TAX COURT OPINION

Case: Mohammad Ali Peryani & Ha Choon Kim Peryani
Docket Number: 2114-13
Judge: Halpern
Opinion Type: bench
Filed: 03/24/2014
Pages: 5

UNITED STATES TAX COURT WASHINGTON, DC 20217 RS MOHAMMAD ALI PERYANI & HA CHOON ) ) KIM PERYANI, ) ) ) ) Docket No. 2114-13. Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORD ER 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 the pages of the transcript of the trial in the above case before Judge James S. Halpern at Los Angeles, California, 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, a decision will be entered under Rule 155. Dated: Washington, D.C. March 24, 2014 (Signed) James S. Halpern Judge SERVED Mar 25 2014 Capital Reporting Company 3 : 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Bench Opinion by Judge James S. Halpern February 1 , 2014 Mohammad Ali Peryani & Ha Choon Kim Peryani v. Commissioner Docket No. 2114-13 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. THESE 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, as amended. At the time of they filed the petition, 19 Petitioner s resided in California. Respondent has 20 21 22 23 24 25 determined a deficiency of $96,643 in Petitioner Federal income tax of 2008, and an accuracy-related penalty for $19,328.80 under section 6662(a). The parties have entered into a stipulation of settled issues that settles all issues in this case, other than whether Petitioner wife is entitled to claim a 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 1 2 3 partnership loss for the year in the amount of $54,538. The only issue with respect to the partnership loss is whether Petitioner wife 4 materially participated in the activities of the 5 6 7 8 9 10 11 12 13 14 15 16 17 partnership. The parties have stipulated, and we find, that Petitioner Ha Choon Kim Peryani (Petitioner) and her son were equal 50 percent partners in a Japanese restaurant. Petitioner testified, and we find, that she worked in the restaurant some Friday evenings, and from 8:00 a.m. to 5:00 p.m. on Saturdays and Sundays. When her son was not there she managed the ßW restaurant and acted as hostess. When he was there she acted as hostess. We find that she worked in the restaurant more than 500 hours during 2008. Section 469 disallows any deduction for passive activity losses. A passive activity is an 18 activity involving the conduct of a trade or business 19 20 21 22 in which the taxpayer does not materially participate. Sec. 4 9(c)(1). A taxpayer materially participates in a passive activity only if the taxpayer is involved in the operations of the 23 activity on a basis that is regular, continuous, and 24 25 substantial. Sec. 4 9(h)(1). An individual who owns an interest in a business at the time she works in 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company the business is considered as participating in the activity, no matter the capacity in which she does the work. See Sec. 1.469-5(f)(1), Income Tax Regs. In general, an individual is considered as participating in an activity if she participates in the activity more than 5004a year. Sec. 1.469- Eg3 Pet Reg S 7a7 CFeb ST(a)(1), Temp. Income Tax Regs An individual's participation in an activity may be established by any reasonable means. Sec. 1.469-5T ( f) (4) Temp. Income Tax Regs We have held that the regulations do not allow a post-event "ballpark guesstimate". 1 2 3 4 5 6 7 8 9 10 11 5 % 12 E.g., Moss v Commissioner, 135 T.C. 365, 369, 2010. 13 14 15 16 17 18 19 20 21 22 23 24 25 Nevertheless, we have accepted oral testimony alone as a reasonable means of establishing an individual's participation. See Montgomery v. Commissioner, T.C. Memo. 2013-151. Petitioner was a credible witness. She testified to the regular, weekly nature of her visits to her son's house to see her grandchildren, and to work in the restaurant of which she owned half. While she may not have visited every weekend, we are confident, based on her familial relationship with her son and grandson, that she visited regularly, close to every weekend during 2008. One the basisAthat9during 20089she worked on 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 Friday evenings, and Saturdays and Sundays, 8:00 a.m. to 5: 00 p.m., we have found that she worked in the restaurant more th n 500 hours in 2008. Petitioner 4 materially participated in the restaurant4 during 6 2008, so that the passive loss rules do not apply to her share of the partnership loss. Decision will be entered pursuant to Rule 155. That concludes this bench opinion. (Whereupon, at 3:10 p.m., the above- entitled matter was concluded.) 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