TAX COURT OPINION

Case: Gale A. Vician
Docket Number: 1333-10S
Judge: Colvin
Opinion Type: bench
Filed: 10/08/2010
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 GALE A. VICIAN, CLC Petitioner, v. ) Docket No. 1333-10 S. COMMISSIONER OF INTERNAL REVENUE, Respondent 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 to petitioner and to respondent a copy of transcript of Laro at Chicago, findings of hearing. fact and opinion rendered at the hearing in the above case before Judge David IL, on September 27, 2010, containing her oral the pages of the the conclusion of the In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155. (Signed) David Laro Judge Dated: Washington, D.C. October 8, 2010 SERVEDOct122010 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 Senior Judge David Laro Docket No. 1333-10S September 28, 2010 Gale A. Vician v. Co missioner The Court as decided to render Oral Findings of Fact and in this case. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Inter al Revenue Code and Rule 152 of the Tax Court Rules of Practice and Procedure. Petitioner refers to Gale A. Vician, section references are to th Internal Revenue Code, and Rule references are to he Court's Rules of Practice and Procedure . Petitioner while residing in Illinois, petitioned the Cou t to review respondent's determination of a $1,925 deficiency in her 2007 Federal income tax. The parties have stipulated that for 2007, petitioner failed to report (1) a state income tax refund of $198; (2) payments in lieu of dividends of $15; an (3) a net capital loss of $521. We decide the amount of gain or loss which petitioner was required to report from her sale of Johnson and Johnson stock during 2007. Background Petitioner purchased 200 shares of Johnson and Johnson stock land held those shares in a Merrill 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 Lynch cash management account. On January 11, 2007, petitioner sold all 200 shares for $13,336, or $66.68 per share. The parties submitted account statements from Merrill Lynch, as well as a graph indicating the share price of Johnson and Johnson stock between May 1, 1999, and December 29, 2006. At trial, petitioner testified that she purchased the shares through Merrill Lynch in 1999 for "approximately" $52 per share. She explicitly stated that the shares were not a gift. Respondent's counsel offered no contrary evidence at trial. We note that petitioner's testimony was consistent with the graph showing Johnson and Johnsonistock price during 1999. On June 23, 2008, petitioner filed a Form 1040, U.S. Individual Income Tax Return, for å e tax year 2007. Petitioner did not report any of the proceeds received from selling the Johnson and Johnson stock on that return. On November 2, 2009, respondent issued to petitioner a notice of deficiency determining a $1,925 deficiency in petitioner's 2007 Federal income tax. The notice of deficiency alleged, among other things, that petitioner failed to report $13,336 in income received from the säle of Johnson and Johnson stock. Petitioner petitioned the Court for a redetermination 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 of that liability on January 15, 2010. Discussion I. Burden of Proof Petitioner has the burden of proving the amount of gain or loss realized from the sale of stock. See Rule 142.(a); Hall v. Commissioner, 92 T.C. 1027, 1038 (1989). Under section 7491(a), ,the burden of proof as to factual matters may shift to the Commissioner under dertain circumstances. Petitioner has not alleged that section 7491(a) applies nor has she established her compliance with the substantiation and recordkeeping requirements of the Internal Revenue Code. See sec. 7491(a) (2) (A) and (lB). Petitioner therefore bears the burden of proof. II. Petitioner's Gain in the Stock Gain from the sale or other disposition of property is the excess of the amount realized over the adjusted basis of the property. S e gesties 1001(a). Sections 1011 and 1012 provide that the basis of property sold is generally its cost to the taxpayer. Only the basis of petitioner's stock is at issue in this case. Respondent cites Bohannon v. Commissioner, T.C. Memo. 1997-153, and Tornev v. Commissioner, T.C. Memo. 1993-385, for the proposition that basis should Heritage Reporting Corporation (202) 628-4888 t 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 not be allowed where a taxpayer fails to substantiate, with documentary evidence, the exact amount paid for those shares. The taxpayer in Bohannon alleged that he was unable to produce investment records because those records were purportedly destroyed in the riots following the United States' invasion of Panama in 1989. In ruling for the Government, we declined to accept the taxpayer's testimony in lieu of documentary evidence because the taxpayer's testimony was "evasive, vague and not credible." In Torney, we similarly refused to accept uncredible testimony in lieu of documentary evidence in denying the taxpayer's charitable contribution deduction for stock in which he hadAzero basis. Unlike the taxpayers in Bohannon and Torney, we believe petitioner's testimony that she purchased the shares in 1999 at a price of approximately $52 per share to be credible. See Dockery v. Commissioner, T.C. Memo. 1978-63 (determining the basis of stolen property based on witness'.2[ testimony). We hold that àL-. petitioner's basis in the stf (Johnson and Johnson 0 was $10,400, or $52 per share. See Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), affg. in part and revg. in part 11 B.T.A. 743; Grippo v. 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 Commissioner, T.C. Memo. 1993-101. In accordance with section 1001, we therefore conclude that petitioner's gain in the Johnson and Johnson shares is $2,936 ($13,336 realized less $10,400 basis). Petitioner contends that her 2007 capital 1,osses offset the gain she realized from selling the Johnson and Johnson stock. Based on the limited record before us, we are unable to determine petitioner's 2007 tax liability. Decision thq( re will be entered under Rule 155. This concludes the Court's Oral Findings of Fact and Opinion in this case. (Whereupon, at 10:24 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888