t c memo united_states tax_court michael gigliobianco and mary gigliobianco petitioners v commissioner of internal revenue respondent docket no filed date andrew ira panken for petitioners michael s coravos for respondent memorandum findings_of_fact and opinion chiechi judge respondent determined the following deficiencies in addition under sec_6651 to and accuracy-related_penalties under sec_6662 on petitioners’ federal_income_tax tax 1all section references are to the internal_revenue_code code in effect for the years at issue all rule references are to the tax_court rules_of_practice and procedure year deficiency dollar_figure big_number the issues remaining for decision are addition_to_tax under sec_6651 accuracy-related_penalty under sec_6662 dollar_figure --- dollar_figure dollar_figure are petitioners entitled to deduct certain claimed business_expenses of dollar_figure and dollar_figure for their taxable years and respectively we hold that they are not except to the extent stated herein are petitioners entitled to deduct a claimed nonpassive loss of dollar_figure for their taxable_year we hold that they are not are petitioners liable for their taxable_year for the addition_to_tax under sec_6651 we hold that they are are petitioners liable for each of their taxable years and for the accuracy-related_penalty under sec_6662 we hold that they are findings_of_fact some of the facts have been stipulated and are so found at the time petitioners filed the petition they resided in new york during and petitioner mary gigliobianco ms gigliobianco worked for sing along family childcare sing along during those years ms gigliobianco received wage income from sing along of dollar_figure and dollar_figure respectively in petitioner michael gigliobianco mr gigliobianco retired from the police force during each of the years and mr gigliobianco received taxable pension distributions totaling dollar_figure during mr gigliobianco also worked as a security guard and received wage income of dollar_figure from m m security inc in mr gigliobianco obtained a private pilot’s license in after he retired from the police force mr gigliobianco obtained a commercial pilot’s license and later that same year he obtained a flight instructor’s license during the period starting in when mr gigliobianco obtained a private pilot’s license until when he obtained a commercial pilot’s license he flew airplanes exclusively for personal purposes after he obtained a commercial pilot’s license in mr gigliobianco generated income as a professional pilot until he retired from flying in in micnic aviation inc micnic in which mr gigliobianco held a 100-percent ownership_interest purchased a mooney m20j airplane mooney micnic financed the purchase of the mooney by borrowing dollar_figure from the putnam county national bank of carmel new york mr gigliobianco both in his personal capacity and as the president of micnic signed the document titled promissory note demand security_agreement relating to that borrowing in ownership of the mooney was transferred to mickes aviation a sole_proprietorship of mr gigliobianco during and mr gigliobianco flew the mooney used the flight instruments with which the mooney was equipped and performed various aerial maneuvers with that aircraft during and mr gigliobianco an independent_contractor worked as a licensed flight instructor for arrow aviation llc arrow arrow operated a flight school near the airport in danbury connecticut and also was in the business of renting airplanes for approximately dollar_figure an hour for use in flight and instrument training as a flight instructor for arrow mr gigliobianco would have been entitled to receive about a percent discount from arrow if he had decided to rent one of its airplanes thus mr gigliobianco could have rented an airplane from arrow for approximately dollar_figure an hour in order for a pilot to maintain a license as a flight instructor during and the federal aviation administration faa required that every other year the pilot take a two-hour flight examination or complete a training course mr gigliobianco chose to renew his flight instructor’s license during by taking a training course for which he paid approximately dollar_figure in order to maintain his position as a flight instructor during and arrow did not require mr gigliobianco to do anything more eg own an airplane or obtain additional flight training when mr gigliobianco gave flight lessons to arrow’s clients that company required him to use an airplane that it owned and insured in return for his services as a flight instructor mr gigliobianco received from arrow compensation of dollar_figure and dollar_figure during and respectively during and mr gigliobianco gave flight lessons exclusively to arrow’s clients and received compensation as a flight instructor only from arrow in p i c inc pic an s_corporation in which mr gigliobianco owned percent of the stock purchased a piper pa44-180 seminole airplane piper for the purpose of operating an airline charter business pic financed the purchase of the piper by borrowing dollar_figure from cornerstone bank in stamford connecticut mr gigliobianco as vice president of pic signed the document titled aircraft loan contract relating to that borrowing pic stopped operating in 2the record does not establish whether pic disposed of the piper after it stopped operating on date and date respectively petitioners filed joint tax returns for their taxable years return and return petitioners included schedule c profit or loss from business for a business identified in that schedule as mickes aviation with each of the return schedule c and the return schedule c petitioners also included schedule e supplemental income and loss with the return schedule e dennis p clark signed petitioners’ return as a paid preparer in the schedule c petitioners reported gross_receipts of dollar_figure and claimed expenses of dollar_figure claimed schedule c expenses the claimed schedule c expenses consisted of the following claimed expenses 3the copy of the return that the parties stipulated into the record in this case is incomplete in that there are certain pages missing from the copy of that return 4the record does not establish whether a paid preparer prepared and signed petitioners’ return expense amount depreciation and sec_179 expense deduction insurance interest repairs and maintenance other total dollar_figure big_number big_number big_number big_number big_number in the schedule e petitioners reported a nonpassive loss of dollar_figure claimed schedule e loss from pic that loss was shown in schedule_k-1 shareholder’s share of income deductions credits etc that mr gigliobianco received from pic for his taxable_year and was equal to percent of the loss of dollar_figure that pic claimed pic loss in form_1120s u s income_tax return for an s_corporation that pic filed for its taxable_year