TAX COURT OPINION

Case: Yomika Topaz Alexander
Docket Number: 405-12S
Judge: Holmes
Opinion Type: bench
Filed: 02/27/2013
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 SEC YOMIKA TOPAZ ALEXANDER, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) O R D E R Docket No. 405-12S. Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall the.pages of transmit the to petitioner and to respondent a copy of transcript of Holmes at Chicago, findings of which the case was heard. fact and opinion rendered at the trial in the above case before Judge Mark V. IL, on February 4, 2013,, containing his oral the trial session at In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155. (Signed) Mark V. Holmes Judge Dated: Washington, D.C. February 27, 2013 SERVEDMar042013 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Bench Opinion by Judge Mark V. Holmes February 4, 2013 Yomika Topaz Alexander v. Commissioner Docket No. 405-12S THE COURT: You can be seated. In the case of Yomika Topaz Alexander v. Commissioner, Docket Number 405-12S, the Court has decided to render oral findings of fact and opinion and the following represents the Court's oral findings of fact and opinion. 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's Rules of Practice and Procedure. The record consists of the stipulation hich the parties both agree, and Ms. Alexander's testimony. She was an Illinois resident when she filed her petition. The case was tried here in Chicago, Illinois. There are two issues presented in the case. The first, and my far the smallest, was Ms. 21 Alexander's entitlement to a deduction of $200 to her 22 23 24 25 IRA. She presented no proof of this during the course of the trial so I do have to disallow that. But the biggest question was $6,399 in cancellation of indebtedness income allegedly received by her in 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 2009 from Bank of America as evidenced by a 1099-C. In this event, Bank of America was the successor to another bank called Nation's Bank, the issuer of her credit card, which initially gave rise to the debt in question. Relevant to this discussion is a somewhat obscure provision of the Internal Revenue Code called 6201(d) and it states "In any court proceeding if a taxpayer asserts a reasonable dispute with respect to any item of income reported on an information return filed with the Secretary under subpart B or C of part three of subchapter A of chapter 61 by a third party, and the taxpayer has fully cooperated with the Secretary including providing within a reasonable period of time access to and inspection of a · 16 witness's information and documents within the 17 18 19 20 21 22 23 24 25 control of the taxpayer as reasonably requested by the Secretary, the Secretary shall have the burden of producing reasonable and probative information concerning such deficiency in addition to such information returned." Now, that's all a long tax lawyer geekish way of saying that they can't rely on the 1099-C if I find that you cooperated, Ms. Alexander, in producing information, talking to the IRS. And the reason I 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 asked you those questions was because I knew about this section and I find that you did cooperate with the IRS. It wasn't your burden to come up with this Ms. Crow and bring her here or anything. But that shifts the burden to the government of producing reasonable and probative information concerning this deficiency flowing from the forgiveness of $6,399 in credit card debt. The most important evidence here was that 10 1099-C, but because I find that you raised issues 11 with regard to the 1099-C and that you cooperated 12 with the government in trying to figure out what was 13 14 15 16 17 18 19 20 21 22 23 24 25 going on, I am putting the burden on the government for showing some reasonable and probative information in addition to that. Now, it's very hard to figure out what was going on and the first question that I said I have to ask is what did the government come up with in terms of reasonable and probative evidence? Well, the first thing and the most important, of course, is the record of the informal proceeding against you, the alternative to court marsha-l-1-, back in 1999. Here I was struck by the fact that according to the plain language of this'proceeding, which was a non-judicial punishment proceeding, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 according to the plain language of this Exhibit 6-J, the charges listed regarding the credit card.were just that they were charges . They weren' t findings by your commanding officer justifying this charge. Now, you said, and. I do believe you as I do with most of your testimony that was going on here, was that you were found, juilty"isn't quite the right·word. I was using culpable. But I believe you when you said that the commanding officer found that you had 10 negligently failed to re.frain from giving your 11 Nation's Bank Visa credit card to Margaret Marie Crow 12 13 14 15 16 for personal, unofficial use as it was your duty to do so. Now·this is interesting because if you look at the language here, it wasn't saying that you had run up debts or allowed her to ring up debts for 17 which you were liable. It was that you had .. 18 19 20 21 22 23 24 25 negligently failed from refraining from givirig her the credit card. And so I don't think that this is good evidence or reasonable and probative evidence that you are actually responsible for the debt. I also notice that there is nothing here in what the government's produced or from what you've told me or you've produced that shows that you are under any order of restitution to the government or 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 ! 1 2 3 4 5 6 7 8 9 10 11 12 that you owed them any money upon discharge. I was struck by the fact that in the bankruptcy proceeding, whose records you also presented here, there was no offset of your Bank of America checking account. Bank of America thought in 2004 and 2007 that you owed it money. You've notified them that you had a checking account there. They normally would come back and say you owe us way more than the $30, we're going to take the $30. Moreover, you didn't list this rather substantial debt in your bankruptcy. petition when it would have been in your interest to do so because you 13 . would have gotten .it discharged, at least probably 14 15 16 17 18 19 20 21 22 23 24 25 discharged. So that, again, indicates that you didn't think you owed it back then. And certainly the record of the bankruptcy doesn't help the government meet it reasonable-and-probative- evidence standard for producing information in addition to that 1099-C. It':s also reasonably likely, though certainly not beyond the shadow of a doubt that the terms of your government credit card, as you understood them, required you to list or produce receipts and a travel voucher. But the government itself could be on the hook to pay the money to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 Nation's ba k. So again, I'm not sure that th s debt 2 3 4 5 6 7 8 9 10 11 12 13 14 was owed by you to Nation's Bank. And what really clinched it for me was that the amount of the discharged debt, the amount that you were charged by the military, was somewhere between $5,400 and $6,800 and yet the debt discharge was only $6, 399. And common sense, everyJday experience suggests that banks are just a notch below shylocks in charging interest and that a debt like that would not decrease over ten year s of time. But all this means is I conclude the government has not shown reasonable and probative evidence in addition to the 1099-C that you have shown that it's more likely than not that thÃ 1099-C 15 ' was in error. So you win on that issue. But you do owe the tax on the extra $200 for the IRA deduction. That means that we'll have to do a Rule 155 computation, a little bit of math, that takes some time. This concludes the Court's oral findings of fact and opinion in this case and the Alexander case is over. (Whereupon, at 3:11 p.m., the above entitled matter was concluded.) 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com