2010 Federal income tax of $8,000 and an accuracy-related penalty under Section 6662(a) of $1,600. Respondent has conceded the accuracy-related penalty. The issue remaining for decision is whether 6 Petitioners are entitled to an $8, 000 tax credit for 7 8 9 10 11 12 13 14 15 16 17 18 first-time homebuyers. Some of the facts have been stipulated and are so found. On May 1st, 2010, Petitioner Francisdo Nassar initialed an offer to purchase a house at 8209 Capistrano Avenue, West Hills, California, for $390,000. On May 3rd, 2010, the seller counteroffered in writing to sell the house for $395,000. On May 4, 2010, Mr. Nassar accepted the counteroffer in writing, and the house was purchased for that price on June 1st, 2010. The parties have stipulated that petitioners did not enter into a 19 written binding agreement to purchase the house at 20 21 22 23 24 25 8209 Capistrano Avenue before May 1, 2010. Petitioners timely filed a joint Federal income tax return for 2010, on which they claimed a first-time homebuyer credit of $8,000. They attached a settlement statement to their return, which showed that they closed on the purchase on June 1st, 2010. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 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 Respondent issued Petitioners a timely notice of deficiency, disallowing the credit and determining the now conceded 20 percent accuracy-related penalty. Section 36(a) provides a refundable tax credit to a first-time homebuyer of a principal residence equal to 10 percent of the purchase price of the residence, up to a maximum of $8,000. The credit is effective only for purchases made on or after April 9, 2008 and before May 1, 2010, Section 36(h) (1). There is an exception, however, for purchases made on May 1st, 2010 or thereafter if the taxpayer entered into a "written binding contract before May 1, 2010," to close on the purchase before July 1, 2010hLSection 36(h) (2). In this case, if the closing then took place before October 1, 2010, the purchase qualifies for the credith>Section 36(h) (2). The parties do not dispute that, under the applicable law and facts of this case, Petitioners' purchase of the property on Capistrano Avenue qualifies as the purchase of a residence and that petitioners qualify as first-time homebuyers. Respondent's only contention is that Petitioners are not entitled to the credit because they did not have a written binding contract before May 1, 2010, to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 close on the purchase of the home. See Section 36(h). Petitioners closed on the purchase of their home on June 1, 2010, which is after the deadline imposed by Section 36(h) (1). The closing date of June 1, 2010 would satisfy the later deadline in Section 36(h) (2), but Petitioners would only qualify for that later deadline if they had a written and binding contract to purchase the home before May 1, 2010. They have not contended that their contract to purchase was binding before May 1, and the evidence, including the parties' stipulation conclusively demonstrates that it was not. 14 Petitioners first made an offer on the home on May 1, 15 16 17 18 19 20 21 22 23 24 25 2010, to which the seller counteroffered with a higher price on May 3rd, and petitioners accepted on May 4th, 2010. Conceding that they missed the. deadline, Petitioners contend that they have otherwise satisfied the statute and that their failure to meet the written binding contract deadline by a few days is a mere technicality that the Court, using its discretion, should disregard. Deadlines by their nature can lead to harsh and seemingly arbitrary results for individuals who fall just outside of them. Petitioners' frustration 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 is understandable, and while the Court sympathizes 2 with their plight, we do not have any authority to 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 alter the terms of the statute. The statute clearly and unambiguously requires that there be a written and binding contract to purchase the home "before May 1, 2010." This Court is as bound by those statutory terms as petitioners are. As the Supreme Court ! observed in an analogous context, "Filing deadlines, like statutes of limitations, necessarily operate harshly and arbitrarily with respect to individuals who fall just on the other side of them, but if the concept of a filing deadline is to have any content, the deadline must be enforced." U.S. v. Locke, 471 U.S. 84, 100-101 (1985). Congress set a clear deadline for qualifying for the first-time homebuyer credit in the statute, which petitioners have not met with respect to the Capistrano property. While this result may be 19 difficult to swallow, the Court must apply the law as 20 written, and we accordingly hold that Petitioners are 21 22 23 24 25 not entitled to the Section 36 credit for 2010. To reflect the foregoing and given Respondent's suggestion that there may be an overpayment for the year at issue, decision will be entered under Rule 155. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company This concludes the Court's oral findidgs of 8 fact and opinion in this case. This also concludes this session of the Tax 1 2 3 4 Court. We stand adjourned. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Whereupon, at 4:38 p.m., the bench opinion in the above-entitled matter was concluded.) . 866.488.DEPO www.CapitalReportingCompany.com