pic’s form_1120s the pic loss was calculated as the difference between the total income of dollar_figure reported and the total deductions of dollar_figure claimed in that form those claimed total deductions consisted of the following deductions that pic claimed in pic’s form_1120s 5as discussed above mr gigliobianco owned percent of the stock of pic deduction amount repairs and maintenance interest depreciation not claimed on schedule a or elsewhere on return other deduction sec_1 total dollar_figure big_number big_number big_number big_number 1the record does not establish the nature of any of the claimed other deductions in the schedule c petitioners reported gross_receipts of dollar_figure and expenses of dollar_figure claimed schedule c expenses the claimed schedule c expenses consisted of the following claimed expenses expense amount advertising car and truck contract labor depreciation and sec_179 expense deduction insurance interest legal and professional services rent or lease dollar_figure big_number big_number big_number big_number big_number repairs and maintenance supplies taxes and licenses travel meals and entertainment other total big_number big_number big_number big_number respondent issued to petitioners a notice_of_deficiency notice with respect to their taxable years and in that notice respondent determined to disallow the claimed schedule c expenses of dollar_figure and the claimed schedule c expenses of dollar_figure respondent also determined in the notice to disallow the claimed schedule e loss of dollar_figure in addition respondent determined in the notice that petitioners are liable for the addition_to_tax under sec_6651 for their taxable_year and for the accuracy-related_penalty under sec_6662 for each of their taxable years and on date petitioners filed a petition commencing this case on date the internal_revenue_service irs issued two separate letters to petitioners with respect to their taxable years and respectively irs letters the letter with respect to petitioners’ taxable_year irs letter stated in pertinent part based on the information you provided we changed your form_1040 to correct your adjustments to income we changed the civil penalty amount that we previously charged as a result you owe dollar_figure that letter also contained the following summary summary account balance before this change decrease in tax decrease in accuracy-related_penalty on underpayments penalty decrease in failure-to-file penalty decrease in interest amount due dollar_figure -dollar_figure -dollar_figure -dollar_figure -dollar_figure dollar_figure the letter with respect to petitioners’ taxable_year irs letter stated in pertinent part based on the information you provided we changed your form_1040 to correct your adjustments to income we changed the civil penalty amount that we previously charged as a result you owe dollar_figure that letter also contained the following summary summary account balance before this change decrease in tax decrease in accuracy-related_penalty on underpayments penalty decrease in interest amount due dollar_figure -dollar_figure -dollar_figure -dollar_figure dollar_figure both the irs letter and the irs letter stated in pertinent part if you agree with the changes we made you don’t need to respond to this notice opinion petitioners bear the burden of establishing that the determinations that remain at issue are erroneous see rule a 290_us_111 moreover deductions are a matter of legislative grace and petitioners bear the burden of proving entitlement to any deduction claimed see 503_us_79 the code and the regulations thereunder required petitioners to maintain records sufficient to establish the amount of any deduction claimed see sec_6001 sec_1_6001-1 income_tax regs at trial petitioners called mr gigliobianco as a witness we found mr gigliobianco’s testimony to be in certain material respects not credible vague self-serving uncorroborated and or contradicted by certain other evidence in the record we shall not rely on the testimony of mr gigliobianco to establish petitioners’ position with respect to each of the issues that remain for decision see eg 87_tc_74 claimed schedule c expenses it is petitioners’ position that they are entitled to deduct under sec_162 the claimed schedule c expenses of dollar_figure and the claimed schedule c expenses of dollar_figure respondent disagrees before turning to petitioners’ position we shall summarize the requirements of sec_162 sec_162 generally allows a deduction for the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business the determination of whether an expenditure satisfies the 6at trial and on brief petitioners also take the position that they are entitled to respective deductions for their taxable years and for depreciation and sec_179 expense in amounts greater than they claimed in the schedule c and the schedule c petitioners presented no reliable evidence and advance no arguments under sec_167 and sec_179 in support of their position that they are entitled to any deductions for and for depreciation and sec_179 expense our discussion below addresses only the respective schedule c deductions for petitioners’ taxable years and to which they claim they are entitled under sec_162 requirements for deductibility under sec_162 is a question of fact see 320_us_467 we shall also summarize the requirements of sec_274 that is because even though petitioners advance no argument under sec_274 certain of the claimed schedule c expenses are subject_to that section ie certain claimed expenses for meals while mr gigliobianco was traveling and for a passenger_automobile for certain expenses otherwise deductible under sec_162 such as expenses for meals while traveling away from home see sec_274 and expenses for a passenger_automobile that is listed_property see sec_280f a taxpayer must also satisfy the substantiation requirements set forth in sec_274 before such expenses will be allowed as deductions as pertinent here in order to satisfy the substantiation requirements in sec_274 the elements that a taxpayer must establish with respect to claimed business_expenses for meals while traveling away from home are the amount of each expenditure except that in the case of claimed business_expenses for meals while traveling away from home the daily cost of the traveler’s own breakfast lunch and dinner may be aggregated the time of each expenditure ie the date of departure and return for each trip away from home and the number of days away from home spent on business the place of each expenditure ie the destination or locality of travel described by name of city or town or other similar designation and the business_purpose of each expenditure ie the business reason for the travel or the nature of the business benefit derived or expected to be derived as a result of the travel see sec_1_274-5t temporary income_tax regs fed reg date as