TAX COURT OPINION

Case: Temyre Adams
Docket Number: 26973-13
Judge: Kerrigan
Opinion Type: bench
Filed: 01/23/2015
Pages: 5

RMM UNITED STATES TAX COURT WASHINGTON, DC 20217 STEVEN CHARLES CHIMCHIRIAN & JANET MARIE CHIMCHIRIAN, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) Docket No. ) ) ) ) 7713-14. ORD 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 petitioners and respondent a copy of the pages of the transcript of trial in the above case before Judge Kathleen Kerrigan at Philadelphia, Pennsylvania, on January 13, 2015, containing her oral findings of fact and opinion rendered at the conclusion of the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Kathleen Kerrigan Judge Dated: Washington, D.C. January 23, 2015 SERVEDJan 262015 Capital Reporting Company 3 1 2 3 Bench Opinion by Judge Kathleen Kerrigan January 13, 2015 Steven Charles Chimchirian and Janet Maria 4 Chimchirian v. Commissioner 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Docket No. 7713-14 THE COURT: The Court has decided to render the following as its oral findings of fact and opinion, which 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 and Rule 152 of the Tax Court Rules of Practice and Procedure. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. By notice of deficiency dated March 17, 2014, respondent determined a deficiency of $592 for tax year 2011. Trial of this case was conducted on January 12, 2015, in Philadelphia, Pennsylvania. Petitioners represented themselves. Kirsten E. Brimer represented respondent. The parties' stipulation of facts and attached exhibits were admitted into evidence. We find the following facts: 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company FINDINGS Petitioners resided in Pennsylvania when 4 they filed the petition. Petitioners timely filed their joint 2010 federal income tax return. Petitioners claimed a deduction for the payment of state and local income taxes of $3,637. In 2011, petitioners received a Pennsylvania tax refund of $3,636. Petitioners filed timely their joint 2011 Federal income tax return and they did not report the $3,636 tax refund. OPINION Generally, the Commissioner's determinations in a notice of deficiency are presumed correct, and the taxpayer bears the burden of proving that those determinations are erroneous. Rule 142(a)(1);, Welch v. Helvering, 290 U.S. 111,115(1933). Under section 7491(a), in certain circumstances, the burden of proof may shift from the taxpayer to the Commissioner. Petitioners have not claimed or shown that they meet the specifications of section 7491(a) to shift the burden of proof to respondent as to any relevant factual issue. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Petitioners did not raise section 6201(d) and the 25 parties |stipulated that petitioners received a 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 Pennsylvania tax refund of $3,636. Generally, if an amount was deducted on a prior year's tax return which resulted in a reduction of tax and a tax benefit to the taxpayer, a subsequent recovery by the taxpayer of such amount 6 must be included in gross income in the year the 7 8 9 10 11 12 13 14 15 16 17 18 recovery is received. Sec. 111(a); Kadunc v. Commissioner, T.C. Memo. 1997-92. Therefore, gross income includes a refund of State income tax in the year received to the extent that the payment of such tax was claimed as a deduction in a prior taxable year which deduction resulted in a reduction of Federal income tax. See Kadunc v. Commissioner, supra. Petitioners contend that they did not receive an actual refund and that the Pennsylvania credit reflected an accounting adjustment based on how Pennsylvania treats military compensation. 19 Petitioners presented no evidence to show that they 20 21 22 23 24 25 had not received a credit in 2011 for Pennsylvania taxes to reverse the Pennsylvania taxes for 2010. Because petitioner took a deduction in 2010 for the Pennsylvania taxes, the credit received for those taxes is income. Therefore, the Pennsylvania refund of $3,636 is taxable income. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 We sustain the deficiency as determined by respondent and a decision will be entered for respondent. This concludes the Court's oral Findings of Fact and Opinion in this case. (Whereupon, at 2:05 p.m., the above- entitled matter was concluded.) 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