TAX COURT OPINION

Case: David Jamieson Rose
Docket Number: 28226-12S
Judge: Guy
Opinion Type: bench
Filed: 10/29/2013
Pages: 7

SEC UNITED STATES TAX COURT WASHINGTON, DC 20217 DAVID JAMIESON ROSE, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 28226-12S. ) ) ) ) OR D E R 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 abovecaptioned case before Special Trial Judge Daniel A. Guy, Jr., at San Antonio, Texas, on October 1, 2013, 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 for respondent. (Signed) Daniel A. Guy, Jr. Special Trial Judge Dated: Washington, D.C. October 29, 2013 SERVED Oct 31 2013 Capital Reporting Company 3 1 2 Bench Opinion by Special Trial Judge Daniel A. Guy, Jr. 3 October 1, 2013 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 David Jamieson Rose Docket No. 22826-12S 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. The oral findings of fact and opinion shall not be relied on as precedent in any other case. This proceeding to redetermine a deficiency is a small tax case conducted pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 174 of the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal 19 Revenue Code of 1986, as amended, and Rule 152 of the 20 21 22 23 24 25 Tax Court Rules of Practice and Procedure. ·Hereinafter in this bench opinion, section references are to the Internal Revenue Code of 1986, as amended, in effect for 2010, and Rule references are to the Tax Court Rules of Practice and Procedure. Petitioner resided in Texas at the time the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 petition was filed, and he appeared at trial pro se. Jeffrey D. Heiderscheit appeared on behalf of respondent. Respondent determined a deficiency of $637 in petitioner's Federal income tax for 2010. 6 Petitioner filed a timely petition for 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 redetermination with the Court pursuant to sect'ion 6213 (a) . Petitioner concedes that he failed to. report interest income of $14 for 2010. The issue remaining for decision is whether $2,362.50 that petitioner received from Corporation for National and Community Service (AmeriCorps) represents taxable income that petitioner failed to report for 2010. Some of the facts have been stipulated and are so found. The stipulation of facts and the accompanying exhibits are incorporated herein by this reference. Before 2010, petitioner participa(cid:16)254edin various work programs sponsored by AmeriCorps such as environmental restoration projects and computer assembly jobs. In exchange for his efforts, he earned Segal AmeriCorps Education Award benefits. . Petitioner has been a part-time student at 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 Austin Community College (ACC) since 2002. He 2 3 4: 5 registered for classes at ACC for the 2010 spring semester. On January 14 and March 11, 2010, AmeriCorps made two transfers of $1,181.25 (a total of $2,362.50) to petitioner's account at ACC. 6 After initially subtracting course registration 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 charges from the amounts AmeriCorps deposited to petitioner's account, ACC refunded most of the AmeriCorps funds to petitioner. Petitioner .stated that he used some of the funds to purchase books and supplies. Although there was confusion in respect of the matter at trial, the record reflects that ..petitioner received a Form 1099-MISC, Miscellaneous Income, fr·om AmeriCorps for the taxable year 2010 reporting that he received ".Other income" of $2,362.50. Petitioner provided a copy of the Form 1099-MISC to respondent's counsel in May 2013 as part of a larger package of documents that he transmitted at that time by fax. ACC issued to petitioner a Form 1098-T, Tuition Statement, for 2010 reporting that he -paid $140.28 for qualified tuition and related expenses and that he received scholarships or grants of $2,362.50. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 Petitioner filed Form 1040A, U.S. 2. Individual Income Tax Return, for 2010. He did not 3 4 5 6 7 8 9 10 11 12 13 14 15 include the $2,362.50 that he received from AmeriCorps in his gross income for 2010 . Respondent determined in the notice of deficiency that the entire amount that AmeriCorps transferred to petitioner's account at ACC was includable in his gross income for 2010. Petitioner asserts that the amount that he received from AmeriCorps represents a scholarship that is excluded from gross income under section 117(a). We begin with the fundamental principle of Federal tax litigation that the Commissioner's determinations normally are presumed correct. See INDOPCO Inc. v. Commissioner, 503 U.S. 79, 84 (1992); 16 Welch v. Helvering, 290 U.S. 111, 115 (1933). Section 17 18 19 20 21 22 23 24 25 61(a) (1) provides the general rule that gross income includes all income from whatever source derived, including all forms of compensation for services. Section 117(a) provides the general rule that gross income does not include any amount received as a qualified scholarship by an individual who is a candidate for a degree at an educational organization described in section 170 (b) (1) (A) (ii) . Section 117 (b) (1) defines the term "qualified 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company scholarship" as any amount received by an. individual as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for 7 qualified tuition and related expenses. Section 117 (b) (2) defines the term "qualified tuition and related expenses" to include tuition and fees required for enrollment, as well as fees, books, supplies, and equipment required for courses of instruction. With exceptions not relevant here, section 117 (c) (1) sets forth the general rule that subsection (a) of section 117 shall not apply to that portion of any amount received which represents payment for teaching, research, or other services by the student required as a condition for receiving the qualified scholarship. Although petitioner received conflicting information from AmeriCorps on the one hand, and ACC on the other, regarding the proper characterization of the AmeriCorps .payments, we conclude that the amount that AmeriCorps transferred to petitioner's ACC account during 2010 does not constitute a qualified scholarship that is excludable from gross income pursuant to section 117(a). In short, the amount in question represents compensation paid by 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 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 Capital Reporting Company AmeriCorps for petitioner's past services and was not a scholarship. See sec. 117(c) (1); sec. 1.117- 4 (c) (1), Income Tax Regs.; see also Bingler v. Johnson, 394 U.S. 741, 757-758 (1969); Godfrey v. Commis sioner, T . C . Memo . 1998-51 (a $5, 000 payment by the Boston Globe to Dartmouth College after the taxpayer/student fulfilled his commitment: to deliver newspapers for three years as part of the Globe's "Paper Route to College" program was not a qualified scholarship). Consistent with the preceding discussion, decision will be entered for respondent. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 11:45 a.m., the above- entitled matter was concluded.) . 866.488.DEPO www.CapitalReportingCompany.com