pertinent here in order to satisfy the substantiation requirements in sec_274 the elements that a taxpayer must establish with respect to business_expenses for a passenger_automobile that is listed_property under sec_280f are a the amount of each separate expenditure with respect to the automobile and b the amount of each business use based on mileage the time ie the date of each expenditure or use with respect to the automobile and the business_purpose for each expenditure or use with respect to the automobile see sec_1 5t b temporary income_tax regs fed reg date we address now petitioners’ position that they are entitled to deduct under sec_162 the claimed schedule c expenses and the claimed schedule c expenses in support of that position petitioners rely on the testimony of mr gigliobianco as indicated above we are unwilling to rely on his testimony petitioners also rely on certain documents that the parties stipulated stipulated documents we find those stipulated documents to be deficient in certain material respects in supporting petitioners’ position that they are entitled to deduct under sec_162 the claimed schedule c expenses and the claimed schedule c expenses certain of the stipulated documents are certain invoices or similar documents collectively aircraft documents that show certain expenses with respect to the mooney as well as an unidentified aircraft an illustration of a deficiency in the aircraft documents is that they do not establish whether the amounts shown thereon were paid and if so who paid them certain of the stipulated documents are certain receipts for certain fuel some of which appear to pertain to certain fuel for an automobile or similar vehicle and some of which appear to pertain to certain fuel for an aircraft collectively fuel receipts an illustration of a deficiency in the fuel receipts is that they do not establish the purpose for which the automobile or the aircraft for which the fuel was purchased was used certain of the stipulated documents are certain receipts for certain meals from various restaurants meal receipts an illustration of a deficiency in the meal receipts is that they do not establish the business_purpose for any of those meals on the record before us we are unwilling to rely on the stipulated documents to establish that petitioners are entitled to deduct under sec_162 the claimed schedule c expenses and the claimed schedule c expenses petitioners acknowledge that except for the stipulated documents they have no documentation petitioners’ claimed documentation supporting their position that they are entitled to deduct under sec_162 the claimed schedule c expenses and the claimed schedule c expenses petitioners contend that they do not have petitioners’ claimed documentation because they destroyed that documentation after having received and relied on the irs letters in reliance on that contention petitioners advance the following argument petitioners’ equitable_estoppel argument the respondent now attempts to benefit from its own error in its position that petitioner has failed to meet his burden_of_proof due to a lack of records which were destroyed solely because of the language in respondent’s notices irs letters the respondent should be estopped from taking advantage 7in his opening statement at trial respondent’s counsel stated as follows with respect to the irs letters my understanding is that these irs letters were form letters that were produced as a result of an erroneous assessment and after the agent sent out the statutory_notice_of_deficiency the service inappropriately assessed the deficiencies and when this came to the appeals officer’s attention he put out a request to abate those of its own error as detrimental reliance by the opposing party is at the core of estoppel it is our understanding that petitioners are arguing that they should not be penalized for not having the records that they claim would establish their entitlement to deduct the claimed schedule c expenses and the claimed schedule c expenses because they destroyed petitioners’ claimed documentation after they received and relied on the irs letters we believe that petitioners misunderstand and misapply the doctrine_of equitable_estoppel in any event on the record before us we conclude that the doctrine_of equitable_estoppel does not apply here equitable_estoppel is a judicial doctrine that ‘precludes a party from denying his own acts or representations which induced another to act to his detriment ’ 98_tc_695 quoting 74_tc_743 aff’d 673_f2d_784 5th cir that doctrine is applied against the commissioner of internal revenue commissioner with the utmost caution and restraint 76_tc_209 aff’d 810_f2d_209 d c cir application of the doctrine_of equitable_estoppel requires the establishment of the following a false representation or wrongful misleading silence by the party against whom estoppel is claimed an error in a statement of fact and not in an opinion or statement of law ignorance of the true facts by the taxpayer reasonable reliance by the taxpayer on the acts or statements of the one against whom estoppel is claimed and adverse effects suffered by the taxpayer from the acts or statements of the one against whom estoppel is claimed 120_tc_109 104_tc_13 aff’d 140_f3d_240 4th cir in support of petitioners’ equitable_estoppel argument petitioners rely principally on the testimony of mr gigliobianco we do not believe mr gigliobianco’s testimony that except for the stipulated documents petitioners destroyed all of petitioners’ claimed documentation only because of and after they received the irs letters mr gigliobianco testified that he informed petitioners’ accountant of petitioners’ receipt of the irs letters and that the accountant told him to destroy the records pertaining to the claimed schedule c expenses and the claimed schedule c expenses if petitioners did not hear anything further from the irs within a month or so petitioners did not call as a witness at the trial in this case that accountant nor did petitioners explain why they failed to call their accountant to testify we presume that the testimony of any such accountant of petitioners would not have been favorable to their position see 6_tc_1158 aff’d 162_f2d_513 10th cir it is also significant that although petitioners’ counsel of record had entered an appearance on behalf of petitioners in the instant case before they received the irs letters mr gigliobianco testified that he did not consult that counsel after 9the record does not establish the identity of the individual with whom mr gigliobianco purportedly spoke about petitioners’ receipt of the irs letters or that any such individual is an accountant petitioners received those irs letters and before they contend they destroyed all of petitioners’ claimed documentation except the stipulated documents we are incredulous that mr gigliobianco would not have done so on the