TAX COURT OPINION

Case: David T. Moore
Docket Number: 19344-09S
Judge: Colvin
Opinion Type: bench
Filed: 12/28/2010
Pages: 9

UNITED STATES TAX COURT 20217 Washington, D.C. DAVID T. MOORE, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) Docket No. 19344-09S O R 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 the transcript of the trial of herewith to petitioner and to respondent a copy of pages of Special Trial Judge Lewis R. Carluzzo at Dallas, Texas, on November 30, 2010, containing his!oral findings of opinion rendered at the conclusion of trial. the above case before the fact and In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. December 28, 2010 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 3 Bench Opinion by Special Trial Judge Lewis R. Carluzzo s Docket No. 19344-095 November 30, 2010 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. This proceedi g for the redetermination of a deficiency is conducted as a Small Tax Case pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 175 of the Tax ourt Rules of Practice and Procedure . This bench opinion is made pursuant to the authority granted by section 7459 (b) of the Internal Revenue Code of 1986, a amended, and Rule 152 of the Tax Court Rules of Pract ice and Procedure. Subsequent section references made in this bench opinion are to the Internal Revenue Co e of 1986, as amended, in effect for 2007; Rule r ferences are to the Tax Court Rules of Practice and P ocedure. David T . Moor appeared pro se . Daniel L . Timmons appeared on behalf of respondent . In a notice o deficiency dated May 26, 2009, respondent determined a $2,472 deficiency in petitioner' s 2007 Federàl income tax (the deficiency Heritage Reporting Corporation (20 ) 628-4888 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 4 notice) . The deficienc results entirely (directly and by a related computational adjustment) from an adjustment increasing petitioner's 2007 income by $17, 688 . This amount represents the wages petitioner received from Building Surplus, one of his employers during 2007. Petitioner ag ees that he received the income; his dispute seen s to center on the computation of the deficiency as shcwn in the deficiency notice. According to petitioner, if all of his income for 2007 is taken into account, his income tax liability, or at least the amount thaÈ he still owes with respect to that liability, would b less than claimed by respondent . As best as we can determine from what has been presented, it appears that petitioner considers the amount of the "deficiency" as determined in the deficiency notice and t e amount of the additional Federal income taxes that he might owe for 2007 to be computed in the same mar ner, which, for reasons discussed below, is not the way it works. Some of the facts have been stipulated and are so found. At the t(me the petition was filed petitioner resided in Texas. Petitioner held two jobs at different times Heritage Reporting Corporation (202) 628-4888 1 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 5 during 2007. For the first part of the year he worked as a brake press operator for M&M Manufacturing (Manufacturing) His wages from that job totaled $7, 588 . Later in the year he worked for Builders Surplus, Inc. (Surplus) . His wages from that job totaled $17, 688, which as noted, is the amount of the adjustment made in the deficiency notice. Respondent' s ecords suggest that petitioner's 200'7 Feder 1 income tax return was filed sometime in late Januar or early February 2008 . .That return was prepared on a Form 1040, U.S. Individual Income Tax Return, prepared by paid income tax return preparer s.ervice (petit oner' s 2007 Form 1040) . The income reported on petitioner's 2007 Form 1040 consists entirely of thd $7, 588 wages petitioner earned from Manufacturing. His wages from Surplus are not included on the 200 Form 1040 . Taking into a count a personal exemption deduction and the standard deduction, petitioner's 2007 Form 1040 shows that he had no taxable income or income tax liability fo that year. The $1,226 refund claimed on petitioner's 2007 Form 1040 consists of Federal income tax with eld from his wages from Manufacturing ($842) and a $384 earned income credit. Respondent' s records show that the refund was paid to Heritage Reporting Corporation (202) 628-4888 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 6 petitioner in February 2008, a point not disputed by petitioner. At some point after his 2007 Form 1040 was filed, petitioner realized that he had failed to report his income from Surplus on that return. He attempted to correct hid mistake by filing another Federal income tax return, this time on a Form 1040 EZ, Income Tax Ret rn for Single and Joint Filers with No Dependents (pet tioner's 2007 Form 1040 EZ) . The income re orted on petitioner's 2007 Form 1040 EZ consists er tirely of the wages he received from Surplus. Based upon that income, and taking into account a personal exemption deduction and the standard deduction, the