TAX COURT OPINION

Case: Patrick W. Treverton & Patricia L. Treverton
Docket Number: 12518-17S
Judge: Buch
Opinion Type: bench
Filed: 07/24/2018
Pages: 6

RS UNITED STATES TAX COURT WASHINGTON, DC 20217 PATRICK W. TREVERTON & PATRICIA L. TREVERTON, Petitioners, v. ) ) ) ) ) Docket No. 12518-17S. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit with this order to petitioners and respondent a copy of the pages of the transcript of the trial in this case before Judge Ronald L. Buch at Buffalo, New York, 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 as to the tax and for petitioners as to the penalty. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. July 24, 2018 SERVED Jul 24 2018 3 1 2 3 4 5 6 7 8 9 Bench Opinion by Judge Ronald L. Buch June 14, 2018 Patrick W. Treverton & Patricia L. Treverton v. Commissioner of Internal Revenue Docket No. 12518-17S The following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion may not be relied upon as precedent in any other case. This opinion is in conformity with Internal 10 Revenue Code section 7459(b) and Rule 152(a) of the Tax 11 Court Rules of Practice and Procedure. Any section 12 references refer to the Internal Revenue Code or the 13 Treasury regulations in effect during the years at issue, 14 and any Rule references are to the Tax Court Rules of 15 Practice and Procedure. 16 This case was heard pursuant to section 7463. 17 Under section 7463(b), the decision to be entered in this 18 case is not reviewable by any other court, and this 19 opinion may not be treated as precedent for any other case. 20 21 The question before the Court is whether Mr. and 22 Mrs. Treverton should be taxed on items of income reported 23 24 as having been paid to them by Bank of America on Forms 1099-MISC, Miscellaneous Income. The Trevertons do not 25 dispute having received the income but question whether it crine s 97h 406-2250 ! operdxmseescribertnet l www esaiberuer is taxable. Because they did not prove that the income was not taxable, decision will be entered for the 4 Commissioner. Facts Bank of America issued checks totaling $17,142 to the Trevertons during 2014. They deposited those checks into their personal bank account. Bank of America then sent Forms 1099-MISC, reporting that income as "other income" to the Trevertons. In early 2015, the Trevertons began to question the nature of the payments they received. They contacted 1 2 3 4 5 6 7 8 9 10 11 12 Rust Consulting (as a proxy for Bank of America), asking 13 14 15 16 "what the checks are being classified as." They received the following explanation: Bank of America reviews accounts from time to time. As part of an account review, it was noted that 17 while serving in the military, the Bank's calculation for 18 determining your account adjustment did not provide their 19 20 21 22 full-intended benefit. They have adjusted the calculation, reevaluated your account and determined that an additional adjustment was needed. Unsatisfied with this explanation, the 23 Trevertons continued to press Bank of America for further 24 explanation. As of March 19, 2015, the Trevertons 25 maintained, "It is unclear to us why we are receiving $73; 406-2250 operat omeerdbertrut www.escdbermet 1 2 3 4 5 6 7 8 9 10 11 1099-M documents in regards to compensation checks we received from Bank of America." When filing their 2014 tax return, the Trevertons attached a disclosure informing the Commissioner that they had excluded the income and explaining why. And as of the time of trial, the Trevertons remain unconvinced as to the exact nature of the payments from Bank of America. As Mrs. Treverton explained, "The facts are that nobody knows what it is." The Commissioner issued a notice of deficiency to the Trevertons determining that the $17,142 they received from Bank of America was taxable. The 12 Commissioner also determined an accuracy-related penalty. 13 Before trial, the Commissioner conceded the penalty. 14 Discussion 15 In general the Commissioner's determination of a 16 deficiency is presumed correct, and the taxpayer bears the 17 burden of proving otherwise. See Rule 142(a); Welch v. 18 Helvering, 290 U.S. 111, 115 (1933) . In limited 19 circumstances the burden can shift to the Commissioner 20 21 22 23 24 under section 7491(a), but the record does not establish that the criteria under section 7491 have been met, therefore, the burden of proof remains on the Trevertons. The Trevertons do not dispute receiving the income that was reported to them on Forms lO99-MISC issued 25 by Bank of America. They question whether the income 6 reported to them should be taxable. According to Bank of America, the amounts paid to the Trevertons represent refunds of interest overcharges relating to mortgage loans. The Trevertons are not certain that Bank of America is correct about that. They inquired of Bank of America, got an answer, but remain unconvinced that the income is taxable. This uncertainty is the reason we must decide this case for the Commissioner. As previously noted, it is the Trevertons' burden to show a nontaxable source for the income that they received. Welch v. Helvering, 290 1 2 3 4 5 6 7 8 9 10 11 12 U.S. 111 (1933); Rule 142(a); see also Meier v. 13 Commissioner, 91 T.C. 273 (1988). And taxpayers are 14 15 required to maintain records sufficient to establish nontaxable sources. Sec. 6001; DiLeo v. Commissioner, 96 16 T.C. 858, 867 (1991), aff'd. 959 F.2d 16 (2d Cir. 1992). 17 18 The Trevertons have not met their burden to show that their income from Bank of America is not taxable. They 19 did not provide any documents or testimony establishing 20 that the $17,142 should be excluded from their income. 21 Accordingly, we sustain the Commissioner's determination 22 that the Trevertons had unreported income from Bank of 23 America in the amount of $17,142. 24 25 Decision will be entered for the Commissioner as to the tax and for the Trevertons as to the penalty. en*22solopentme.oneanalwwwasabewa 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 (Whereupon, at 9:06 a.m., the above-entitled matter was concluded.) F4406425eleparenw.eeeeenmelwenmatassa