t c summary opinion united_states tax_court richard william corduan petitioner v commissioner of internal revenue respondent docket no 9939-02s filed date richard william corduan pro_se kathleen c schlenzig for respondent dean special_trial_judge this case was heard under the provisions of sec_7463 of the internal_revenue_code as in effect at the time the petition was filed unless otherwise indicated all other section references are to the internal_revenue_code in effect for the year at issue the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority respondent determined a deficiency in petitioner's federal_income_tax of dollar_figure and an accuracy-related_penalty under sec_6662 of dollar_figure for petitioner agrees that he is not entitled to a dependency_exemption deduction for his father the issues remaining for decision are whether petitioner is entitled to a a dependency_exemption deduction for his mother b head_of_household filing_status and c business_expense deductions claimed on schedule c profit or loss from business some of the facts have been stipulated and are so found the stipulation of facts supplemental stipulation of facts and exhibits received in evidence are incorporated herein by reference at the time the petition was filed petitioner resided in trevor wisconsin background on his form_1040 u s individual_income_tax_return petitioner listed his occupation as factory worker he reported his filing_status as head_of_household and claimed dependency_exemption deductions for both his father and mother he attached to the return a schedule c in the name of daybreak iv fishing llc for the activity of information service for fishing petitioner's mother and father filed a joint federal_income_tax return for his father received total income for of dollar_figure his mother received social_security payments of at least dollar_figure in on date the state of wisconsin filed articles of organization of a limited_liability_company llc daybreak iv fishing llc daybreak the organizers named in the articles are petitioner and his father richard w corduan sr during daybreak maintained a web address at a cost of dollar_figure on date petitioner wrote a letter to the state of wisconsin department of industry labor and human relations ui division declaring there has been no activity by daybreak iv fishing since and no employees or payments of wages has been made since that time we have been through extreme financial problems and any possibility of this venture ever being resurrected are minute on date petitioner wrote to the department of revenue of the state of wisconsin stating there has been no activity by daybreak iv fishing since he further represented in the letter that the business has been nonexistent since the parties agree that daybreak has never filed a federal_income_tax return petitioner reported his daybreak activity on schedule c as producing gross_receipts of zero dollar_figure in labor costs car and truck expenses of dollar_figure legal and professional service expenses of dollar_figure rent or lease expenses for vehicles or equipment of dollar_figure and unnamed other expenses of dollar_figure resulting in a net_loss of dollar_figure discussion because petitioner failed to meet the requirements of sec_7491 the burden_of_proof with respect to factual issues relevant to the deficiency does not shift to respondent as to the accuracy-related_penalty respondent has the burden of production the burden of persuasion remains with petitioner see sec_7491 116_tc_438 dependency_exemption and head_of_household filing_status a dependency_exemption deduction is allowed under sec_151 for a parent of a taxpayer only if among other requirements the taxpayer provides over half of the parent's support for the year see sec_151 and sec_152 a taxpayer is considered a head_of_household with respect to a parent only if among other requirements the taxpayer maintains a household which constitutes the principal_place_of_abode of that parent and the taxpayer is entitled to a dependency_exemption deduction for the parent for that taxable_year see sec_2 although the taxpayer is not required to reside with his parents for purposes of sec_2 he must maintain the household which means that he must pay more than one-half 1the actual sum of the claimed items is dollar_figure the cost of maintaining the household for the taxable_year see sec_2 sec_1_2-2 income_tax regs nothing in the record shows or even estimates an amount which petitioner provided for his mother's support or to maintain the home the court finds that petitioner did not provide over half his mother's support for therefore because petitioner may not claim a dependency_exemption deduction for either of his parents petitioner is not entitled to head_of_household filing_status the court upholds respondent's determinations with respect to both dependency_exemption deductions and filing_status schedule c deductions a taxpayer generally must keep records sufficient to establish the amounts of the items reported on his federal_income_tax return see sec_6001 sec_1_6001-1 e income_tax regs however in the event that a taxpayer establishes that a deductible expense has been paid but is unable to substantiate the precise amount the court generally may estimate the amount of the deductible expense bearing heavily against the taxpayer whose inexactitude in substantiating the amount of the expense is of his own making see 39_f2d_540 2d cir the court cannot estimate a deductible expense however unless the taxpayer presents evidence sufficient to provide some basis upon which an estimate may be made see 85_tc_731 sec_274 imposes stricter requirements and supersedes the cohan doctrine see 50_tc_823 affd per curiam 412_f2d_201 2d cir sec_274 provides that unless the taxpayer complies with certain strict substantiation rules