TAX COURT OPINION

Case: Luke Speier
Docket Number: 4841-09S
Judge: Colvin
Opinion Type: bench
Filed: 03/25/2010
Pages: 5

UNITED STATES TAX COURT WASHINGTON , DC 2021 7 RM M LUKE SPEIER, Petitioner, v . ) Docket No . 4841-09 S . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s 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 hearing in the above case before Judge Laro at Los Angeles, CA on March 8, 2010, containing his oral findings of fact and opinion rendered at the conclusion of the hearing . In accordance with the oral findings of fact and opinion, an appropriate Order and Decision will be entered . (Signed ) David Laro Judg e Dated : Washington, D .C . March 25, 2010 SERVED Mar 26 2010 1 Bench Opinion by Senior Judge David Laro March 11, 201 0 2 Speier v . Commissioner Docket No . 4841-09 S 3 THE COURT : All right . The Court has decided to 4 render oral findings of fact and opinion in this case . 5 The following represents the Court's Oral Findings o f Fact and Opinion . This Bench opinion is made pursuant to the 8 authority granted by Section 7459(b) of the Internal Revenue Code of 1986, as amended to date, and Rule 152,o f 10 the Tax Court Rules of Practice and Procedure . 11 Unless otherwise stated, section references are to 12 the applicable version of the Internal Revenue Code ; rule 13 references are to the Tax Court Rules of Practice an d 14 Procedure, and dollar amounts are rounded to the nearest 15 dollar . 16 Respondent determined a deficiency in the amount 17 of $12,186, for Petitioner's 2006 taxable year, and an 18 accuracy-related penalty in the amount of $776 . At th e 19 time he petitioned this Court for a redetermination, 20 Petitioner resided in West Hills, California . 21 In 2006, . Petitioner received unreported interes t 22 income in the amount of $15 and unreported gamblin g 23 income 4-i -t -ffe amount of $24,305 . Petitioner als o ti 24 incurred gambling losses in the amount of $24,305 . 25 Petitioner received, but did not report, an early Heritage Reporting Corporatio n (202) 628-4888 4 1 distribution from a qualified retirement-plan in th e 2 amount of $42,543 . Taxes in the amount of $8,308 were 3 . withheld from the retirement plan distribution . 4 Petitioner concedes all of the above items , 5 including an early-distribution penalty under Section 6 72(t), in the amount of $4,154 . 7 The sole issue remaining for us to decide is the 8 application of the accuracy-related penalty in the amount 9 of $776 . 10 Respondent bears the burden of production as to 11 penalties, under Section 7491(c) . See Higbee v . 12 Commissioner , 116 T .C . 438, 446 (2001) . Section 6662(a) 13 imposes a 20 percent penalty on any substantia l 14 understatement of income tax . 15 There is a substantial understatement of income 16 tax if the amount of the understatement is greater than 17 $5,000, or 10 percent of the amount required to be shown 18 on the return . Sec . 6662(d) . The amount of the 19 understatement, which Petitioner conceded, was $12,014, 20 which is greater than $5,000 and greater than 10 percent 21 of the amount required to be shown on the return . This 22 satisfies Respondent's burden of production . See Moore 23 v . Commissioner , T .C . Memo 2007-123 . 24 Petitioner bears the burden of proving that the 25 accuracy-related penalty does not apply because he had Heritage Reporting Corporatio n (202) 628-4888 reasonable cause and acted in good -faith with respect to the amount of the understated income . Sec . (D664(c) . We take particular facts and circumstances into account to determine whether the taxpayer acted wit h reasonable cause and in good faith . Sec ., 1 .6664-4(b) (I) , Procedure and Admin ; Regs . The taxpayer may have had an hones t misunderstanding of fact-or law that is ;reasonable in light of all the facts and circumstances, including th e 10 experience, knowledge, and education of the taxpayer . 11 Id . The most important factor to'consider is the extent 12 of the taxpayer's efforts to assess his proper ta x 13 liability . Id . 14 Petitioner claimed that he believed the amoun t 15 withheld from the retirement distribution satisfied the 16 tax liability and reporting requirements associated with 1.7 the early distribution . 18 At trial, Petitioner briefly testified that he was 19 in the . process of moving .and did not receive all of his 20 forms W-2 or 1099, though he knew that some would be sent 21 to him . 22 . . When he did not receive .the appropriate tax forms, 23 he filed his return without including all of his income . 24 Because Petitioner has not shown that he made efforts to 25 report his correct income, or determine the prope r Heritage Reporting Corporation (202) 628-4888 1 treatment for the early retirement distribution, he has 2 failed to satisfy-his burden of proof regarding : the 3 .. reasonable cause andgood,faith exception to accuracy- related penalties . 5 .Accordingly, we hold for Respondent, and wil l 6 enter a decision in his favor. This .concludes th e Court's O Findingsof Fact and opinion in this case . (Whereupon , at 10 :04 a .m ., the bench opinion i n the above - entitled matter was concluded . ) // 10 11 1 2 13 14 15 16 / / 17 . 18 // 1 9 20 21 22 23 24 25 Heritage Reporting Corporation (202) 628-4888