record before us we find that petitioners have failed to establish that the doctrine_of equitable_estoppel applies here on the record before us we find that petitioners have failed to carry their burden of establishing that pursuant to sec_162 they paid_or_incurred during their taxable years and respectively any of the claimed schedule c expenses and the claimed schedule c expenses in carrying on mr gigliobianco’s business as a licensed flight instructor assuming arguendo that petitioners had carried their burden of establishing that pursuant to sec_162 they paid_or_incurred during their taxable years and respectively any of the claimed schedule c expenses and the claimed schedule c expenses in carrying on mr gigliobianco’s business as a licensed flight instructor they would nonetheless be required to establish that those expenses are ordinary and necessary expenses within the meaning of sec_162 in carrying on that business we turn first to whether the claimed schedule c expenses and the claimed schedule c expenses are ordinary expenses within the meaning of sec_162 in carrying on mr gigliobianco’s business as a licensed flight instructor in general an expense is ordinary if it is considered normal usual or customary in the context of the particular business out of which it arose see 308_us_488 petitioners argue that the claimed schedule c expenses and the claimed schedule c expenses relating to the mooney10 are ordinary expenses within the meaning of sec_162 in carrying on mr gigliobianco’s business as a licensed flight instructor because a flight instructor would not touch the controls of an airplane while teaching a student to perform maneuvers and it is ordinary usual and customary for that flight instructor to purchase and maintain his own plane in order to maintain proficiency with maneuvers and controls petitioners offered no reliable evidence that it is normal usual or customary for a flight instructor in the business of giving flight lessons as an independent 10because petitioners’ argument that the claimed schedule c expenses and the claimed schedule c expenses are ordinary and necessary expenses under sec_162 focuses only on the expenses relating to the mooney we focus our analysis only on those expenses thus we do not address the respective expenses claimed as part of the claimed schedule c expenses and the claimed schedule c expenses relating to advertising cars and trucks contract labor legal and professional services rent or lease supplies taxes and licenses meals and entertainment and business telephone contractor for a flight school to purchase and maintain an airplane in order to maintain proficiency with maneuvers and controls in order for a pilot to maintain a license as a flight instructor during and the faa required that every other year the pilot take a two-hour flight examination or complete a training course mr gigliobianco testified that he believed that those faa requirements were inadequate and that he should fly hours each year in order to maintain proficiency as a pilot in maneuvering and controlling an airplane petitioners offered no reliable evidence that mr gigliobianco a pilot with more than years of flying experience needed hours of flying time each year in order to maintain proficiency as a pilot in maneuvering and controlling an airplane moreover the record does not establish that during each of the years and mr gigliobianco even met his own 150-hour flying requirement according to certain purported flight logs that mr gigliobianco prepared with respect to the mooney for and mooney purported flight logs he flew that airplane a total of hours during and a total of hours during dollar_figure in addition mr gigliobianco testified that during each of 11although the entries in the mooney purported flight log that mr gigliobianco prepared for are legible with respect to the numbers of hours that mr gigliobianco recorded as flight hours the entries in that log regarding the respective purposes for those flight hours are not legible in certain respects the years and he used the mooney for the exclusive purpose of obtaining the flight hours that he believed he needed in order to stay safe however certain entries in the mooney purported flight logs indicate that during mr gigliobianco made at least trips in the mooney in order to inter alia travel to job interviews assuming arguendo that petitioners had carried their burden of establishing that pursuant to sec_162 they paid_or_incurred during their taxable years and respectively any of the claimed schedule c expenses and the claimed schedule c expenses in carrying on mr gigliobianco’s business as a licensed flight instructor on the record before us we find that petitioners have failed to carry their burden of establishing that any of those expenses are ordinary expenses within the meaning of sec_162 in carrying on that businessdollar_figure we turn now to whether the claimed schedule c expenses and the claimed schedule c expenses are necessary expenses within the meaning of 12furthermore on the record before us we do not believe that it was reasonable for petitioners to have taken the position in each of the return and the return that the claimed schedule c expenses and the claimed schedule c expenses respectively are ordinary expenses within the meaning of sec_162 in carrying on mr gigliobianco’s business as a licensed flight instructor sec_162 in carrying on mr gigliobianco’s business as a licensed flight instructor in general an expense is necessary if it is appropriate and helpful to the operation of the taxpayer’s trade_or_business see 383_us_687 83_tc_356 aff’d 777_f2d_662 11th cir an expense is necessary only to the extent that it is reasonable in relation to its purpose see 77_tc_1124 aff’d without published opinion 9th cir date petitioners argue that the claimed schedule c expenses and the claimed schedule c expenses relating to the mooney are necessary expenses within the meaning of sec_162 in carrying on mr gigliobianco’s business as a licensed flight instructor because mr gigliobianco would not have been able to maintain proficiency as a pilot in maneuvering and controlling an airplane like the mooney if he had not purchased and flown that airplane to gain proficiency with maneuvers and controls petitioners offered no reliable evidence that mr gigliobianco used the mooney during each of the years and in order to maintain proficiency in maneuvering and controlling that and similar airplanes let alone that purchasing and maintaining the mooney was appropriate and helpful during each of the years and to the operation of mr gigliobianco’s business as a licensed flight instructor assuming arguendo that petitioners had carried their burden of establishing that pursuant to sec_162 they paid_or_incurred during their taxable years and respectively any of the claimed schedule c expenses and the claimed schedule c expenses in