TAX COURT OPINION

Case: Scott R. Bishop & Kellene E. Bishop, n.k.a. Kellene E. Vaile
Docket Number: 8716-13
Judge: Buch
Opinion Type: bench
Filed: 12/09/2016
Pages: 6

SEC UNITED STATES TAX COURT WASHINGTON, DC 20217 SCOTT R. BISHOP & KELLENE E. BISHOP, N.K.A. KELLENE E. VAILE, Petitioners, v. ) ) ) ) ) Docket No. 8716-13. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit with this order to petitioners and respondent a copy of the pages of the transcript of the trial in this case before Judge Ronald L. Buch at Salt Lake City, Utah, 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 under Rule 155. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. December 9, 2016 SERVED Dec 12 2016 Capital Reporting Company 3 1 Bench Opinion by Judge Ronald L. Buc.h 2 October 27, 2016 3 Scott R. Bishop & Kellene E. Bishop, n.k.a Kellene E. 4 Vaile 5 6 Docket No. 8716-13 THE COURT: The following represents The 7 Court's oral findings of fact and opinion in this 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 case. The oral findings of fact and opinion may not be relied upon as precedent in any other case. This opinion is in conformity with Internal Revenue Code Section 7459(b) and Rule 152g of the Tax Court (dì (- Rules of Practice and Procedure. Any section references refer to the Internal Revenue Code or the Treasury Regulations in effect during the year in issue. And Rule references are to the Tax Court Rules of Practice and Procedure. As corrected at the start of trial, Respondent alleges that Petitioner received $166,242.44 of income during taxable year ending December 31, 2009. For that year Petitioner filed a tax return showing zero. In his testimony today, Mr. Bishop does not dispute that many of the items of income are connected with items that are considered taxable for 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 federal income tax purposes, including exchange of 2 money for labor or the sale of items, for example, 3 4 5 6 7 8 9 the sale of personal items or the sale of automobiles. As far as legal arguments, Mr. Bishop offers legal arguments that have been repeatedly rejected by the Courts as frivolous. As to those items that Mr. Bishop alleges were sold, Mr. Bishop did not establish through 10 testimony or documents, one, that it was items that 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 were sold and, two, if any item is sold, the receipts from that sale are still income. But Petitioner has to establish the basis in the item in order to get credit for it. So the gross receipts from the sale, for example, if Mr. Bishop had sold an automobile for $44,000 and wanted to allege he shouldn't be taxed on $44,000 of income, he would need to show his basis in that automobile. And he offers no evidence to do so. Further, to the extent that Mr. Bishop alleges that the $44,000 income entry item was from the sale of an automobile, he correctly points out in his closing argument that the only evidence in the record that this relates to the sale of an automobile is his testimony. 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 5 1 Unfortunately, Mr. Bishop's testimony, 2 while he comes across as very forthright, repeatedly 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 his credibility was harmed during his testimony when, for example, he alleges that he does not have signature authority over a bank account but then in that very bank account there are checks that bear his signature or when he alleges during his testimony that a check received in the amount of $48,953 marked for deposit only to account number ending in 994 was a transfer clearing entry after deductions of $44,283.37, in other words, netting to the precise amount shown on the bank deposits analysis. Mr. Bishop continues to dispute that that relates to the same entry on the bank deposits. So I can't give much weight to Mr. Bishop's testimony in this rega.rd, and so I disregard that testimony. As to the frivolous arguments, we spent time on the record during closing argument addressing 19 many of those. The Court referred Mr. Bishop to 20 Wnuck v. Commissioner, 136 T.C. 498, and that's from 21 22 2011. The Court also referred Mr. Bishop to Waltner v. Commissioner, T.C. Memo 2014-35 in hopes that he 23 will read them. 24 As our Court has said and as the Fifth 25 Circuit has said, in this case, again, Petitioners 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 only offer frivolous arguments. And our Court and others have said: "We -perceive no need to refute these frivolous arguments with somber reasoning and copious citation of precedent. To do so might suggest that these arguments have some colorable 6 merit." That quote comes from 737 App.2d at page 7 8 9 1417, Fifth Circuit, 1984. Nonetheless, we spent time with Mr. Bishop on the record in the hopes ~that he'll heed this 10 warning. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We've also noted in Wnuck v. Commissioner it's doubtful whether tax jurisprudence will be advanced much by issuing yet another opinion affirming the obvious truisms about tax law. That passage comes from 136 T.C. 498 at page 511 in 2011. So we sustain the Commissioner's determination that Mr. and Mrs. Bishop received income in the amount of $166,242.44 in the taxable year 2009. That leaves the issue of penalties under Section 6662. The Commissioner asserted a penalty for substantial understatement of income tax. The Commissioner has the burden of production as to the substantial understatement penalty. That burden of production is met when for the substantial 866.488.DEPO www.CapitalReportingCompany.com i - Capital Reporting Company 7 1 understatement penalty the mathematical formula is 2 met. 3 4 5 6 7 8 9 10 11 12 13 14 15 And in this instance the income tax shown on the return is zero. The Rule 155 computations by definition will yield a substantial understatement, so the Commissioner has met his burden of production as to the substantial understatement penalty. The Court further during the closing arguments cautioned Mr. Bishop against making frivolous arguments. And the reason for that caution is that The Court may impose penalties under Section 6673 when frivolous or groundless arguments are pursued in a Tax Court proceeding. The Court does not intend to impose a sanction under Section 6673 in this case, but The 16 Court will take this opportunity to caution Mr. Bishop that should he continue to pursue frivolous arguments in the Tax Court that such a sanction could be imposed in the future. So in light of the foregoing, a decision in this case will be entered under Rule 15.5. And with that, we are off the record. (Whereupon, at 12:25 p.m., the above- entitled matter was concluded.) 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com