TAX COURT OPINION

Case: Denise Scurlock
Docket Number: 13177-17
Judge: Morrison
Opinion Type: bench
Filed: 05/28/2019
Pages: 10

CT UNITED STATES TAX COURT WASHINGTON, DC 20217 DENISE SCURLOCK, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 13177-17. ORDER OF SERVICE OF TRANSCRIPT 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 in the above case before Richard T. Morrison, at Los Angeles, California, on May 7, 2019, containing his oral findings of fact and opinion rendered at the conclusion of trial. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Richard T. Morrison Judge Dated: Washington, D.C. May 28, 2019 SERVED May 28 2019 RECEIVED 5/14/19 IN THE UNITED STATES TAX COURT CT In the Matter of: ) DENISE SCURLOCK, ) Docket No. 13177-17 Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) Pages: 1 through 8 Place: Los Angeles, California Date: May 7, 2019 (973)406-2250loperationscescribers.net|www.escribecuet 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 IN THE UNITED STATES TAX COURT 1 In the Matter of: ) ) DENISE SCURLOCK, ) Docket No. 13177-17 Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) Edward R. Roybal Center 255 East Temple Street Room 1167, Los Angeles, California 90012 llth Floor & Fed. Bldg. May 7, 2019 The above-entitled matter came on for bench opinion, pursuant to notice at 9:01 a.m. BEFORE: HONORABLE RICHARD T. MORRISON Judge APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance (973)406-2250|operationseerribetsmetlwww.escribersnet P R O C E E D I N G S 2 (9:01 a.m.) THE CLERK: Recalling from the calendar docket number 13177-17, Denise Scurlock. (Whereupon, a bench opinion was rendered.) 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 Ø73)406-22501-operations@escribers.net]www.escribersnet Bench Opinion by Judge Richard T. Morrison May 7, 2019 Denise Scurlock v. Commissioner of Internal Revenue Docket No. 13177-17 3 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. 1 2 3 4 5 6 7 8 9 10 This bench opinion is made pursuant to the 11 authority granted by section 7459(b) of the Internal 12 Revenue Code of 1986, as amended, and Rule 152 of the Tax 13 Court Rules of Practice and Procedure. 14 15 16 17 18 19 In this bench opinion, all references to sections are to the Internal Revenue Code of 1986, as amended, unless otherwise noted. All references to Rules are to the Tax Court Rules of Practice and Procedure. The respondent is referred to as the IRS. On March 6, 2017, a notice of deficiency for tax 20 year 2015 was issued by the IRS. The notice of deficiency 21 22 23 24 determined that there was a deficiency of income tax of $1,320 for tax year 2015. We sustain the deficiency in full. The trial of this case as conducted on May 6, 25 2019, in Los Angeles, California. The petitioner, Ms. sham (973)406-2250|operations@escribersnetlwww.escribers.net Denise Scurlock, was the only witness. 4 The stipulation of facts was executed by the parties and the Court admitted Exhibits 1-J, 2-J, 3-J. We find the following facts: FINDINGS OF FACT Scurlock resided in California when she filed the petition. As the parties have stipulated, Scurlock received $8,808 in unemployment compensation from 1 2 3 4 5 6 7 8 9 California's Employment Development Department in -2015. 10 11 12 13 14 15 16 17 The Employment Development Department did not withhold from this amount any federal income tax. The Employment Development Department filed with the IRS a Form 1099-G, Certain Government Payments, stating that it had paid $8,808 of the unemployment compensation to Scurlock. Scurlock timely filed her 2015 income tax return on Form 1040EZ, Income Tax Return for Single and Joint 18 Filers With No Dependents. The section of the return for 19 identifying the paid preparer was blank. The return did 20 not report any unemployment compensation. 21 22 The notice of deficiency determined that the $8,808 of unemployment compensation was includable in 23 Scurlock's income. The notice of deficiency determined a 24 corresponding deficiency of $1,320. 25 Scurlock filed a timely petition with this Court (973)406-2250|operations@escribers.net|www.escibers.net for redetermination. 