TAX COURT OPINION

Case: Jerome Joseph Pellerin
Docket Number: 26655-12
Judge: Goeke
Opinion Type: bench
Filed: 07/08/2015
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 JEROME JOSEPH PELLERIN, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 26655-12. ) ) ) ) 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 to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke at New Orleans, Louisiana on June 19, 2015, containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral fmdings of fact and opinion, a decision will be entered under Rule 155, Tax Court Rules of Practice and Procedure.. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. July 8, 2015 SERVED JUL - 9 2015 Capital Reporting Company 3 Bench Opinion by Judge Joseph Robert Goeke June 19, 2015 Jerome Joseph Pellerin v. Commissioner Docket No. 26655-12 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 1 2 3 4 5 6 7 8 9 10 Opinion shall not be relied upon as precedent in any 11 12 13 14 other case. This opinion is rendered pursuant to Rule 152 of the Tax Court Rules of Practice and Procedure, and Internal Revenue Code Section 7459(b). 15 Hereinafter rule references are to the Tax Court 16 17 18 19 20 21 22 23 24 25 Rules of Practice and Procedure and Section references are to the Internal Revenue Code. This case is before the Court based upon our jurisdiction under Section 6À13 (a) to review timely deficiencies petitioned to the Court after Respondent has issued to the taxpayer a notice of deficiency. In the present case Respondent issued two notices of deficiency, one for the years 2006 through 2008 and the other for the year 2011. Petitioner 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 timely petitioned both of these notices of deficiency and they are consolidated in this one docket. Respondent determined additions to tax, in addition to deficiencies in federal income tax, in the notices of deficiency pursuant to Section 6651(a)(1), 6651(a)(2) and 6654. Prior to trial Petitioner conceded the determinations made by the Respondent for the years 2008 and 2011. At the time the petition was filed in 10 this case the Petitioner was a resident of New 11 Orleans, Louisiana. 12 13 This case was originally scheduled for trial in Houston, Texas, at the request of the 14 Petitioner. The trial was subsequently moved to New 15 Orleans, Louisiana, and when the case was called for 16 trial in August of 2014, the parties reported that 17 18 19 20 21 22 23 24 25 the case was potentially susceptible to settlement. However, in a status report filed by Respondent in January of 2015, Respondent reported that Petitioner had not produced additional documents, which would facilitate settlement, and the case was set for trial on June 17th, 2015, and the trial did, in fact, take place on that day in New Orleans, Louisiana. The trial record included exhibits stipulated by the parties and the testimony of the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 Petitioner. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Petitioner had not filed federal income tax returns for the years 2006 and 2007 prior to the issuance of the notice of deficiency. Sometime after the notice of deficiency was issued and prior to trial Petitioner did submit to Respondent's counsel a Form 1040 for the year 2007. That document was among the stipulated exhibits. The notices of deficiency as pertinent to the two years before the Court assert income adjustments based upon reporting to the Respondent by third parties of Petitioner's receipt of income pursuant to Forms 1099 issued to the Petitioner. Pertinent to the year 2006 prior to testimony the parties made certain concessions. 16 Petitioner conceded the receipt of interest income in 17 18 19 20 21 22 23 24 25 2006 in the amount of $714, and Respondent conceded that of the adjustments to income in the notices of deficiency for 2006 Petitioner did not receive income in the amount of $275. Respondent also conceded that Petitioner is entitled to student loan interest reportable on Line 33 of Form 1040 for the year 2006 in the amount of $2,155. Finally, for 2007 Petitioner concedes the receipt of interest income in the amount of $4,772. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 At trial Petitioner testified about the unreported items of income. Petitioner's position is that these amounts are the gross receipts of various settlements and that the amounts were split between himself and his clients. He testified credibly about this income split and referenced his trust account, into which the amounts in dispute were deposited. Based upon his testimony the Court finds that the Petitioner's actual income from his law practice for the year 2006 is based upon the following items: Regarding checks issued by Liberty Mutual in the gross amount of $15,425, the Court finds that the Petitioner's gross income resulting from these checks is $5,425. Regarding checks issued by Louisiana Insurance Guarantee Association in 2006 in the gross amount of $14,825, the Court finds that the gross income received by the Petitioner in 2006 is $4,550. Regarding checks issued by State Farm Insurance Company in 2006 totaling $9,889.88, the Court finds that Petitioner's gross income is $3,300. Finally, regarding a check payable to the 24 Petitioner and his client in the gross amount of 25 $130,000 in 2006 the Court finds that the gross 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 income portion of this amount received by the 2 Petitioner is $26,000. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Moving to 2007, based upon the evidence in the record and Petitioner's testimony, the Court finds that the correct amount of Petitioner's gross income from his legal practice in 2007 is the amount reported on the document stipulated as the return submitted by the Petitioner for 2007, in the amount of $159,300. The only remaining issues are the additions to tax and whether Petitioner is entitled to any expenses in the years 2006 and 2007 from his law practice. Petitioner failed to produce any substantiating documents relative to expenses and is not permitted any expense deductions relative to items which would require substantiation under Section 274. However, Petitioner testified credibly about the nature of his law practice and certain other business activities for which expenses might otherwise be allowable. Based upon his testimony we determine that in each of the years 2006 and 2007 Petitioner is entitled to $625 as a deduction from his income due to Bar dues, and $1,150 as a deduction from his 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 income based upon the expenses for CLE seminars. Because Petitioner has failed to provide any substantiation and specific document of any other expenses, no further expenses are allowable. Regarding the addition to tax, Petitioner offered no basis for determination for reasonable cause for his failure to timely file federal income tax returns and for his failure to timely pay his federal income taxes. Therefore, we are left with no alternative but to sustain the additions to tax as determined by Respondent, which will be determined based upon the revised amounts of the deficiencies for 2006 and 2007, as a result of the determinations we've previously described. Regarding the addition to tax under Section 6654, we sustain this addition to tax in full because 18 Petitioner failed to provide any evidence which would 19 20 21 22 23 24 25 support a different result. However, this addition to tax must also be recomputed based upon the revised amounts. Given our determinations, a Rule 155 computation will be necessary to determine the additions to tax and deficiencies for the years 2006 and 2007; and, therefore, for those two years a Rule 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 155 computation will be necessary. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 10:25 a.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 www.CapitalReportingCompany.com