TAX COURT OPINION

Case: Frederick R. Kelly
Docket Number: 14186-09S
Judge: Colvin
Opinion Type: bench
Filed: 05/24/2010
Pages: 6

UNITED STATES TAX COURT WASHINGTON , D .C . 2021 7 FREDERICK R . KELLY, Petitioner , v . Docket No . 14186-09 S COMMISSIONER OF INTERNAL REVENUE , Respondent . O R D E R Pursuant to Rule 152(b), Tax Court Rules of .Practice and Procedure, it i s 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 of the above case before Special Trial Judge Lewis R . Carluzzoat Atlanta, Georgia, on May 11, 2010, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed) Lewis R . Carluzzo Special Trial Judg e Dated : Washington, D .C . May 24, 2010 SERVED MAY 2 4 2010 3 1 Bench Opinion by Special Trial Judge Lewis R . Carluzzo 2 Kelly v . Commissioner Docket No . 14186-09S 3 May 11, 201 0 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion in this case, an d 6 the following represents the Court ' s oral findings of 7 fact and opinion . The oral findings of fact an d 8 opinion . shall not be relied upon as precedent in any 9 other case . 10 This proceeding for the redetermination of a 11 deficiency is a Small Tax case conducted pursuant to 12 the provisions of Section 7463,of the Internal Revenue 13 Code of 1986, as amended , and Rules 170 through 175 of 14 the Tax Court Rules of Practice and Procedure . 15 This bench opinion is made pursuant to the 16 authority granted by Section 7459 ( b) of the Internal 17 Revenue Code of 1986 , as amended , and Rule 152 of the 18 Tax Court Rules of Practice and Procedure . 19 Hereinafter in this bench opinion, unless 20 otherwise indicated , section references are to the 21 Internal Revenue Code of 1986, as amended, in effect 22 for 2007 . Rule references are to the Tax Court Rules 23 of Practice and Procedure . 24 Frederick R . Kelly appeared pro se . Tammra 25 S . Mitchell appeared on behalf of Respondent . Heritage Reporting Corporatio n (202) 628-4888 4 1 In a notice of deficiency dated March 9, 2 2009, Respondent determined a $3,570 deficiency i n 3 Petitioner's 2007 federal income tax . The issue for 4 decision is whether Petitioner received and failed to 5 report unemployment compensation . 6 Petitioner was incarcerated in Virginia from 7 January 1 through January 27, 2007 . The recognizance 8 document effectuating his release shows his address at 9 a location in Greensboro, North Carolina, at the time 10 of his release . Around May of that year he bega n 11 employment with WellStar Health System (WellStar) . 12 His wages from that company for 2007 totaled $24,972 . 13 According to the records of the Employment 14 Security Commission of North Carolina (Employment) , 15 Petitioner was paid unemployment compensation totaling 16 $11,882 during 2007 . Employment's records furthe r 17 show that the employment compensation was paid in 26 18 weekly installments of $457 . 19 Ten of those installments are shown to have 20 been directly deposited into a checking accoun t 21 maintained by Petitioner during 2007, and Petitioner's 22 banking records confirm Employment's records . The 16 23 other installments are shown to have been made through 24 a debit card . The record is not as complete as w e 25 would like regarding the details of the debit car d Heritage Reporting Corporation (202) 628-4888 5 1 process . 2 Petitioner's 2007 federal income tax return 3 was timely filed . The income reported on that return 4 includes his wages from WellStar but does not include 5 any amount attributable to unemployment compensation . . 6 In the above-referenced notice o f 7 deficiency, Respondent increased Petitioner's income 8 by the employment compensation shown on Employment's 9 records ; that is, $11,882 . Other adjustments made i n 10 the notice of deficiency are either not in dispute or 11 computational, although we note that one of thes e 12 "computational" adjustments -- that is, the reduction 13 of the earned income credit claimed on Petitioner's 14 return -- accounts for a substantial portion of the 15 deficiency here in dispute . 16 Unemployment compensation is includable in 17 the recipient's income . Section 85 ; see als o 18 Commissioner v . Glenshaw Glass Co . , 348 U .S . 42 6 19 (1955) . Petitioner does not suggest otherwise, but 20 claims that he did not apply for unemploymen t 21 compensation during 2007 and was unaware that he had 22 received any . 23 His claim not to have been aware of the 24 receipt is greatly undermined by his own bankin g 25 records . For the period from April through June, 10 Heritage Reporting Corporatio n (202) 628-4888 6 1 unemployment compensation installment payments were 2 deposited into his checking account, and, along with 3 many overdraft advances and transfers from other o f 4 his accounts, provided the source of many withdrawals 5 made from that account . This situation continue d 6 until his wages from WellStar began to be directly 7 deposited into his account later in June . 8 Whether Petitioner was aware of the amounts 9 from Employment being directly deposited into hi s 10 account is really of no consequence . The unemployment 11 compensation was deposited into his account and wa s 12 used by him . The unemployment compensation directly 13 deposited into Petitioner's account, which total s 14 $4,570, is includable in his income for 2007 . 15 The record contains little information 16 regarding the unemployment compensation shown o n 17 Employment's records to have been paid to Petitioner 18 through a debit card . As best as we can tell fro m 19 Petitioner's presentation at trial, he has no 20 recollection of any such payments . 21 With respect to these payments, which total 22 $7,317, we weigh the records of Employment agains t 23 Petitioner's recollection of the situation . In so 24 doing, we find Employment's records to be mor e 25 reliable . Petitioner's recollection of the relevant Heritage Reporting Corporatio n (202) 628-4888 7 1 events is shown to be faulty by the erroneou s 2 allegations contained in the petition ; namely that he 3 was incarcerated "until August 2007" and that he "did 4 not receive any unemployment benefits at all . " 5 As with the unemployment compensation 6 directly deposited into Petitioner ' s bank, th e 7 unemployment compensation paid through debit cards 8 during 2007, as shown on Employment ' s records, is 9 includable in Petitioner ' s income for that year . 10 To reflect the foregoing , decision will be 11 entered for Respondent . This concludes the Court's 12 oral findings of fact and opinion in this case . 13 (Whereupon , at 9 :30 a .m, the bench opinion 14 in the above - entitled matter was concluded . ) 15 16 17 18 1 9 20 2 1 22 23 24 // 25 Heritage Reporting Corporation (202) 628-4888