5 OPINION All findings of facts are based on the preponderance of the evidence, so it is unnecessary to determine which party bears the burden of persuasion. Section 85(a) provides that "gross income includes unemployment compensation". The $8,808 that Scurlock received from the Employment Development Department was unemployment compensation. Therefore, the $8,808 is includable in Scurlock's income. Under Wiermerskirch v. Commissioner, 596 F.2d 358, 362 (9th Cir. 1979), rev'g 67 T.C. 672 (1977), the IRS must present evidence linking the taxpayer to income- producing activity. Here, Scurlock has stipulated that she earned $8,808 of unemployment compensation. Section 6201(d) provides that if a taxpayer asserts a reasonable dispute with respect to any item of income reported on an information return filed with the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 IRS by a third party, and if other conditions have been 20 met, the IRS has the burden of producing reasonable and 21 Probative information concerning such deficiency in 22 addition to such information return. Scurlock's 23 24 unemployment-compensation income was reported to the IRS on an information return, i.e., a form 1099-G. However, 25 Scurlock does not dispute that she received the $8,808 of cribers (973)406-2250!aperations@erribers.net|www.escribers.net unemployment compensation. Thus, section 6201(d) would 6 not affect the resolution of this case. Scurlock contends that H&R Block, a tax- preparation firm, told her that the unemployment compensation was not includable in her income. Section 6662(a) imposes a 20% penalty on a taxpayer who reports less than the correct amount of tax on a return. There is a defense to the 20 % penalty if the taxpayer has reasonable cause for reporting less than 1 2 3 4 5 6 7 8 9 10 the correct amount of tax and if the reporting was in good 11 12 13 14 15 16 17 18 19 faith. Under certain circumstances set forth in section 1.6664-4 (b) (1) and (c), Income Tax Regs., reasonable cause and good faith can be shown if the taxpayer relied on the op1nlon of a professional tax advisor. Here, however, the IRS is not asserting the 20% penalty. And no provision of the Code reli,eves a taxpayer of the underlying income tax liability if the taxpayer was advised that the tax liability is less than the correct liability. Scurlock also contends that the IRS cannot 20 determine that the unemployment compensation is includable 21 in her income because the Employment Development 22 Department did not withhold federal income tax from the 23 unemployment-compensation payments. Even if the 24 Employment Development Department had a duty to withhold 25 income tax from Scurlock's unemployment compensation (973)406-2250|operation5@escribers.net|www.escnbersnet 7 payments, it s failure to withhold income tax would not 8 relieve Scurlock from the obligation of reporting the unemployment compensation on her return. As we explained in Chenault v. Commissioner, T.C. Memo. 2011-56, slip OPinion) at 11, a third party's withholding obligation "does not excuse the taxpayer from his or her duty to report income and pay the resulting tax". Given the foregoing, A decision will be entered for respondent. 1 2 3 4 5 6 7 8 9 10 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT 11 AND OPINION IN THIS CASE. 12 , (Whereupon, at 9:08 a.m., the above-entitled 13 14 15 16 17 18 19 20 21 22 23 24 25 matter was concluded.) 1 73)406-2250|operations@escribersmet|wwviescribersaet CERTIFICATE OF TRANSCRIBER AND PROOFREADER 8 CASE NAME: Denise Scurlock v. Commissioner DOCKET NO.: 13177-17 We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 8 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Troy Ray on May 7, 2019 before the United States Tax Court at its session in Los Angeles, CA, in accordance with the 1 2 3 4 5 6 7 8 9 10 applicable provisions of the current verbatim reporting 11 12 contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript 13 against the verbal recording. 14 15 16 17 18 19 20 21 22 23 24 25 Meribeth Ashley, CET-507 Transcriber 5/13/19 Date Jessica Hernandez Proofreader 5/13/19 Date (973)406-2250|operations©escribers.netlwww.escribers.net