TAX COURT OPINION

Case: Ellna K. Gregory-Goodrum
Docket Number: 16298-10
Judge: Halpern
Opinion Type: bench
Filed: 06/29/2011
Pages: 5

UNITED STATES TAX COURT WASHINGTON, DC 20217 ELLNA K. GREGORY-GOODRUM, Petitioner v. COMMIS$IONER OF INTERNAL REVENIJE, Respondent ) ) ) ) ) ) ) ) ) Docket No. 16298-10. 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 herewith the pages of the to petitioner and to respondent a copy of transcript of the above case before Judge Jämes S. Halpern at Dallas, Texas on June 14, 2011, containing his oral findings of fact and opinion rendered at the conclusion of trial. the trial of In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155. (Signed) James S. Halpern Judge Dated: Washington, D.C. June 29, 2011 86000 gui. - 1 2011 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 Judge James S. Halpern June 14, 2011 Ellna K. Gregory-Goodrum v. Commissioner Docket No. 16298-10 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. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, 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. Respondent determined a deficiency of $30,410 in petitioner's Federal income tax for 2007 and determined an accuracy-related penalty under section 6662(a) of $6,082. Petitioner assigned error to both determinations. The parties have stipulated certain facts. The stipulation of facts, with attached exhibits, is incorporated herein by this reference. 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 4 The parties have reached an agreement on the amount of the deficiency, and the only item remaining for decision is the accuracy-related penalty. Section 7491 imposes on respondent the TSH burden of production with respect to additions to tax and penalties. Section 6662(a) imposes an accuracy-related penalty on underpayment of tax attributable to, among other things, (1) negligence or disregard of rules or regulations and (2) any substantial understatement of income. Sec. 6662(b) (1) and (2). Negligence includes any failure to make a reasonable attempt to comply with the Internal Revenue Code. There is a substantial understatement of income tax for a year if the amount of the understatement exceeds the greater of 10 percent of the tax required to be shown on the return or $5,000. Respondent represents, and we have no reason to doubt, that petitioner's understatement for 2007 was substantial, taking into account the adjustment of the deficiency agreed to by the parties. Section 6664(c) provides that the accuracy- related penalty shall not apply with respect to any portion of an underpayment if it is shown that there was reasonable cause for such portion and the taxpayer 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 5 acted in good faith with respect to such portion. The underpayments of tax in question are attributable to petitioner not including in gross income certain withdrawals from IRA accounts with (1) Fidelity and (2) the Credit Union of Texas. When she made the Credit Union of Texas withdrawals, she signed IRA Withdrawal Statements acknowledging her liability for the payment of Federal income tax on the amount of the distributions. No one advised her that the withdrawals were not taxable. While petitioner may not have received the IRS Forms 1099-R notifying her of the gross distributions, she was aware of the distributions and, from the IRA Withdrawal Statements she signed, she should have been aware of her liability to pay any applicable federal income tax. JSR We find that petitioner was negligent in not reporting the IRA distributions as gross income on her 2007 return. Petitioner has not established reasonable cause for the resulting underpayments in tax nor that she acted in good faith with respect to such underpayments . We shall therefore sustain respondent's determination of the accuracy-related penalty. 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 This concludes the Court's oral findings of fact and opinion in this case. Decision will be entered under Rule 155. (Whereupon, at 10:05 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888