TAX COURT OPINION

Case: Jacob Tiab
Docket Number: 14194-19S
Judge: Gustafson
Opinion Type: bench
Filed: 11/10/2020
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 JACOB TIAB, Petitioner, v. ) ) ) CT ) Docket No. 14194-19S. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER OF SERVICE OF TRANSCRIPT Pursuant to Rule 152(b) of the Tax Court Rules of Practice and Procedure, it is 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 Phoenix, Arizona, remote session 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 the Commissioner. (Signed) David Gustafson Judge Dated: Washington, D.C. November 10, 2020 SERVED Nov 10 2020 Bench Opinion by Judge David Gustafson 3 October22, 2020 Jacob Tiab v. Commissioner Docket No. 14194-19S THE COURT: The Court has decided to render the following as its oral Findings of Fact and Opinion in this case. This Bench Opinion is made pursuant to the authority granted by 26 U.S.C. section 7459(b) and Tax Court Rule 152 and shall not be relied on as precedent in any other case. This proceeding was heard as a Small Tax Case 1 2 3 4 5 6 7 8 9 10 11 12 pursuant to the provisions of section 7463 and Rules 170 13 14 15 16 through 174. By a statutory notice of deficiency ("SNOD") dated May 6, 2019 (Ex. 5-J), the Internal Revenue Service ("IRS") determined a deficiency of $1,514 in the Federal 17 income tax of petitioner, Jacob Tiab, for the year 2017. 18 As stated in the SNOD, the deficiency arises from $11,469 19 of unreported wage income and a disallowance of $72 of 20 earned income credit ("EIC"). The IRS did not determine 21 any penalties in this case. 22 Trial of this case was conducted remotely at a 23 Phoenix trial session of the Court, with the parties and 24 the Court attending virtually via the internet from their 25 respective locations. Mr. Tiab represented himself, and Lindsey Nicolette represented the Commissioner. The issues for decision are the taxability of Mr. Tiab's unreported wage income and the disallowed EIC. We decide 4 both issues in favor of the Commissioner. The following facts are almost entirely stipulated and are not in dispute: FINDINGS OF FACT Mr. Tiab resided in Arizona when he filed his petition in this case. In 2017 Mr. Tiab was not married 1 2 3 4 5 6 7 8 9 10 and did not have any children. 11 Undisputed income 12 During 2017 Mr. Tiab worked for two employers: 13 MSLA Management, LLC ("MSLA") and United Education 14 Institute ("United"). (Stip. 3.) In 2017 MSLA paid Mr. 15 Tiab $14,087 in wages and withheld $1,622 for Federal 16 income taxes ("the MLSA amounts"); and United paid Mr. 17 Tiab $11,469 in wages and withheld $625 for Federal income 18 taxes ("the United amounts"). (Stip. 3.) MSLA and United 19 each issued a W-2, "Wage and Tax Statement", to Mr. Tiab 20 reporting to him and to the Government the amounts paid 21 and withheld for 2017. 22 Tax return 23 24 For 2017 Mr. Tiab electronically filed a Form 1040EZ, "Income Tax Return for Single and Joint Filers 25 With No Dependents". (Stip. 2; Ex. 4-J.) On his return 5 Mr. Tiab reported the MSLA amounts and claimed EIC of $72. (Stip. 2, Ex. 1-J.) With his return Mr. Tiab included the W-2 from MSLA. On his return Mr. Tiab did not report the United amounts. SNOD and Tax Court petition The IRS received the information that MLSA and United had reported about Mr. Tiab's wages and withholding. The IRS examined Mr. Tiab's 2017 return and determined that he had not reported the United amounts. The IRS accordingly increased Mr. Tiab's taxable income by $11,469, his tax by $1,442, and his withheld amounts by $625. (Ex. 5-J.) As a result of the increase in taxable income from $3,687 (as reported on his return) to $15,156 (as corrected), the IRS determined that, for purposes of the EIC, Mr. Tiab's taxable income exceeded the $15,010 "Complete Phaseout Amount" for single taxpayers with no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 qualifying children, so the IRS disallowed the $72 of EIC 19 that Mr. Tiab had claimed on his return. See I.R.C. sec. 20 32(b),(f); Rev. Proc. 2016-55, sec. 3.05, 2016-45 I.R.B. 21 22 707, 717. On May 6, 2019, the IRS issued to Mr. Tiab an SNOD that determined a deficiency in income tax in the 23 amount of $1,514. 24 25 Mr. Tiab timely filed his petition in this Court on July 30, 2019. (Stip. 1.) a ners OPINION 6 I. General principles A. Burden of proof and evidentiary rules The IRS's determination is presumed correct, and the taxpayer generally bears the burden to prove otherwise. see Tax Court Rule 142(a)(1). This proceeding was heard as a Small Tax Case (called an "S case") pursuant to section 7463 and Rules 170 through 174. In an S case, the normal procedural and evidentiary rules are relaxed. See Rule 174(b). This relaxed evidentiary standard, however, does not change the substance of the law. This Court "cannot ignore the law to achieve an 1 2 3 4 5 6 7 8 9 10 11 12 13 equitable end". McGuire v. Commissioner, 149 T.C. 254, 14 15 16 17 18 19 20 262 (2017). B. Wage income Pursuant to section 61(a), gross income includes "all income from whatever source derived", including wage income. C. Earned income credit section 32(a)(1) allows an eligible individual 21 an EIC against the individual's income tax liability. 22 section 32(b) prescribes different percentages and 23 amounts, including phaseout amounts, that are used to 24 calculate the EIC. Section 32(f) further provides that 25 the EIC "allowed by this section shall be determined under 73)406·2250ioperations@escribers.net!www.escribers.net tables prescribed by the Secretary." For taxable years beginning in 2017, the 7 Secretary provided a "Complete Phaseout Amount" at $15,010 of adjusted gross income for single taxpayers with no qualifying children. Rev. Proc. 2016-55, sec. 3.05. II. Analysis A. Wage income It is undisputed that Mr. Tiab earned $11,469 of wage income from United in 2017. The income from United 1 2 3 4 5 6 7 8 9 10 was indeed a part of Mr. Tiab's gross income and should 11 have been reported on his 2017 return. See I.R.C. sec. 12 61(a). Mr. Tiab, however, did not report the income from 13 United on his 2017 return. 14 15 Nevertheless, United reported to the Government the wage income paid to Mr. Tiab (and the withheld tax 16 amounts), and the IRS adjusted Mr. Tiab's reported taxable 17 18 19 20 21 22 23 24 25 income accordingly. Mr. Tiab has not provided any legal reason to suggest that the IRS's adjustment was inappropriate or incorrect, and we know of none. Thus, we sustain the IRS's determination on this 1ssue. B. EIC For 2017 the EIC was unavailable for a single taxpayer with no children if the taxpayer's taxable income was greater than $15,010. Rev. Proc. 2016-55, sec. 3.05. (973)406-2250 operationseescribers.net wwwescribetsnet 8 As a result of the IRS's adjustment to include the $11,469 that United paid Mr. Tiab, his taxable income for 2017 increased from $3,687 to $15,156. Thus, Mr. Tiab's taxable income exceeded the $15,010 "Complete Phaseout Amount" for an EIC for 2017, and we sustain the IRS's determination on this issue. III. Conclusion We sustain the IRS's determinations on both issues in this case. Decision will be entered in favor of the Commissioner. This concludes the Court's oral Findings of Fact and Opinion in this case. (Whereupon, at 9:24 a.m., the above-entitled matter was concluded.) 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