no deduction is allowable for traveling expenses for entertainment_expenses for expenses for gifts or with respect to listed_property see sec_280f including passenger automobiles computers and peripheral equipment and cellular phones to meet the strict substantiation requirements the taxpayer must substantiate the amount time place and business_purpose of the expenses see sec_274 sec_1_274-5t temporary income_tax regs fed reg date an llc with more than one member is treated as a partnership for federal_income_tax purposes unless the llc elects otherwise see sec_301_7701-3 proced admin regs the parties stipulated that daybreak never filed any federal_income_tax returns from this stipulation the court assumes that daybreak filed neither forms u s return of partnership income nor form_8832 entity classification election petitioner merely filed a schedule c and claimed a net_loss from the activity of the llc as though it were a proprietorship petitioner however aside from a few summary schedules presented no evidence to support the claimed loss or the underlying expenses listed on the schedule c furthermore early in petitioner admitted to two agencies of the wisconsin state government that daybreak had not engaged in any business activity since and was nonexistent petitioner has not explained how daybreak could incur trade_or_business_expenses in if it was not engaged in a trade_or_business and was nonexistent the court therefore upholds respondent's disallowance accuracy-related_penalty sec_6662 imposes a 20-percent penalty on the portion of an underpayment attributable to any one of several factors including negligence or disregard of rules or regulations and a substantial_understatement_of_income_tax see sec_6662 and negligence includes any failure to make a reasonable attempt to comply with the provisions of the internal_revenue_code including any failure to keep adequate books_and_records or to substantiate items properly a substantial_understatement includes an underpayment_of_tax of dollar_figure or more see sec_6662 and d sec_1_6662-3 and sec_1_6662-4 income_tax regs sec_6664 provides that the penalty under sec_6662 shall not apply to any portion of an underpayment if it is shown that there was reasonable_cause for the taxpayer's position and that the taxpayer acted in good_faith with respect to that portion the determination of whether a taxpayer acted with reasonable_cause and in good_faith is made on a case-by-case basis taking into account all the pertinent facts and circumstances see sec_1_6664-4 income_tax regs the most important factor is the extent of the taxpayer's effort to assess his proper tax_liability for the year see id petitioner failed to keep adequate books_and_records reflecting expenses of his daybreak activity and to properly substantiate other items reported on his return see sec_6662 sec_1_6662-3 income_tax regs there is an understatement_of_tax greater than dollar_figure the court concludes that respondent has produced sufficient evidence to show that the sec_6662 accuracy-related_penalty is appropriate nothing in the record indicates petitioner acted with reasonable_cause and in good_faith the court holds that the record supports respondent's determination that petitioner is liable for the accuracy-related_penalty reviewed and adopted as the report of the small_tax_case division to reflect the foregoing decision will be entered for respondent


internal_revenue_service number release date index number ---------------------------- ------------------------------ ----------------------- ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc corp b05 plr-152042-06 date date - legend distributing controlled state a individual a individual b year ------------------------------ ----------------------------------- ------------- ------------------------ ---------------------------- ------- business a ---------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- -------------------------------------------------------------- sub sub sub state b year ------------------------------- ------------------ -------------------------------- ---------------- ------- business b ---------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------- plr-152042-06 ----------------------------------------------------------------------------------- year ------- business c -------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- state c year ---------------- ------- business d ------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------- -------------------------------------------------------------- year business e a ------- ---------- ------ ------------------------------- individual c dear ------------- we respond to your authorized representative's date letter requesting rulings regarding the tax treatment of a proposed transaction the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process the pertinent facts as described in your letter are set forth below summary of facts distributing a state a corporation is owned by two individual shareholders individual a and individual b and is treated as an s_corporation for federal_income_tax purposes since year distributing has engaged in business a distributing owns all of the stock of sub sub sub and controlled sub a state b corporation is treated as a qualified_subchapter_s_subsidiary qsub for federal_income_tax purposes since year sub has engaged in business b sub a state b corporation is treated as a plr-152042-06 qsub for federal_income_tax purposes since year sub has engaged in business c sub a state c_corporation is treated as a qsub for federal_income_tax purposes since year sub has engaged in business d as qsubs all of the assets liabilities and items of income deduction and credit of sub sub and sub are treated as items of distributing controlled a state a corporation is