TAX COURT OPINION

Case: Kenneth Joseph Matta
Docket Number: 20831-11S
Judge: Laro
Opinion Type: bench
Filed: 01/30/2013
Pages: 9

CZ UNITED STATES TAX COURT WASHINGTON, DC 20217 KENNETH JOSEPH MATTA, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 20831-11S. ) ) ) ) ) OR 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 the pages of the transcript of the trial in the above case before Judge David Laro, at Phoenix, Arizona, on December 14, 2012, 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, a decision will be entered for respondent. Dated: Washington, D.C. January 30, 2013 (Signed) David Laro Judge SERVED Feb 04 2013 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Bench Opinion by Senior Judge David Laro December 14, 2012 Kenneth Joseph Matta v. Commissioner Docket No. 20831-11S The Court has decided to render øral 0 findings of fact and opinion in this case, and the following are the Court's oral findings of fact and opinion. This bench opinion is made pursuant to the authority granted by Section 7459(b) and Rule 152. This case was conducted pursuant to the provisions of Section 7463. Pursuant to the provisions of Section 7463(b), the decision to be entered is not reviewable by any other court, and this opinion shall not be treated as precedent for any other case. Unless otherwise indicated, SSection references are to the Internal Revenue Code, and Rule references are to the Tax Court Rules of Practice and Procedure. Petitioner refers to Kenneth Joseph Matta. 21 Petitioner resided in Arizona when he filed the 22 23 24 25 petition. The parties submitted this case to the Court for decision without trial under Rule 122. The stipulation of facts and the exhibits submitted 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 . therewith are incorporated herein by this reference. We find the stipulated facts accordingly. The Court also filed the parties' pretrial 4 memoranda. The only issue for decision is whether 5 FFetitioner is entitled to the first-time homebuyer 6 7 8 credit underS$ection 36(a). We hold that he is not. BACKGROUND On August 26th, t-+re (purchase date), 9 Petitioner purchased a home located in Phoenix, (PhouàV) Arizona^. During the th-r-ee-year period ending on the purchase date, fetitioner had no present ownership interest in a principal residence. . On the purchase date, pfetitioner was 10 11 12 13 14 married to Heidi Matta, (Ms. Matta). Ms. Matta had 15 16 17 filed a petition in the state court for dissolution of marriage, which was finalized on September 2nd, 2008. During their marriage, Fetitioner and Ms. 18 Matta lived in a home in Phoenix that Ms. Matta had 19 20 21 22 23 24 25 owned since 1999. DISCUSSION Section 36 (a) provides a tax credit to "an individual who is a first-time homebuyer of a principal residence in the United States during a taxable year." A "first-time homebuyer" is "any individual if such individual (and if married, such 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company individual's spouse) had no present ownership interest in a principal residence during the thæee- year period ending on the date of the purchase of the principal residence to which this section appliess." Section 36(c) (1). In other words, for a married couple to qualify for the credit, both spouses must not have lwæt a present ownership interest in any principal residence during the relevant LSeee-year period. It is undisputed that Ffetitioner individually did not have a present ownership interest in a principal residence during the relevant £8 ee-year period, whereas Ms. Matta had such interest. Thus, whether Petitioner is entitled to the first-time homebuyer credit hinges on whether #etitioner is considered married for purposes of u )) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 .S$ection 36(c) (1). We think he is. 18 19 20 21 22 23 24 25 Petitioner argues that marital status is determined on the date of filing for the tax credity that-ès, the date of filing his return); kWe contends the phrase "if married" is stated in the present tensex ands thus, the relevant date is the date he claimed the credit. Respondent's position is that marital status is determined by reference to the purchase 866.488.DEPO www.CapitalReportingCompany.com 6 I Capital Reporting Company 1 2 3 4 5 6 7 date of the principal residence to which s$ection 36 applies; hkfe relies on Foster v. Commissioner, 138 T.C. 51, 53 (2012), which does not speak directly to the issue. There is a third possibility:- mßarital status is determined as of the close of the taxable year as provided in sßection 7703. We believe 8 PRespondent's interpretation is the one most 9 consistent with the statute's plain and ordinary 10 meaning. 