TAX COURT OPINION

Case: ProAdvocate Group
Docket Number: 10139-16
Judge: Foley
Opinion Type: bench
Filed: 11/17/2017
Pages: 5

SYM UNITED STATES TAX COURT WASHINGTON, DC 20217 PROADVOCATE GROUP, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 10139-16. ) ) ) ) ) ) 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 Maurice B. Foley at Dallas, Texas, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) Maurice B. Foley Judge Dated: Washington, D.C. November 17, 2017 SERVED Nov 20 2017 3 1 2 3 4 5 6 7 8 Bench Opinion by Judge Maurice B. Foley October 4, 2017 ProAdvocate Group v. Commissioner Docket No. 10139-16 THE COURT: I will now read into the record a bench decision relating to ProAdvocate Group, Docket number 10139-16. The Court has decided to render oral findincjs of . 9 fact and opinion, and the following represents the Court's 10 oral findings of fact and opinion. The oral findings of 11 12 13 fact and opinion shall not be relied upon as precedent in any other case. This bench opinion is made pursuant to the 4 authority. granted by section 7459(b) of the Internal 5 Revenue Code of 1986, as amended, and Rule 152 of the Tax 6 Court Rules of Practice and Procedure. Unless otherwise 7 8 9 indicated, section references are to the Internal Revenue Code relating to the year in issue, and Rule referenäes are to the Tax Court Rules of Practice and Procedure. . 0 Respondent concedes that petitioner is entitled 21 22 23 24 25 to deductions of C,$122, 772 relating to salaries and M8F wages, $24,046 relating to employment taxes, $150 relating to accountant's fees, $1,240.46 relating to property taxes, $11, 325 relating to wages paid to a receptionist, and $33,100 relating to wages paid to a legal assistant. 73)406-2250|operations®escribersnet|www.escibersaet 1 2 3 4 5 6 7 8 9 The remaining issues are whether petitioner is entitled tb deductions relating to expenses paid to vendors and whether petitioner is liable for a section 6662(a) accuracy-related penalty. The facts are as follows: Petitioner is a subchapter C corporation which provides consulting services. In 2013 petitioner paid $3,600 Spartan Trust, $57,200 to Sentinel Trust, $12,000 to Dan Reyes, $36,500 to GY Benefits, $900 to Tim Coker, 10 $19,126 to Rodney Clark, $46,500 to Phil Clegg, $6,415 to 11 Kenneth Mason, $1,250 to Larry Pitts, $3,500 to Kristi 12 Ross, $1,800 to Three C Consulting, $2,330 to PMA 13 Solutions, and $4,600 to Association of Natural Health. 14 Petitioner timely filed its Form 1120 U.S. Corporate 15 L6 L7 8 Income Tax Return relating to 2013, on which it claimed a $90,030 deduction relating to salaries and wages and a $438,420 deduction relating to other expenses. On February 11, 2016, respondent issued 9 petitioner a notice of deficiency relating to 2013 in 0 which he disallowed deductions relating to salaries and 1 wages and other expenses, and asserted a section 6662(a) 22 accuracy-related penalty. On May 2, 2016, petitioner 3 4 5 timely filed its petition with the Court. Discussion of Legal Authorities: y@e Petitioner established that the 2013 4gp SEEE (973)406-2250|operations@escribersnet|www.escribers.net 5 payments to Spart.an Trust, Sentinel Trust, Dan Reyes, GY Benefits, Tim Coker, Rodney Clark, PhÈl Clegg, Kenneth Mason,' Larry Pitts, Kristi Ross, Three C Consulting, PMA Solutions, and Association of Natural, Health were ordinary and necessary business"expenses. See se 162 (a) . Petitioner is therefore entitled to a $195,721 deduction relating to these payments. Section 6662 (a) imposes a 20 percent penalty on the amount of any underpayment of tax attributable to 1 2 3 4 5 6 7 8 9 10 "[a]ny substantial understatement of income tax"ysee HD 11 secd 6662 (b) (1) and (2) . Petitioner 's understatement HS 12 of income tax relating to the year in issue will be 13 determined pursuant td Rule 155.. If the understatement 14 15 16 exceeds both ten percent of the tax required to be shown on the return and $10, 000, such understatement will be substantial.A There is no credible evidence that 17 petitioner made reâsonable efforts to assess its proper See see.. 66(,I(d)6 X8) 8 Federal income tax liability or believed in good faith 19 that the liability was accurately reported. Á Accordingly, O petitioner will be liable for a section 6662 accuracy- Inc6 s Sec . Idl,4(C). S e c. t .4 ¼ 4(k) 21 22 3 4 5 related penalty if it substantially understated its liability. Contentions we have not addrèssed are irrelevant, moot, or meritless. . This concludes the Court's oral findings of fact 973)406-2250|operations@escribers.net www.escribers.net . 6 and opinion in this case. And with that, this case is submitted and this session is adjourned. (Whereupon, at 5:09 p.m., the above-entitled matter was concluded.) 9 1 2 3 4 5 6 7 8 9 ° 11 12 13 4 5 6 8 19 20 1 21 2 23 24 25 973)406-2250|operations@escribers.net|wwwescribers.net