wholly-owned by distributing and is treated as a c_corporation for federal_income_tax purposes since year controlled has engaged directly in business e although controlled provides business e services to distributing and its subsidiaries the substantial portion of its income arises out of business e services performed for third parties proposed transaction distributing proposes to distribute the stock of controlled to its shareholders pro_rata the proposed transaction is being carried out to permit individual c a key_employee of controlled to become a a shareholder in controlled the proposed transaction will be accomplished through the following steps distributing will distribute all of the shares of controlled to its shareholders the distribution on a pro_rata basis controlled will make an election under sec_1362 to be treated as an s_corporation within the meaning of sec_1361 within three months of the distribution controlled will issue its key_employee a of its common_stock for cash and or installment notes representations the taxpayer has made the following representations in connection with the proposed transaction no part of the shares of controlled to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of distributing’s business a is representative of its present operations and with regard to distributing’s business a there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of controlled’s business e is representative of its present operations and with regard to plr-152042-06 controlled’s business e there have been no substantial operational changes since the date of the last financial statements submitted following the distribution each of distributing and controlled will continue the active_conduct of its business independently and with its separate employees notwithstanding the preceding sentence following the distribution the managerial_services of individual a and individual b on an as needed basis will be shared by distributing and controlled the distribution is being undertaken for the corporate business_purpose of retaining the services of a key_employee the distribution is motivated in whole or substantial part by this key_employee corporate business_purpose the distribution is not used principally as a device for the distribution of earnings_and_profits of distributing or controlled or both except for certain trade debt if any no other indebtedness will exist between distributing and controlled at the time of or subsequent to the distribution the indebtedness owed by controlled to distributing if any after the distribution will not constitute stock_or_securities payments made in connection with all continuing transactions if any between distributing and controlled will be for fair_market_value and based on terms and conditions arrived at by the parties bargaining at arm’s length for purposes of sec_355 immediately after the distribution no person determined after applying sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution for purposes of sec_355 immediately after the distribution no person determined after applying sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of stock entitled to vote of controlled or percent or more of the total value of shares of all classes of stock of controlled that was either i acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on plr-152042-06 the date of the distribution or ii attributable to distributions on any stock of distributing that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution the distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons will acquire directly or indirectly stock representing a percent or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation each of distributing and controlled will pay its own expenses if any incurred in connection with the distribution rulings based solely on the information submitted and on the representations set forth above we hold as follows with respect to the proposed transaction no gain_or_loss will be recognized by and no amount will be included in the income of the shareholders of distributing upon the receipt of the stock of controlled in connection with the distribution sec_355 no gain_or_loss will be recognized by distributing on the distribution of the stock of controlled in connection with the distribution sec_355 the aggregate basis of the distributing shares and the controlled shares in the hands of the shareholders of distributing after the distribution will be the same as the basis of the distributing shares in the hands of its shareholders immediately before the distribution allocated in the manner described in sec_1_358-2 sec_358 b and c sec_1_358-1 the holding_period of the stock of controlled to be received by the distributing shareholders will include the holding_period of the distributing stock held by each such shareholder prior to the distribution provided that the shares of distributing were held as a capital_asset on the date of the distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 caveats plr-152042-06 no opinion is expressed about the tax treatment of the proposed transaction under other provisions of the code and regulations or the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings in particular no opinion is expressed regarding whether the proposed transaction i satisfies the business_purpose requirement of sec_1_355-2 ii is used principally as a device for the distribution of the earnings_and_profits of the distributing_corporation or the controlled_corporation or both see sec_355 and sec_1_355-2 or iii is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a fifty percent or greater interest in the distributing_corporation or the controlled_corporation under sec_355 procedural statements this ruling letter is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent a copy of this ruling letter must be attached to the federal_income_tax return of each taxpayer involved for the taxable_year in which the transaction covered by this ruling letter is consummated alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the ruling letter in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative _t ian russell____________ t ian russell senior counsel branch office of associate chief_counsel corporate sincerely


