TAX COURT OPINION

Case: Puran Richard Ramsahai & Ana Maria Ramsahai
Docket Number: 10745-06S
Judge: Colvin
Opinion Type: bench
Filed: 12/01/2008
Pages: 7

UNITED STATES TAX COURT Washington, D .C . 2021 7 PURAN RICHARD RAMSAHAI AND ANA MARIA RAMSAHAI , Petitioners , V . Docket No . 10745-06S COMMISSIONER OF INTERNAL REVENUE, Respondent . O R D E R SE , CAL, STAT S . T . JUG' Z 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 petitioners and to respondent a copy of the pages of the transcript of the trial of the above case before Special Trial Judge Lewis R . Carluzzo at San Diego, California, on October 22, 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) Lewis R. Carluzzo Special Trial Judg e Dated : Washington, D .C . December 1, 2008 SERVED Dec 02 2008 3 1 Bench Opinion by Special Trial Judge Lewis R . Carluzzo 2 October 22, 2008 Ramsahai v . Commissioner 3 Docket No . : 10745-06 S 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion in this case, an d 6 the following represents the Court's oral findings of 7 fact and opinion . The oral findings of fact and 8 opinion shall not be relied upon as precedent in any 9 other case . 10 This proceeding for the redetermination of a 11 deficiency is a Small Tax Case conducted pursuant to 12 the provisions of Section 7463 of the Internal Revenue 13 Code of 1986, as amended, and Rules 170 through 175 of 14 the Tax Court Rules of Practice and Procedure . 15 This bench opinion is made pursuant to the 16 authority granted by Section 7459(b) of the Internal 17 Revenue Code of 1986, as amended, and Rule 152 of the 18 Tax Court Rules of Practice and Procedure . 19 Hereinafter in this bench opinion, unless 20 otherwise indicated, section references are to the 21 Internal Revenue Code of 1986, as amended, in effect 22 for the relevant period . Rule references are to the 23 Tax Court Rules of Practice and Procedure . 24 Puran Richard Ramsahai (Puran) and Ana Maria 25 Ramsahai (Ana), who resided in California at the time Heritage Reporting Corporatio n (202) 628-4888 4 1 the petition was filed, appeared pro sese . Sylvia L . 2 Shaughnessy appeared on behalf of Respondent . 3 In the notice of deficiency dated March 6, 4 2006, Respondent determined deficiencies i n 5 Petitioners' 2003 and 2004 federal income taxes and 6 imposed an accuracy-related penalty for 2003 . The 7 deficiency for each year results for the most part 8 from adjustments denying deductions claimed o n 9 Petitioners' timely filed joint federal income tax 10 return . Among other reasons, the deductions, o r 11 portions of certain deductions, were disallowed for 12 lack of substantiation . 13 In their petition, timely filed on July 6, 14 2006, in response to that notice of deficiency , 15 Petitioners challenge the determinations made in that 16 notice and, in effect, allege that they are entitled 17 to the deductions claimed on their returns . 18 Much has taken place since the filing of the 19 petition . Petitioners have since divorced, and An a 20 sought and was administratively denied relief under 21 Section 6015 . Furthermore, Puran and Responden t 22 agreed to the amount of the deficiency for each year, 23 as well as to the accuracy-related penalty for 2003 . 24 Lastly, Ana and Respondent now agree that she i s 25 entitled to relief under Section 6015(f), which relief Heritage Reporting Corporatio n (202) 628-4888 5 1 is opposed by Puran . 2 The agreements between the parties narrow 3 our focus considerably, and we need only consider : 4 (1) whether Ana has established entitlement t o 5 deductions in excess of amounts contemplated in the 6 agreement between Puran and Respondent ; and (2 ) 7 whether the agreement between Ana and Responden t 8 should be disregarded . Both questions are answered in 9 the negative . 10 As we have often noted, the Commissioner's 11 determinations in a notice of deficiency are presumed 12 correct, and the taxpayer bears the burden of proving 13 that those determinations are erroneous . Rule 142(a) ; 14 Welch v . Helvering , 290 U .S . 111, 115 (1933) . (It is 15 clear that the provisions of Section 7491 are no t 16 applicable here, and neither Petitioner suggests 17 otherwise .) Moreover, deductions are a matter o f 18 legislative grace, and the taxpayer bears the burden 19 of proving that he or she is entitled to any deduction 20 claimed . Rule 142(a) ; New Colonial Ice Co . v . 