TAX COURT OPINION

Case: Richard Martin
Docket Number: 22682-12S
Judge: Nega
Opinion Type: bench
Filed: 11/21/2013
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 RICHARD MARTIN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) Docket No. 22682-12S. 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 respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph W. Nega at Washington, DC, on November 6, 2013, containing his oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Joseph W. Nega Judge Dated: Washington, D.C. November 21, 2013 SERVED NOV 2 2 2013 Capital Reporting Company 3 1 2 Bench Opinion by Judge Joseph W. Nega November 6, 2013 3 Richard Martin v. Commissioner 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Docket No. 22682-12S 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. In this ench pinion all citations are to sections, unless otherwise noted, in the Internal Revenue Code for the year at issue, and citations to rules are to the Tax Court Rules of Practices and Procedure. This opinion is rendered pursuant to Section 7459(b) and Rule 152. Richard Martin is self-represented. Rebecca J. Sable represents Respondent. In a Notice of Deficiency dated June 11, 2012, respondent determined a deficiency of $4,637 in petitioner's federal income tax for 2009. The issue for decision is whether petitioner may deduct as an itemized deduction all of his claimed mortgage interest. Petitioner timely filed his 2009 federal 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 8 9 10 11 12 13 income tax return. Although petitioner was married he and his spouse did elect to file a tax return jointly for 2009. Rather petitioner filed a married filing separately tax return. Petitioner alleges (in a response to respondent's motion for summary judgment) that his marriage had "broke down completely" by January, 2010 and that Petitioner's spouse did not respond to petitioner's offer to file a joint return for 2009. Petitioner's direct testimony at trial included similar statements. Petitioner notes that he used the H&R Block at Home tax preparation program to prepare his timely filed 2.009 married, filing separately tax return. 14 Petitioner alleges that the program did not alert him 15 16 17 18 19 20 21 22 23 24 25 to any special limitations on the amount of deductible interest expense which could result from his married filing separately tax return. It is unclearly from petitioner's testimony, but it appears that the "special limitations" to which the petitioner refers are contained in Section 163(h) (4) (A) (ii), which provides (in the case of a married individual filing separate returns), "If a married couple does not file a joint return for a taxable year--(I) such couple shall be treated as one taxpayer for purposes of clause (I) 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 1 (relating the definition of "qualified residence" 2 which generally includes the principal residence of 3 4 5 6 7 8 9 10 11 the taxpayer and one other residence of the taxpayer, which is selected by the taxpayer for purposes of this subsection for the taxable year, and which is used by the taxpayer as a residence) and (II) each individual shall be entitled to take into account one residence, unless both individuals consent in writing to one individual taking into account the principal residence, and the other the other residence." If this is the "special limitation" to 12 which petitioner refers, it is irrelevant to this 13 14 15 16 17 18 19 20 21 22 case. As described below, the limitation on deductibility of mortgage interest upon which this case turns, is not that petitioner had to designate one residence ut rather is the $500,000 limitation 0 that applies to individuals filing as married filing separately. On Schedule A, Itemized Deduction, attached to petitioner's tax return, petitioner reported $52,488 of home mortgage interested as an itemized deduction. This amount related to two residences. 23 After receiving respondent's Notice of Deficiency 24 25 petitioner began working with the IRS to resolve the case. This led to the creation of a "sample 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 6 1 worksheet" by petitioner. 2 3 4 5 6 7 8 9 10 11 12 13 14 In this "sample worksheet" received by respondent on February 6, 2012, petitioner calculated his deductible home mortgage interest as $33,933.00. This amount relates to a single residence located at 4615 Brookville Road, and calculates the deductible interest paid with respect to that residence for the year by applying a ration to $41,382, (the total interest paid on the property for the year) which corresponds to the ratio of $500,000 (the applicable statutory limit) to $671,036 (the total indebtedness on the property). In response to petitioner's submissions dated February 6, 2012, respondent agreed with 15 petitioner's $33,933 amount of deductible mortgage 16 17 18 interest expense. At trial petitioner described his continued efforts to secure agreement from his former spouse to file a married filing joint tax return. 19 While the Court notes that the general dollar 20 21 22 23 24 25 limitations on home mortgage interest for joint returns.are $1 million for acquisition indebtedness, and $100,000 for home equity indebtedness, Section 163(h) (3), ultimately these are not available to the petitioner as a married individual who has filed a separate tax return. 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Generally, taxpayers are permitted to deduct mortgage interest paid od a qualified residence, Section 163(h)2(d). !Hjowever, married individuals who file separate returns may claim interest deductions only on the I irst $500,000 of qualified residence acquisition ebt, and $50,000 of home equity debt. See Section 163(h)3(+r)-ttTTi$, and (c) (2) (ii). Respondent asserts that petitioner's debt exceeds these limitations. Petitioner does not dispute this point. Petitioner contends that if he and his former spouse could file an amended 2009 federal income tax return and claim the status of married filing jointly, he could deduct the full amount, $52,488 of mortgage interest claimed on his original tax return. However, once a petition has been filed in this Court a taxpayer is no longer eligible to elect to file jointly an income tax return for the year or years at issue, Section 6013(b(2 ). In response to respondent's Notice of 21 Deficiency, petitioner filed a petition timely with 22 this Court to commence this case. Consequently, 23 Petitioner is now precluded from filing a joint tax 24 25 return with his former spouse. Accordingly, we sustain respondent's determination with respect to 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 8 the limitation of etitioner's deductible mortgage interest. Decision will be entered for respondent. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 4:15 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 25 866.488.DEPO twww.CapitalReportingCompany.com