internal_revenue_service number release date index number ---------------------------------------- --------------------------------------------- ----------------------------- ------------------------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------------------------------------- -------------------------------------- telephone number ---------------------- refer reply to cc psi b04 plr-107751-14 date august legend decedent executor date date date dear ---- ------------ --------------------------------------------------- --------------------------- --------------------------- -------------------------- ---------------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to file a form_8939 allocation of increase in basis for property_acquired_from_a_decedent to make an election under sec_1022 of the internal_revenue_code code sec_1022 election and to allocate basis to eligible_property transferred as a result of decedent’s death the facts and representations submitted are summarized as follows decedent died in in her will decedent appointed executor to be the executor of her estate on date a date prior to date executor experienced a medical emergency for which he was hospitalized and had an extended recovery_period at his home executor did not return to work until date a date after date executor filed form_8939 on date a date after date consequently executor failed to timely file form_8939 and failed to make a sec_1022 election for decedent’s estate plr-107751-14 law and analysis sec_1022 provides that property_acquired_from_a_decedent who died after date is treated as transferred by gift and the basis of the person acquiring the property from such a decedent is the lesser_of the adjusted_basis of the decedent or the fair_market_value of the property at the date of the decedent's death sec_1022 provides in general that the basis_of_property under sec_1022 is increased by basis increase that is allocated to the property sec_1022 provides in general that basis increase is the portion of the aggregate basis increase that is allocated to the property sec_1022 and c provide that the aggregate basis increase is dollar_figure and that the aggregate basis increase is increased by-- i the sum of the amount of any capital_loss_carryover under sec_1212 and the amount of any net_operating_loss_carryover under sec_172 that would but for the decedent's death be carried from the decedent's last taxable_year to a later taxable_year of the decedent plus ii the sum of the amount of any losses that would have been allowable under sec_165 if the property acquired from the decedent had been sold at fair_market_value immediately before the decedent's death sec_1022 provides that in the case of property that is qualified spousal property the basis of such property under sec_1022 as increased under sec_1022 is increased by spousal property basis increase allocated to the property sec_1022 provides in general that spousal property basis increase is the portion of the aggregate spousal property basis increase which is allocated to the property sec_1022 provides that the aggregate spousal property basis increase is dollar_figure sec_1022 provides in general that the basis_of_property acquired from a decedent may be increased under sec_1022 or c only if the property was owned by the decedent at the time of death sec_1022 describes property that is considered to be owned by the decedent at the time of death sec_1022 provides that the basis adjustments under sec_1022 and c shall not increase the basis of any interest in property above its fair_market_value in the hands of the decedent as of the date of the decedent's death sec_1022 provides in general that the executor is to allocate the basis adjustments under sec_1022 and c on the return required by sec_6018 and that any allocation made may be changed only as provided by the secretary plr-107751-14 sec_1022 describes property that is considered to be acquired from the decedent for purposes of sec_1022 subtitle a of title v of the economic_growth_and_tax_relief_reconciliation_act_of_2001 p l stat enacted sec_2210 which made chapter the estate_tax inapplicable to the estate of any decedent who died in and chapter the generation skipping transfer gst tax inapplicable to generation-skipping transfers made in on date the tax relief unemployment insurance reauthorization and job creation act of truirjca p l stat became law and sec_301 of truirjca retroactively reinstated the estate and gst taxes however sec_301 of truirjca allows the executor of the estate of a decedent who died in to elect to apply the code as though sec_301 of truirjca did not apply with respect to chapter and for property acquired or passing from a decedent within the meaning of sec_1014 thus sec_301 of truirjca allows the executor of the estate of a decedent who died in to elect not to have the provisions of chapter apply to the decedent’s estate but rather to have the provisions of sec_1022 apply notice_2011_66 2011_35_irb_184 section i a provides that the executor of the estate of a decedent who died in makes the sec_1022 election by filing a form_8939 on or before date notice 2011_40_irb_479 extended the due_date of the form_8939 and thus the election from date to date notice_2011_66 section i d provides that the internal_revenue_service will not grant extensions of time to file a form_8939 and will not accept a form_8939 filed after