11 12 The cardinal rule of statutory interpretation is that we construe a statute in a 13 manner that would give effect to its plain and 14 15 16 17 18 ordinary meaning unless doing so would produce absurd or futile results. See United States v. American Trucking Association, Inc., 310 U.S. 534, 543L544 (1940). Based on this premises, we believe 19 Ffetitioner's position is untenable. Contrary to 20 Ffetitioner's contention, the operative clause of 21 S$ection 36(c) (1) is stated in the past tense: "Zf 22 23 24 such individual (and if married, such individual's spouse) had no present ownership interest in a principal residence.^" The parenthetical phrase 25 modifies the word "individual, " and S$ection 36 (c) (1) 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 operates to qualify such individual 'based on certain requirements that the individual must meet at a specific point in time in the past. Absent any clear language to the contrary, the natural way to read the paragraph is "If such individual (ancf if the individual was married, such individual's spouse) @ no present ownership interestd. " Indeed, parallelism in English grammar favors such construction. Moreover, FFetitioner's construction would produce incongruous results . For example, a taxpayer who was unmarried for the entire tax year and who 13 would otherwise qualify for the tax credit would 14 15 16 17 18 become unqualified if he became married by the time he filed his Ffederal income tax return Athe following year. And if marital status were determined on the date when a taxpayer claimed the credit, the credit could become available to a marr.ied taxpayer who 19 would not otherwise qualify for the credit if the 20 21 22 23 24 25 taxpayer filed an amended return after a divorce and claimed the credit then. We are certain .such results are not what Congress intended. Section 7703(a) determines marital status as of the cilose of a taxpayer's taxable year "lf}>r purposes of art V of s%ubchapter B of C7hapter 1 and 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 those provisions of this title which refer to this subsection." Thus, subsection 7703(a) only operates in conjunction with s$ections 151 through 153 or if it is specifically referenced in another section of the Internal Revenue Code. The lack of any reference in 6 S%ection 36(c) (1) tos$ection 7703(a) is a cogent 7 8 9 10 11 12 13 14 15 16 17 18 indication that Congress did not intends$ection 7703(a) to apply. This conclusion is bolstered by the fact that Congress decided to reference s$ection 7703 when it added Section 36(b) (4) 2nad the Worker, Hömeownership, and Business Assistance Act of 2009x effective for purchases after November 6kh, 2009. Section 36(b) (4), inapplicable to Fetitioner, imposes an age requirement that a taxpayer must be at least 18 years as of the date of the purchase to qualify for the credit.xAgnd if "any taxpayer who e married (within the meaning of Section 7703),"uthe taxpayer 19 would be treated as meeting the age requirement if he 20 21 22 23 24 25 or the spouse was at least 18 on the date of the purchase. Section 36(b) (4) is telling because in stark contrast tos%ection 36(c) (1), it sets forth two conjunctive elements by referencing two distinct points in time: aKge on the date of purchagg. and 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 marital status as of t;he close of the taxable year. 2 3 4 5 6 7 8 9 It is thus clear that Congress was capable of making references to different points in time for different elements within the same paragraph ps a statute. of That Congress did not do so in Section 36 (c) (1) convinces us that the temporal focus of the paragraph lies on one dater- the purchase date of a principal residence. Respondent's interpretation is thus the 10 most consistent with the plain and ordinary meaning 11 12 13 14 15 16 17 ofs$ection 36(c) (1). The paragraph includes only one time-referencex: -year period ending on the date ofnpurchase. Hence, SØection 36(c) (1)'s only focal point is the date of the purchase of a principal residence. Correspondinglyx a taxpayer must meet all the requirements in SØection 36(c) (1) on that date. Any other reading would strain the statute's plain 18 meaning and import substance that is not there. 19 20 21 22 23 24 Because Petitioner was married when he purchased the new residence, . he is considered "married" for purposes of S$ection 36(c) (1) . And because Ms . Matta was not a first-time homebuyer unders$ection 36(c) (1) with respect to the purchase of pfetitioner's new residence, neither was 25 Petitioner. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company Accordingly, Fetitioner is not entitled to 10 the tax credit, and :: hold 22:crdingly. In reaching this holding, we have considered all arguments N the parties have made 1 2 3 4 5 Oin their briefs. To the extent not mentioned above, 6 we conclude that they are moot, irrelevant, or 7 without merit. Decision will be entered for rKespondent. This concludes the Court's Oral Findings of Fact and Opinion in this case. (Whereupon, at 9:32 a.m., the above- entitled matter was concluded.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com