TAX COURT OPINION

Case: Charles M. Wilson
Docket Number: 7514-07S
Judge: Colvin
Opinion Type: bench
Filed: 07/02/2008
Pages: 5

UNITED STATES TAX COURT WASHINGTON, D.C. 20217 CHARLES W . WILSO N Petitioner, * V. Docket No . 7514-07S CAL . STAT . COMMISSIONER OF INTERNAL REVENUE Respondent . * * ORDE R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s 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 of the above case before Judge Joseph R . Goeke at Knoxville, Tennessee , on June 17, 2008, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155 . (Signed ) Joseph Robert Goeke Judge DATED : Washington, D .C . July 2, 2008 SERVED JUL - 3 2008 2 1 Bench Opinion by Judge Joseph R . Goeke June 17, 200 8 2 Wilson v . Commissioner Docket Nos . 7514-07 S 3 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion, and the following 6 represents the Court's oral findings of fact an d 7 opinion in this case . The oral findings of fact and 8 opinion shall not be relied upon as precedent in any 9 other case . 10 These oral findings of fact and opinion are 11 made pursuant to section 7459 of the Internal Revenue 12 Code . Hereinafter references to sections are t o 13 sections in the Internal Revenue Code . 14 This case was tried pursuant to section 7463 15 which was in effect when the petition was filed and 16 was elected by the petitioner . Pursuant to sectio n 17 7463(b), the decision in this case shall not be 18 reviewed by any other court . 19 Certain of the facts in this case wer e 20 stipulated, and they're so found, and certain exhibits 21 were admitted at trial . Mr . Wilson also testified at 22 trial . At trial respondent was represented by Rebecca 23 Dance Harris, and Mr . Wilson appeared pro se . 24 This case involves a deficienc y 25 determination by respondent for the taxable year 2004 Heritage Reporting Corporation (202) 628-4888 a. 3 1 and an addition to tax determination under sectio n 2 6662(a) . Respondent's determinations were based on a 3 Form 1099 sent to the petitioner by River Enterprises, 4 Limited, for the taxable year 2004 . This Form 109 9 5 showed $79,400 of forgiveness of indebtedness income . 6 As a result of the addition of that income t o 7 petitioner's taxable income, respondent increased the 8 portion of petitioner's Social Security benefits which 9 were subject to tax for 2004, and respondent also 10 found that petitioner was liable for the addition to 11 tax under section 6662(a) . 12 The facts of this case are difficult to 13 ascertain because of the absence of certain record s 14 and the fact that the petitioner was the only witness . 15 However, we find Mr . Wilson's testimony to be credible 16 in that he says the payments in question which relate 17 to two automobile leases, one for an automobile fo r 18 him and one for his wife, were made to him by a Mr . 19 Day pursuant to an agreement he reached with Mr . Day 20 four years before the year in question . 21 This agreement involved Mr . Wilson' s 22 offering Mr . Day an interest in a fund that Mr . Wilson 23 was trying to establish to hedge certain commodit y 24 futures . Apparently Mr . Wilson never established this 25 fund, but Mr . Day continued to pay for the leases for Heritage Reporting Corporation (202) 628-4888 4 1 the two automobiles, including the settlement of th e 2 final charges that related to those leases which ended 3 in 2004 . 4 We find Mr . Wilson's testimony to b e 5 credible that the leases ended in midyear 2004, and we 6 find that if there was in question in this case, that 7 income should be prorated over the life of the leases . 8 Therefore, we find for respondent but only in the 9 amount of one-eighth of the determination in the 10 notice of deficiency . 11 Therefore, we find that petitioner Mr . 12 Wilson had additional income in 2004 in the amount of 13 $9,900 . We leave for a Rule 155 computation the 14 determination of the additional deficiency and whether 15 any additional Social Security income is subject t o 16 tax by Mr . Wilson, based upon the determination that 17 he had additional income of $9,900 in 2004 . 18 Regarding the addition to tax, we find that 19 the circumstances of this case and the underlyin g 20 technical issues are so complex as to support Mr . 21 Wilson's contention that his filing was in good faith . 22 Therefore, we determine that the additions to ta x 23 under section 6662 (a) is inapplicable . 24 This ends the Court's oral findings of fact 25 and bench opinion in this case . Heritage Reporting Corporation (202) 628-4888 1 (Whereupon , at 10 :09 a .m ., the bench opinion 2 in the above - entitled matter was concluded . ) 5 3 4 5 6 7 8 / / 9 10 11 12 / / 13 14 15 1 6 17 18 19 20 21 22 23 24 25 // Heritage Reporting Corporation (202) 628-4888