the due_date except in four limited circumstances provided in section i d under this section of notice_2011_66 an executor may apply for relief under sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose date is prescribed by a regulation and not expressly provided by statute requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government plr-107751-14 sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer failed to make the election because of intervening events beyond the taxpayer’s control based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore executor is granted an extension of time of days from the date of this letter to make the sec_1022 election on a form_8939 and allocate additional basis to eligible_property as provided by sec_1022 the form_8939 that is filed should be identical to the form_8939 that was filed on date a copy of this letter should be attached to the form_8939 in accordance with the power_of_attorney on file with this office we have sent a copy of this letter to your authorized representatives except as expressly provided herein we neither express nor imply any opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely _________________________ leslie h finlow senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copy of this letter


internal_revenue_service number release date index number ---------------------- ----------------------------- ------------------------------ ------------------------------- in re ------------------------------------ -------------------------------------------- ------------------------------------------------------ ------------------------ ---------------------------- ------------------------------ ------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------------------------- telephone number --------------------- refer reply to cc it a plr-112885-04 date date -------- ------------------ ---------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- legend legend city state program a program b dear ---- ---------- this letter responds to your ruling_request submitted on behalf of the city by a letter dated date as supplemented on date your request relates to whether the city is required to file information returns for payments made under the programs described below the reporting requirement for these payments depends in part upon whether the payments are taxable_income to the recipients consequently the necessary analysis of the nature of the payments to the recipients is herein included background the city is a municipal government incorporated under the laws of state the city implemented programs a and b to revive the city’s downtown commercial buildings by providing incentives to building owners and long-term tenants to undertake renovation projects in particular program a was established to rehabilitate the interior and program b was established to restore the exterior of the city’s downtown commercial plr-112885-04 buildings building owners and long-term tenants of the city’s downtown commercial buildings are entitled to participate in the programs regardless of their income levels or financial needs in order to receive assistance from the city under the programs building owners and long-term tenants of the city’s downtown commercial buildings must satisfy several conditions the conditions generally include hiring local prevailing wage contractors who are licensed by the city for projects prepayment of project costs and an agreement to permit the city to inspect the completed projects and documents involved in the projects once the conditions are satisfied the city reimburses project costs to the qualified applicants up to a set maximum amount law and analysis sec_6041 of the internal_revenue_code hereinafter the code requires all persons engaged in a trade_or_business and making payment in the course of such trade_or_business to another person of rent salaries wages premiums annuities compensations remunerations emoluments or other fixed or determinable gains profits and income of dollar_figure or more in any taxable_year to file an information_return with the internal_revenue_service hereinafter the service and to furnish an information statement to the payee as used in sec_6041 of the code only fixed or determinable ie taxable_income must be reported the payments of compensation and other_amounts required to be reported under sec_6041 are those includible in gross_income under sec_61 of the code accordingly in order to decide whether the city is required to furnish an information_return to the recipients of assistance under the programs it is necessary to examine whether the payments are includible in gross_income sec_61 of the code and the income_tax regulations hereinafter the regulations thereunder provide that except as otherwise provided by law gross_income means all income from whatever source derived see also section dollar_figure -1 a of the regulations under sec_61 congress intended to tax all gains or undeniable accessions to wealth clearly realized over which the taxpayers have complete dominion 348_us_426 however the service has consistently concluded that payments to individuals by governmental units under legislated social benefit programs for the promotion of the general welfare of the public are not includible in a recipient’s gross_income see eg revrul_74_205 1974_1_cb_20 revrul_98_19 1998_1_cb_840 to qualify under the general welfare exclusion payments must i be made from a governmental fund ii be for the promotion of general welfare ie generally based on individual or family plr-112885-04 needs such as housing education and basic sustenance expenses and iii not represent compensation_for services revrul_75_246 1975_1_cb_24 revrul_76_144 1976_1_cb_17 revrul_82_106 1982_1_cb_16 payments to businesses generally do not qualify under the general welfare