TAX COURT OPINION

Case: Henry Muhlenburg
Docket Number: 14316-22S
Judge: Choi
Opinion Type: bench
Filed: 06/16/2023
Pages: 10

United States Tax Court Washington, DC 20217 HENRY MUHLENBURG, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 14316-22S ORDER OF SERVICE OF TRANSCRIPT Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is hereby ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to the Commissioner a copy of the pages of the transcript of the trial in this case before the undersigned judge at the Winston-Salem, North Carolina trial session containing the Court's 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 under Rule 155 in due course. (Signed) Eunkyong Choi Special Trial Judge Served 06/16/23 RECEIVED 6/15/23 IN THE UNITED STATES TAX COURT In the Matter of: HENRY MUHLENBURG, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket No. 14316-22S ) ) ) ) ) ) ) ) ) ) ) ) Pages: 1 through 8 Place: Winston-Salem, North Carolina Date: June 1, 2023 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 1 IN THE UNITED STATES TAX COURT In the Matter of: HENRY MUHLENBURG, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket No. 14316-22S ) ) ) ) ) ) ) ) ) ) ) ) Hiram H. Ward Federal Building 251 North Main Street Room 847, 8th Floor Winston-Salem, North Carolina 27101 June 1, 2023 The above-entitled matter came on for bench opinion, pursuant to notice at 11:01 a.m. HONORABLE EUNKYONG CHOI Special Trial Judge BEFORE: APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance 2 P R O C E E D I N G S (11:01 a.m.) THE CLERK: Calling from the calendar, docket number 14316-22S, Henry Muhlenburg. (Whereupon, a bench opinion was rendered.) 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 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 Bench Opinion by Judge Eunkyong Choi, Special Trial Judge 3 June 1, 2023 Henry Muhlenburg v. Commissioner of Internal Revenue Docket No. 14316-22S 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 upon as precedent in any other case. The oral findings of fact and opinion are made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code and Tax Court Rule 152. Rule references in this opinion are to the Tax Court Rules of Practice and Procedure, and section references are to the Internal Revenue Code, in effect at all relevant times. By notice of deficiency dated March 14, 2022, respondent determined a deficiency of $8,005 and a section 6662(a) penalty of $1,601 for taxable year 2019. Respondent conceded the section 6662(a) penalty before trial. The issue remaining for trial is whether petitioner is entitled to deduct employee business expenses for taxable year 2019. The Court heard this case at its Winston-Salem, North Carolina trial session on May 30, 2023. Petitioner represented himself. Ryan Ault represented respondent. 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 The parties' stipulation of facts was admitted into 4 evidence along with the attached exhibits. On the evidence before us, and using the burden-of-proof principles explained below, the Court finds the following facts: FINDINGS OF FACT Petitioner resided in North Carolina at the time he filed his petition. During taxable year 2019, petitioner was employed as a technology communication engineer at QED, Inc. in New York. He accepted employment in New York only after being unemployed for one year without securing employment near his home in North Carolina. Petitioner accepted employment in New York to save his home and provide for his family in North Carolina. He traveled from his home in North Carolina each week to work in New York, returning home on the weekend to attend church, where he made charitable contributions of $11,450 for taxable year 2019. Petitioner received a Form W-2 Wage and Tax Statement from QED, Inc., including $88,397 of wages. In his timely filed 2019 federal income tax return, petitioner reported $88,397 of wages and deducted $42,750 of employee business expenses using Form 2106 Employee Business Expenses. Petitioner later filed an amended 1 2 3 4 5 6 7 8 9 return claiming $42,750 of business expenses using 5 Schedule C. The bulk of petitioner's employee business expenses were for travel to work in New York. He also incurred expenses for tools he purchased to perform his job. Respondent issued petitioner a notice of deficiency dated March 14, 2022. In the notice, respondent disallowed the $42,750 of employee business expenses from Form 2106. Petitioner timely filed a 10 petition with this Court disputing the proposed 11 deficiency. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OPINION Generally, the Commissioner's determinations in a notice of deficiency are presumed correct, and the taxpayer bears the burden of proving those determinations erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The taxpayer has the burden of proving that he is entitled to deductions. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Taxpayers are generally entitled to deduct expenses incurred in carrying on any trade or business unless the taxpayer provides services as an employee. § 162; § 62(1). Nevertheless, section 67 allows an employee business expense deduction as a miscellaneous itemized deduction to the extent that the deduction exceeds two 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 percent of adjusted gross income. § 67(a). Unreimbursed 6 employee business expenses are deductible under section 67. See Treas. Reg. § 1.67-1T. Further, taxpayers may deduct the costs of working away from home if they show that they were working away from home temporarily rather than indefinitely. Commissioner v. Peurifoy, 254 F.2d 483, 486 (1957). However, in December 2017, Public Law No. 115- 97, 131 Stat. 2054 (2017), commonly referred to as the Tax Cuts and Jobs Act, amended section 67 to suspend miscellaneous itemized deductions for taxable years from December 31, 2017, through January 1, 2026. See Tax Cuts and Jobs Act, Pub. L. No. 115-97, 131 Stat. 2054 (2017). The only exceptions are for performing artists, officials who are employees of a State, elementary or secondary school teachers, or members of the reserve component of the Armed Forces. See § 62(a)(2). The Court is very sympathetic to petitioner. The facts and circumstances show he may have been entitled to claim the employee business expense deduction for taxable year 2019, but for the suspension of miscellaneous itemized deductions for taxable years December 31, 2017, through January 1, 2026. However, because miscellaneous itemized deductions were suspended for taxable year 2019 and because petitioner did not fall within any of the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 classes of employees entitled to deduct employee business 7 expenses for taxable year 2019, he was not entitled to claim the employee business expense deduction for taxable year 2019. Nevertheless, during his examination of petitioner's return for taxable year 2019, respondent discovered that petitioner underreported his charitable contributions for the year by $8,261. Respondent will accordingly adjust petitioner's charitable contributions for taxable year 2019 from $3,189 to $11,450. Based on the foregoing, we find that respondent's notice of deficiency is sustained, except as to the section 6662(a) penalty, which respondent conceded, and the adjustment to petitioner's charitable contributions for taxable year 2019. This concludes the Court's oral findings of fact and opinion in this case. A decision will be entered 18 under Rule 155. (Whereupon, at 11:12 a.m., the above-entitled matter was concluded.) 19 20 21 22 23 24 25 CERTIFICATE OF TRANSCRIBER AND PROOFREADER 8 CASE NAME: Henry Muhlenburg v. Commissioner DOCKET NO.: 14316-22S We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 8 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Cassidy B. Holland on June 1, 2023 before the United States Tax Court at its session in Winston-Salem, NC, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. _______________________________________________ Susan Patterson, CDLT-174 6/7/23 Transcriber Date _______________________________________________ Lori Rahtes, CDLT-108 Proofreader 6/7/23 Date 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