21 22 Helvering , 292 U .S . 435, 440 (1934) ; Welch v . Helvering , supra . This includes the burden o f 23 substantiation . Hradesky v . Commissioner , 65 T .C . 87, 24 90 (1975), affd . per curiam 540 F .2d 821 (5th Cir . . 25 1976) . Heritage Reporting Corporation (202) 628-4888 6 1 At trial, Ana claimed to have little, i f 2 any, information that supported her entitlement to any 3 of the disallowed deductions or portions of deductions 4 that have been disallowed . She offered no document s 5 into evidence, much less any that would substantiate 6 any of those deductions . Her claim to have little if 7 any information is consistent with a statement sh e 8 made on the Form 8857, Request for Innocent Spouse 9 Relief, to the effect that she "was not involved in 10 preparing the returns," a point later recanted as a 11 result of contrary evidence offered by Puran . 12 Be that as it may, Ana has failed to mee t 13 her burden of establishing that she is entitled to any 14 deduction for either year in excess of the amount s 15 contemplated in the agreement between Puran and 16 Respondent . 17 As noted, Puran is opposed to allowing Ana 18 relief under Section 6015 . If the agreement between 19 Respondent and Ana provided for relief under either 20 Subsection (b) or (c) of Section 6015, then we would 21 be inclined to consider Puran's opposition an d 22 disregard the agreement, as we are not necessarily 23 bound by it . See Dancer v . Commissioner , 73 T .C . 1103 24 (1979) (in which the Court reviewed the validity of an 25 agreement between the parties with respect to th e Heritage Reporting Corporation (202) 628-4888 7 1 legal consequences of certain acts) . 2 On the basis of Puran's testimony, and the 3 somewhat reluctant admission by Ana, we are satisfied 4 that she had actual knowledge of the items giving rise 5 to the deficiency for each year, which knowledge would 6 deny her relief under either of those subsections . 7 See Secs . 6015(b) (1) (C) and (c) (3) (C) . But he r 8 agreement with Respondent is not so based . Respondent 9 now agrees that she is entitled to relief pursuant to 10 Section 6015(f) because it would be inequitable to 11 hold her liable for the deficiencies or any part of 12 the deficiencies here in dispute . According t o 13 Respondent, relief under Section 6015(f) i s 14 appropriate because of the financial burden Ana's 15 suffered by reduced income and additional chil d 16 support obligations after or pursuant to her divorce 17 from Puran . 18 Puran made no argument that Respondent 19 improperly applied the relevant factors to be taken 20 into account in allowing or denying relief unde r 21 Section 6015(f) . See Rev . Proc . 2003-61, 2003-2 C .B . 22 296 . In fact, his evidence did not address Ana' s 23 financial situation at all, or Respondent's reaction 24 to Ana's financial situation . Instead, he pointed out 25 that his financial situation might not be much better Heritage Reporting Corporatio n (202) 628-4888 8 1 than hers, and argued that the tax liabilitie s 2 redetermined in this proceeding should either equally 3 be forgiven or equally shared between the two of them . 4 Although we are somewhat concerned by Ana's 5 lack of candor, we find nothing in the record tha t 6 would support a determination that the agreement 7 between she and Respondent with respect to he r 8 entitlement to relief under Section 6015(f) should be 9 disregarded, or that Respondent's determination now to 10 allow relief under Section 6015(f) is in any way a n 11 abuse of discretion . See Woodral v . Commissioner , 112 12 T .C . 19 (1999) . 13 To summarize, we find that Ana has failed to 14 establish entitlement to any deduction in excess o f 15 the amounts contemplated in the agreement between 16 Puran and Respondent, and we will not upset he r 17 agreement with Respondent to the extent of the relief 18 she is entitled under Section 6015 . 19 To reflect the foregoing, and to give effect 20 to the agreements reached between Respondent and the 21 Petitioners, decision will be entered under Rule 155 . 22 This concludes the Court's oral findings of 23 fact and opinion in this case . 24 (Whereupon, at 3 :21 p .m ., the bench opinion 25 in the above-entitled matter was concluded . ) Heritage Reporting Corporation (202) 628-4888