carrying on mr gigliobianco’s business as a licensed flight instructor on the record before us we find that petitioners have failed to carry their burden of establishing that any of those expenses are necessary expenses within the meaning of sec_162 in carrying on that businessdollar_figure assuming arguendo that petitioners had carried their burden of establishing that pursuant to sec_162 they paid_or_incurred during their taxable years and respectively any of the claimed schedule c expenses and the claimed schedule c expenses in carrying on mr gigliobianco’s business as a licensed flight instructor on the record before us we find that 13furthermore on the record before us we do not believe that it was reasonable for petitioners to have taken the position in each of the return and the return that the claimed schedule c expenses and the claimed schedule c expenses respectively are necessary expenses within the meaning of sec_162 in carrying on mr gigliobianco’s business as a licensed flight instructor petitioners have failed to carry their burden of establishing that any of those expenses are ordinary and necessary expenses within the meaning of sec_162 in carrying on that business based upon our examination of the entire record before us we find that petitioners have failed to carry their burden of establishing that they are entitled to deduct under sec_162 any of the claimed schedule c expenses and the claimed schedule c expenses except for dollar_figure for petitioners’ taxable_year that we have found mr gigliobianco paid during that year to take a training course after which the faa renewed his flight instructor’s license in dollar_figure claimed schedule e loss it is petitioners’ position that they are entitled to deduct the claimed schedule e loss as a flow through loss from pic respondent disagrees petitioners claimed in the schedule e as a nonpassive loss dollar_figure which was equal to mr gigliobianco’s 50-percent share of the pic loss of 14assuming arguendo that we had found that petitioners had carried their burden of establishing their entitlement to deduct under sec_162 the claimed schedule c expenses and the claimed schedule c expenses petitioners would still have to satisfy the requirements of sec_274 with respect to certain of those expenses subject_to that section on the record before us we find that petitioners have failed to carry their burden of establishing that they satisfy those requirements with respect to those expenses dollar_figure shown in pic’s form_1120s the pic loss was calculated as the difference between the total income of dollar_figure reported and the total deductions of dollar_figure claimed in that form petitioners acknowledge that they do not have any documentation of pic supporting their position that pic is entitled to the total deductions of dollar_figure that it claimed in pic’s form_1120s that therefore pic has a loss of dollar_figure as claimed in that form and that accordingly petitioners are entitled to the claimed schedule e loss of dollar_figure in support of their position that they are entitled to the claimed schedule e loss of dollar_figure petitioners advance petitioners’ equitable_estoppel argument which is the same argument that they advance with respect to the claimed schedule c expenses and the claimed schedule c expenses for the same reasons we reject petitioners’ equitable_estoppel argument with respect to those respective claimed schedule c expenses we reject that argument with respect to the claimed schedule e loss assuming arguendo that petitioners had carried their burden of establishing that pic is entitled to the total deductions of dollar_figure and the loss of dollar_figure that it claimed in pic’s form_1120s petitioners would nonetheless have to establish that they are entitled to deduct percent of that loss as they claimed in their schedule e a stockholder of an s_corporation is required to report in the stockholder’s tax_return such stockholder’s pro_rata share of an s corporation’s nonseparately_computed_income_or_loss sec_1366 as pertinent here nonseparately_computed_income_or_loss is defined as gross_income minus the deductions allowed to the corporation sec_1366 an s corporation’s nonseparately computed loss is deductible by a stockholder to the extent of the sum of such stockholder’s adjusted_basis in the stock of the s_corporation and such stockholder’s adjusted_basis in any indebtedness of the s_corporation to such stockholder sec_1366 and b petitioners offered no evidence establishing mr gigliobianco’s adjusted_basis in the stock of pic that he owned during nor have petitioners offered any evidence establishing whether there was any indebtedness of pic to mr gigliobianco during and if so mr gigliobianco’s adjusted_basis in any such indebtedness as a result assuming arguendo that petitioners had carried their burden of establishing that pic is entitled to the total deductions of dollar_figure and the loss of dollar_figure that it claimed in pic’s form_1120s on the record before us we find that petitioners have failed to carry their burden of establishing that the sum of mr gigliobianco’s adjusted_basis in the stock of pic that he owned during and his adjusted_basis in any indebtedness of pic to him during equals at least dollar_figure the share of the pic loss that petitioners claimed in the schedule e based upon our examination of the entire record before us we find that petitioners have failed to carry their burden of establishing that they are entitled to deduct the claimed schedule e loss addition_to_tax under sec_6651 in the case of a failure_to_file a tax_return on the date prescribed for filing sec_6651 imposes an addition_to_tax equal to percent of the amount required to be shown in the return with an additional percent to be added for each month or partial month during which such failure continues not to exceed percent in the aggregate the addition_to_tax under sec_6651 does not apply if it is shown that the failure_to_file was due to reasonable_cause and not due to willful neglect in order to prove reasonable_cause the taxpayer must show that despite the exercise of ordinary business care and prudence he or she was nevertheless unable to file the return within the prescribed time 92_tc_899 the commissioner bears the burden of production with respect to any penalty or addition_to_tax see sec_7491 116_tc_438 to satisfy the commissioner’s burden of production the commissioner must come forward with sufficient evidence indicating that it is appropriate to impose the penalty or addition_to_tax higbee v commissioner t c pincite although the commissioner bears the burden of production with respect to any penalty or addition_to_tax the commissioner need not introduce evidence regarding reasonable_cause or similar provisions the taxpayer bears the burden_of_proof with regard to those issues id pincite generally the date on which an