Form 1040 EZ shows petitioner to have a 2007 income tax liability of $948, satisfied by $1,218 in Federal income tax withholdings from petitioner's wages from Surplus. The $270 refund claimed on petitioner's Form 1040 EZ apparently was not paid because it does not appear that petitioner's Form 1040 EZ, mailed to respondent in January 2009, has been processed by respondent . The incomes rdported on petitioner's Form 1040 and Form 1040 EZ when combined total $25,276, an amount not in dispute. Allowing for a personal Heritage Reporting Corporation (202) 628-4888 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 7 exemption deduction and the standard deduction, taking that income into account results in an income tax liability of $2,088. Again, an amount not in dispute. Petitioner acknowledges the amount of this liability in his pretrial memorandum. Petitioner further recognizes that when properly computed, his 2007 income, in effect, eliminates his entitlement to the $384 earned income credit claimed on his 2007 Form 1040 . See sec . 32 . In his pretrial memorandum, petitioner in effect ag ees that his 2007 Federal income tax liability is i$2,472, which is the amount of the deficiency here in dispute. We are satisfied that the deficiency, as shown in the deficiency notice, has been properly computed. See sec. 6211. Petitioner's dispute with respondent is probably best articulated in his pretrial memorandum. In that document petitioner takes the position, that he has already "paid" $2, 060 towards his 2007 Federal income tax liability. The amount he considers paid consists of the total of Federal income taxes withheld from his wages during 2007 by his two employers; that is, $842 by Manufacturing, plus $1,218 by Surplus. As petitioner views the matter, his 2007 Federal income tax liability has been underpaid, at Heritage Reyorting Corporation (202) 628-4888 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 8 most, by $412, the difference between $2,472 (his income tax liability as properly computed) and $2,080 (the total amount of his income tax withholdings). Petitioner is mistaken both on technical and computational grounds. As to the technical, we point out that in this case because of prepayment credits not taken into account - that is, the Federal income tax withheld from petitioner's wages from Surplus -- there is a difference between the amount of the deficiency as determined in the deficiency notice and, ignoring applicable interest, the amount that he might actually owe for 2007 when all the dust settles. The latter amount will be less than the former. Equally as im ortant is a computational error implicit in petitioner's position. Petitioner apparently considers that the Federal income tax withheld from his wages from Manufacturing to have been "paid" towards his 2007 income tax liability, even though those withholdings ($842) were returned to him as included in the income tax refund that he received for that year. As it stands, only $1,218, the amount withheld from petitioner's wages from Surplus, are considered "paid" towards his 2007 Federal income tax liability. The deficiency notice properly shows Heritage Reporting Corporation (202) 628-4888 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 9 petitioner's total income, the total amount of income tax withholdings and petitioner' s proper Federal income tax liability for 2007. As previously noted, the Court is satisfied that the deficiency, as shown in the deficiency notice, has been properly -computed. In closing, however, we think it appropriate to comment on petitioner's trial testimony that during the year in issue he li ed with and supported an individual not employed during 2007 who might or might not be considered his cdmmon-law wife. According to þetitioner, he might be entitled to a dependency exemption deduction for that individual, which deductiion has not previously been taken into account. See secs. 151 and 152. There are good reasons why this potentially allowable deduction has not been previously taken into account. Petitioner did not claim any such deduction on his 2007 Federal income tax return, and he did note raise any such issue in his petition. · Like the Court, respondent very well might have first heard about getitioner's claim during his trial testimony. Consequently, we make no findings regarding petitioner's ½ecently raised claim and leave it up to the parties to explore between themselves petitioner's entitlement to an additional dependency Heritage Reporting Corporation (202) 628-4888 ·l 10 exemption deduction. To allow them to do so, and even though respondent's adjustments as made in the above-referenced notice of deficiency are sustained, decision will be entered under Rule 155. This concluded the Court's oral findings of fact and opinion in this case. (Whereupon, at 10:38 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // // // // // j , Heritage Reporting Corporation (202) 628-4888 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