exclusion because the payments are not based on individual or family needs see 88_tc_1293 acq 1989_2_cb_1 notice_2003_18 2003_1_cb_699 in revrul_76_395 1976_2_cb_16 the service ruled that payments made to low- income individuals primarily in order to subsidize home improvements necessary to correct building code violations and thereby provide safe and decent housing were excluded from the recipients’ income under the general welfare doctrine in revrul_76_131 1976_1_cb_16 the service ruled that payments made by the state of alaska to long-term residents were not excluded by the general welfare exclusion because the payments were based on the recipient’s age and residency requirements regardless of financial or employment status health or educational background in revrul_2005_46 2005_30_irb_120 the service concluded that a grant that a business received under a state program to reimburse losses from a natural disaster was not excluded under the general welfare doctrine the programs here differ materially from the home rehabilitation program described in revrul_76_395 the renovations subsidized by the programs are for commercial buildings and not for the promotion of general welfare which is based on individual or family needs therefore payments made pursuant to the programs are not excluded from gross_income under the general welfare doctrine and are includible in gross_income see bailey pincite accordingly the city is required to file information returns with the service and to furnish information statements to the recipients with respect to payments under the programs form 1099-misc should be used and the amount of the assistance should be included in box as other income conclusion for these reasons we conclude that payments under the programs will represent gross_income to the qualified applicants and that the city is subject_to the resulting information reporting requirements of sec_6041 with respect to the programs unless the recipient is a corporation or other specified entity payment to which is exempt under sec_1_6041-3 of the regulations plr-112885-04 this document may not be used or cited as precedent see sec_6110 of the code ______________________ john aramburu senior counsel branch associate chief_counsel income_tax accounting sincerely


tcmemo_2010_44 united_states tax_court patrick r turner petitioner v commissioner of internal revenue respondent docket no 29001-08l filed date patrick turner pro_se mindy chou and a gary begun for respondent memorandum opinion kroupa judge this collection review matter is before the court on respondent’s motion for summary_judgment filed pursuant to rule respondent contends that he is entitled to 1all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code unless otherwise indicated judgment as a matter of law on whether the appeals_office correctly determined to sustain the lien filing against petitioner to collect unpaid interest late filing additions to tax and late payment additions to tax for the taxable years and years at issue we shall grant respondent’s motion background petitioner resided in michigan at the time he filed the petition petitioner failed to timely file a return for either year at issue petitioner eventually filed a return for each year at issue over three years after the filing deadline on each return petitioner reported a tax due but failed to pay the reported tax respondent then assessed the dollar_figure tax due shown on the returns and dollar_figure of statutory interest under sec_6601 respondent also assessed dollar_figure of late payment additions and dollar_figure of late filing additions for both years at issue petitioner failed to pay the assessed amounts respondent thereafter sent petitioner a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 lien notice 2all amounts are rounded to the nearest dollar 3respondent applied a dollar_figure withholding credit against petitioner’s liabilities 4petitioner and his wife patricia turner filed joint returns for the years at issue mrs turner is not a party to this collection proceeding as the lien notice and determination continued petitioner timely requested a collection_due_process cdp hearing and objected to the imposed interest and additions petitioner did not challenge the underlying tax petitioner asserted that he was not required to file a tax_return for either of the two years at issue based on the paperwork reduction act of pra u s c sec_3512 petitioner requested that all additions and interest be abated appeals officer thomas anderson ao anderson was assigned petitioner’s collection case ao anderson mailed a letter to petitioner to schedule a telephone conference ao anderson declined to offer petitioner a face-to-face hearing because petitioner raised only frivolous issues ao anderson informed petitioner that to receive a face-to-face meeting he had to assert a non-frivolous issue within a certain period ao anderson also requested petitioner to submit a completed form 433-a collection information statement petitioner responded by requesting a face-to-face hearing but did not raise any non-frivolous issues ao anderson reiterated to petitioner in subsequent phone conversations that he had to raise non-frivolous issues to have a face-to-face hearing ao anderson gave petitioner another opportunity to continued notice were issued solely to petitioner respondent mailed petitioner and mrs turner a notice_of_intent_to_levy and your right to a hearing for tax years and the levy determination is not at issue in this proceeding present a non-frivolous issue petitioner failed to submit any other issues and did not provide the necessary financial information for ao anderson to consider any collection alternatives ao anderson reviewed the material and arguments petitioner presented and determined to sustain the lien filing ao anderson