individual is required to file a tax_return is april following the close of the calendar_year to which the return relates sec_6072 a taxpayer may request an automatic_extension of time to file an individual tax_return by filing on or before april following the close of the calendar_year to which it relates form_4868 application_for automatic_extension of time to file u s individual_income_tax_return form see sec_1_6081-4t temporary income_tax regs fed reg date the parties stipulated that petitioners filed their return on date after the due_date of date the record does not establish that petitioners filed form_4868 on or before date on the record before us we find that respondent has satisfied respondent’s burden of production under sec_7491 with respect to the addition_to_tax under sec_6651 that respondent determined in the notice petitioners argue that they relied on their accountant to prepare their return and that therefore they should not be liable for the addition_to_tax under sec_6651 that respondent determined in the notice it is well established that the failure to make a timely filing of a tax_return is not excused by the taxpayer’s reliance on an agent and such reliance is not ‘reasonable cause’ for a late filing under sec_6651 469_us_241 on the record before us we find that petitioners have failed to carry their burden of establishing that their failure_to_file timely their return was due to reasonable_cause and not due to willful neglect based upon our examination of the entire record before us we find that petitioners have failed to carry their burden of establishing that they are not liable for their taxable_year for the addition_to_tax under sec_6651 15although petitioners’ return was signed by a paid preparer named dennis p clark the record does not establish that he is an accountant accuracy-related_penalty under sec_6662 sec_6662 imposes an accuracy-related_penalty of percent of the underpayment to which sec_6662 applies sec_6662 applies to the portion of any underpayment which is attributable to inter alia negligence or disregard of rules or regulations sec_6662 or a substantial_understatement of tax sec_6662 the term negligence in sec_6662 includes any failure to make a reasonable attempt to comply with the code sec_6662 negligence has also been defined as a failure to do what a reasonable person would do under the circumstances 963_f2d_907 6th cir aff’g tcmemo_1991_179 91_tc_686 aff’d 893_f2d_656 4th cir the term negligence also includes any failure by the taxpayer to keep adequate books_and_records or to substantiate items properly sec_1_6662-3 income_tax regs the term disregard includes any careless reckless or intentional disregard sec_6662 for purposes of sec_6662 an understatement is equal to the excess of the amount of tax required to be shown in the tax_return over the amount of tax shown in the return sec_6662 an understatement is substantial in the case of an individual if the amount of the understatement for the taxable_year exceeds the greater of percent of the tax required to be shown in the tax_return for that year or dollar_figure sec_6662 the accuracy-related_penalty under sec_6662 does not apply to any portion of an underpayment if it is shown that there was reasonable_cause for and that the taxpayer acted in good_faith with respect to such portion sec_6664 the determination of whether the taxpayer acted with reasonable_cause and in good_faith depends on all the pertinent facts and circumstances including the taxpayer’s efforts to assess the taxpayer’s proper tax_liability the knowledge and experience of the taxpayer and the reliance on the advice of a professional such as an accountant sec_1_6664-4 income_tax regs reliance on the advice of a professional may demonstrate reasonable_cause and good_faith if under all the circumstances such reliance was reasonable and the taxpayer acted in good_faith id in this connection a taxpayer must demonstrate that the taxpayer’s reliance on the advice of a professional concerning substantive tax law was objectively reasonable 39_f3d_402 2d cir aff’g tcmemo_1993_480 a taxpayer’s reliance on the advice of a professional will be objectively reasonable only if the taxpayer has provided necessary and accurate information to the professional 115_tc_43 aff’d 299_f3d_221 3d cir see also 70_tc_158 respondent argues that petitioners are liable for the accuracy-related_penalty under sec_6662 because of a substantial_understatement of tax under sec_6662 and petitioners’ negligence or disregard of rules or regulations under sec_6662 on the record before us we find that respondent has satisfied respondent’s burden of production under sec_7491 with respect to the accuracy-related_penalty under sec_6662dollar_figure it is petitioners’ position that under sec_6664 they had reasonable_cause for and acted in good_faith with respect to the respective underpayments for their taxable years and because they relied on the advice of their accountant in preparing their tax returns for those yearsdollar_figure petitioners offered no evidence regarding what if any information they gave their accountant to assist 16for example as discussed above on the record before us we do not believe that it was reasonable for petitioners to have taken the position in each of the return and the return that the claimed schedule c expenses and the claimed schedule c expenses respectively are ordinary and necessary expenses within the meaning of sec_162 in carrying on mr gigliobianco’s business as a licensed flight instructor 17the record does not establish that an accountant or any other paid preparer prepared petitioners’ return see supra note that accountant in preparing their return and their return see goldman v commissioner f 3d pincite in addition petitioners failed to offer any evidence regarding what if any advice their accountant gave them see neonatology assocs p a v commissioner t c pincite it is also significant that petitioners did not call as a witness at the trial in this case their accountant nor did petitioners explain why they failed to call their accountant to testify we presume that the testimony of petitioners’ accountant would not have been favorable to their position see wichita terminal elevator co v commissioner t c pincite on the record before us we find that petitioners have failed to carry their burden of establishing that there was reasonable_cause for and that they acted in good_faith with respect to the respective underpayments for their taxable years and based upon our examination of the entire record before us we find that petitioners have failed to carry their burden of establishing that they are not liable for each of their taxable years and for the accuracy-related_penalty under sec_6662 we have considered all of the contentions and arguments of the parties that are not discussed herein and we find them to be without merit irrelevant and or moot to reflect the foregoing and a concession of respondent decision will be entered under rule


