TAX COURT OPINION

Case: Torrance A. & Lisa Jacko
Docket Number: 4599-10
Judge: Colvin
Opinion Type: bench
Filed: 02/25/2011
Pages: 4

UNITED STATES TAX COURT WASHINGTON, DC 20217 TORRANCE A. & LISA JACKO, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) Docket No..4599-10. 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 petitioners and to respondent a copy of transcript of Halpern at San Diego, California on January 25, 2011, containing his oral the conclusion of trial. the above case before Judge James S. fact and opinion rendered at the pages of the the trial of findings -of In accordance with the oral findings of fact and opinion, an appropriate order and decision will be entered. (Signed) James S. Halpern Judge Dated: Washirigton, D.C. February 25, 2011 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 2 Bench Opinion by Judge James S. Halpern January 25, 2011 Torrance A. & Lisa Jacko Docket No. 4599-10 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 bench opinion is made pursuant to the authority granted by Section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Respondent has determined a deficiency of $43,458 in Petitioners' federal income tax for 2004, a penalty for J'5H failure to file under Section 6651(a) (1) of $10,898.92, and an accuracy-related penalty under Section 6662(a) of $8,691.60. The parties have stipulated certain facts. The stipulation of fact with attached exhibits, A. is incorporated 33H herein by this reference. Except as otherwise mentioned, Petitioners bear the burden of proof. See Rule 142(a). At the start of the trial in this case, the Court Heritage Reporting Corporation (202) 628-4888 1 2 3 allowed Petitioners to amend the petition to raise the period of limitations as an affirmative defense. The notice of deficiency shows that it was mailed to Petitioners on 4 April 4, 2010. Respondent's records show that Petitioners 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 filed their 2004 return on June 1pf 2007. We did not find 33N persuasive Petitioner Torrance Jacko's testimony that Petitioners' accountant electronically filed their return in 2005. Since April 4, 2010 is less than three years after June lff 2007, the notice of deficiency was timely. See QSH Section 6501(a). The adjustments giving rise to the deficiency in tax result primarily from Petitioners' failure to substantiate deductions. Petitioners failed to provide adequate substantiation to prove that any of the adjustments were erroneous. Petitioners also did not show that they did not receive interest of $37. We sustain all of Respondent's adjustments. Section 7491 imposes on Respondent the burden of production with respect to additions to tax and penalties. Section 6651(a) (1) provides that, in the case of a failure to file a return by the date pr&scribed, there shall 33 be added to the amount required to be shown as a tax on such return five percent of the amount of such tax per month or a fraction thereof, not to exceed 25 percent in the aggregate, unless it is shown that such failure is due to reasonable Heritage Reporting Corporation (202) 628-4888 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 cause, and not due to willful neglect. Respondent's records show that Petitioners were granted an extension and, accordingly, their 2004 return was due to be filed on August 15, 2005. Respondent's records also show that Petitioners filed their return on June 1pi'2007. Respondent JJf 4 has met his burden of production. Petitioners have not shown that their failure to file their 2004 return was due to reasonable cause and not due to willful neglect. Accordingly, Petitioners are liable for the late filing addition pursuant to Section 6651(a) (1), and we so find. Section 6662(a) imposes an accuracy-related penalty. In his pretrial memorandum, Respondent has made calculations demonstrating a substantial understatement of income tax, which satisfies his burden of production. Petitioners have not provided reasonable cause nor evidence of good faith with respect to the underpayment. See Section 6664(c). A penalty under Section 6662(a) is therefore applicable, and we so find. This concludes the Court's oral findings of fact and opinion in this case. Decision will be entered for Respondent. (Whereupon, at 10:15 a.m., the bench opinion in the above-entitled matter was concluded.) // // Heritage Reporting Corporation (202) 628-4888