sent petitioner a notice_of_determination concerning collection action s under sec_6320 and or determination notice sustaining the lien filing the determination notice stated that petitioner has not raised any issues that have not been previously ruled to be frivolous by the united_states tax_court petitioner timely filed an imperfect petition seeking relief from respondent’s determination notice petitioner filed an amended petition challenging the assessed interest late filing additions and late payment additions under the pra petitioner does not challenge the self-assessed tax for either year at issue in the petition for review as previously mentioned respondent moved for summary_judgment and petitioner filed an objection discussion we are asked to decide whether it is appropriate to grant summary_judgment in this collection review proceeding summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials see eg 116_tc_73 either party may move for summary_judgment upon all or any part of the legal issues in controversy rule a the moving party bears the burden of proving that there is no genuine issue of material fact 85_tc_812 79_tc_340 when a motion for summary_judgment is made and supported as provided in rule the party opposing summary_judgment must set forth specific facts which show that a question of material fact exists and may not rely merely on allegations or denials in the pleadings 91_tc_322 87_tc_214 petitioner challenges the assessed interest late filing additions and late payment additions asserting that he was not required to file a return because the return violated the pra this and other courts have consistently held taxpayers’ claims based on the pra groundless see eg 970_f2d_750 n 10th cir lack of an omb number on irs forms and notices does not violate the pra 954_f2d_698 11th cir lack of an omb number on a federal_income_tax return does not violate the pra freas v commissioner tcmemo_1993_552 pra does not apply to federal_income_tax regulations or to federal tax forms andreas v commissioner tcmemo_1993_551 pra does not apply to federal_income_tax regulations or to federal tax forms courts have refused to even consider such arguments so as not to suggest they have any credence see schneller v commissioner tcmemo_2006_99 we similarly find that petitioner’s arguments regarding the omb control numbers and the pra lack merit furthermore petitioner’s argument that the pra prevents respondent from charging interest is without merit see wolcott v commissioner tcmemo_2008_153 petitioner also challenges the assessed interest late filing additions and late payment additions on the grounds that respondent denied him the right to a cdp hearing again we disagree a cdp hearing may consist of one or more written or oral communications between an appeals officer and the taxpayer sec_301_6320-1 q a-d6 proced admin regs see 115_tc_329 dinino v commissioner tcmemo_2009_284 this court and other courts have held that a face-to-face cdp hearing is not required under sec_6330 katz v commissioner supra telephone conference procedurally proper williamson v commissioner tcmemo_2009_188 taxpayer not entitled to face-to-face hearing after asserting only meritless arguments stockton v commissioner tcmemo_2009_186 upholding denial of face-to-face conference after the taxpayer failed to raise non-frivolous issue after multiple opportunities leineweber v commissioner tcmemo_2004_17 prior telephone conversations constitute cdp hearing 270_fsupp2d_731 m d n c telephone conversations sufficed affd 85_fedappx_333 4th cir all communications between the taxpayer and the appeals officer between the time of the hearing request and the issuance of the determination notice constitute part of the cdp hearing see middleton v commissioner tcmemo_2007_120 see also dinino v commissioner supra here ao anderson spoke with petitioner on the phone and exchanged written correspondence with petitioner ao anderson gave petitioner ample opportunity to raise non-frivolous issues ao anderson verified that respondent met the requirements of applicable law and administrative procedures we find that petitioner had a cdp hearing with ao anderson in addition we find that petitioner has failed to raise any meritorious issue to suggest that it would be productive or appropriate to remand this case to the appeals_office for further proceedings see 117_tc_183 petitioner has raised no legitimate issue spousal defense or collection alternative see sec_6330 accordingly these issues are now deemed conceded see rule b petitioner has advanced a plethora of groundless arguments we have specifically warned petitioner on two occasions one order dated date and another order dated date to stop making these frivolous arguments we informed petitioner that other taxpayers in similar cases were subject_to a sec_6673 penalty see eg wolcott v commissioner supra schneller v commissioner supra despite these warnings petitioner has wasted the court’s limited time and resources see 119_tc_285 we will not impose a sec_6673 penalty at this time but we caution petitioner that should he bring similar arguments before this court in the future the court may impose such a penalty up to dollar_figure we have considered all arguments made in reaching our decision and to the extent not mentioned we conclude that they are moot irrelevant or without merit we conclude that there are no genuine issues of material fact and that respondent is entitled to summary_judgment as a matter of law to reflect the foregoing decision will be entered for respondent sec_6673 authorizes this court to require a taxpayer to pay a penalty up to dollar_figure whenever it appears that a taxpayer instituted or maintained a proceeding in the court primarily for delay or that a taxpayer’s position in such a proceeding is frivolous or groundless sec_6673