department of the treasury internal_revenue_service washington d c march number release date uil no cam-111607-98 memorandum for district_director michigan district attn chief examination_division from senior technician reviewer cc dom fi p subject legend taxpayer withdrawal of form_3115 application_for change in accounting_method cam-111607-98 cam-111608-98 taxpayer parent this is to notify you in accordance with a of revproc_2000_1 2000_1_irb_4 that taxpayer and taxpayer referred to collectively as taxpayers have withdrawn their applications for a change in accounting_method any legal analysis and conclusions contained herein are not binding upon examination or appeals this document is not to be cited as precedent taxpayers are members of an affiliated_group that files a consolidated_return parent is the parent_corporation of the affiliated_group taxpayers requested effective for the taxable_year ended date to change their method_of_accounting for premiums billed in advance of policy inception advance premiums on business written by taxpayer and reinsured by taxpayer taxpayers have informed us that as a result of td 2000_4_irb_365 promulgating final regulations under sec_832 of the internal_revenue_code they have decided to withdraw their applications for a change in accounting_method td provides an automatic change procedure for advance premiums for the taxable_year ending date cam-111607-98 taxpayers have represented that their methods_of_accounting for determining premiums were not issue s under consideration within the meaning of section dollar_figure of revproc_99_49 as of date under this representation if taxpayers change their accounting_method for advance premiums as provided in sec_1 a ii of the income_tax regulations the service will not except as provided in dollar_figure of revproc_99_49 1999_52_irb_725 or in the appendix of revproc_99_49 require taxpayers to change their method_of_accounting for this item for a taxable_year prior to the year_of_change please direct your questions concerning this matter to branch s donald j drees jr cc


department of the treasury internal_revenue_service washington d c date number release date cc intl br1 wta-n-109280-99 uilc internal_revenue_service national_office field_service_advice memorandum for from subject m grace fleeman assistant to the branch chief cc intl br1 this field_service_advice responds to your memorandum dated date field_service_advice is not binding on examination or appeals and is not a final case determination this document is not to be used or cited as precedent legend taxpayer year a year b year c year d date e issue are the survivor benefits that taxpayer received from the u s government after she renounced her u s citizenship on date e exempt from u s federal_income_tax under the u s -german income_tax treaty1 atreaty conclusion assuming taxpayer is a resident of germany and that her loss of u s citizenship did not have a tax_avoidance purpose we think the best reading of the treaty is that taxpayer s survivor benefits are exempt from u s federal_income_tax after date e facts taxpayer was born in germany in year a she lived in the united_states during years b through c during which time she became a naturalized u s citizen taxpayer formally renounced her u s citizenship in year d on date e before a u s consular officer in germany at that time she stated she was a resident of germany on an attachment to taxpayer s form_1040 for year d taxpayer stated that she was not present in the united_states for any days during year d or during the two immediately preceding years taxpayer s home address on her form_1040 for year d is a german address during year d taxpayer received monthly survivor benefit payments from the u s government federal_income_tax was withheld from those payments on taxpayer s form_1040 for year d she took the position that the survivor benefits she received after date e were exempt from u s tax pursuant to article of the treaty law and analysis paragraph of article pensions annuities alimony and child_support of the treaty provides convention between the united_states of america and the federal republic of german for the avoidance of double_taxation and the prevention of fiscal evasion with respect to taxes on income and capital and certain other taxes signed on date and entered into force on date reprinted in tax_treaties cch subject_to the provisions of article government service social_security pensions and other similar remuneration derived and beneficially owned by a resident of a contracting state in consideration of past employment shall be taxable only in that state paragraph a of article provides wages salaries and similar compensation and pensions paid_by the united_states or by its states or political subdivisions to a natural_person other than a german national shall be exempt from tax by the federal republic of germany it appears the survivor benefits that taxpayer received from the u s government during year d constitute a apension that is covered by article a however article a addresses only germany s right to tax the pension germany can tax the pension as long as taxpayer is a german national although one could infer that the united_states should be able to tax the pension under its domestic law article a does not include such a provision we think the best reading of the treaty is that the united_states right to tax taxpayer s survivor benefits is governed by article the provisions of article are subject_to the provisions of article where there is no applicable_provision in article it appears that article should apply under article pensions derived and beneficially owned by a resident of germany are taxable only in germany accordingly assuming taxpayer is a resident of germany her survivor benefits are not taxable by the united_states after date e if taxpayer s loss of u s citizenship had as one of its principal purposes the avoidance of income_tax the asaving clause in paragraph a of the protocol to the treaty would allow the united_states to continue to tax taxpayer s survivor benefits for ten years after date e however there is nothing in the facts provided to us that suggests the saving clause would be applicable after date e case development hazards and other consideration sec_5 if you have any further questions please call the branch telephone number m grace fleeman assistant to the branch chief cc intl br1


internal_revenue_service number release date index number ---------------------------- ------------------------------ ------------------------------------------------- ---------------------------------- in re ---------------------------------- ------------------ ----------------------------- department of the treasury washington dc person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc corp - plr-115645-04 date date ----------------- ----------------------------- ------------------------------------ legend distributing ----------------------------------------------------------------------------- ---------------------------------------------------------------------- controlled ----------------------------------------------------------------------------- ---------------------------------------------------------------------- individual a individual b individual c business x ----------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------- business y ----------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------- asset z ---------- ----------------------------------------------------------------------------------------------------- - dear ------------ ----------------------------------------------------------------------- ----------------------------------------------------------------------- ------------------ ------------------ this is in response to a letter dated date submitted on behalf of plr-115645-04 distributing requesting rulings under sec_355 and sec_368 of the internal_revenue_code the code with respect to a proposed transaction additional information was received in letters received date date date and date the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalties 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 in particular this office has made no determination regarding whether the transaction satisfies the business_purpose requirement of sec_1_355-2 of the income_tax regulations whether the transaction 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 of the internal_revenue_code and sec_1_355-2 or whether the transaction 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 50-percent_or_greater_interest in the distributing_corporation or the controlled_corporation see sec_355 and sec_1_355-7t distributing is a calendar_year corporation engaged in business x and y distributing does not join in the filing of a consolidated federal_income_tax return distributing has supplied information indicating that business x and y has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years distributing's stock is owned by individual a and by trusts for the benefit of individual a individual b individual c collectively the withdrawing shareholders and other shareholders transactions is proposed of which step has already been completed y assets in exchange for all of the shares of controlled stock stock in exchange for all of their distributing stock distributing will sell to one or more of the withdrawing shareholders or their assigns buyers asset z an asset related to but not an essential part of business y no indebtedness has been or will be canceled in connection with the transaction controlled is not assuming liabilities within the meaning of sec_357 in the transaction distributing will distribute to the withdrawing shareholders all of its controlled distributing will form controlled and will contribute to controlled the business for what is represented to be a valid business_purpose the following series of d the five years of financial information submitted on behalf of distributing and distributing has made the following representations with respect to the a the fair_market_value of the controlled stock and other consideration to be c the five years of financial information submitted on behalf of distributing is b no part of the consideration to be distributed by distributing will be received plr-115645-04 distribution received by each shareholder of distributing will be approximately equal to the fair_market_value of the distributing stock surrendered by the shareholder in the exchange by a shareholder as a creditor employee or in any capacity other than that as a shareholder of distributing representative of the corporation’s present operation and with regard to such corporation there have been no substantial operational changes since the date of the last financial statements submitted then controlled is representative of the latter corporation’s present operation and with regard to such corporation there have been no substantial operational changes since the date of the last financial statements submitted independently and with its separate employees the active_conduct of its share of all the integrated activities of the business conducted by distributing prior to consummation of the transaction out for the following corporate business_purpose resolution of management and shareholder discord the distribution of the stock or stock and securities of controlled is motivated in whole or substantial part by this corporate business_purpose earnings_and_profits of distributing or controlled or both payment of its payables in anticipation of the transaction time of or immediately subsequent to the distribution of the controlled stock distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length g the transaction is not used principally as a device for the distribution of the f the distribution of the stock or stock and securities of controlled is carried i no inter-corporate debt will exist between distributing and controlled at the e following the transaction distributing and controlled will each continue h distributing neither accumulated its receivables nor made extraordinary j payments made in connection with all continuing transactions if any between n buyers do not plan or intend to contribute asset z to controlled l there is no acquisition of distributing or controlled stock including any o neither distributing nor controlled will provide funds to buyers to enable k no two parties to the transaction are investment companies as defined in m the distribution of stock will not be a disqualified_distribution as defined in plr-115645-04 sec_368 and iv predecessor or successor of any such corporation that is part of a plan or series of related transactions with the meaning of sec_1_355-7t that includes the distribution of controlled stock sec_355 because immediately after the distribution of stock i no person determined after applying sec_355 will hold disqualified_stock defined in sec_355 in distributing that will constitute a percent or greater interest defined in sec_355 in distributing and ii no person determined after applying sec_355 will hold disqualified_stock defined in sec_355 in controlled that will constitute a percent or greater interest defined in sec_355 in controlled buyers to purchase asset z based solely on the information submitted and the representations made we have concluded that the controlled stock followed by the distribution of all the controlled stock to the withdrawing shareholders will constitute a reorganization within the meaning of sec_368 of the code distributing and controlled will each be a_party_to_a_reorganization within the meaning of sec_368 of the code controlled in exchange for all of the controlled stock sec_361 stock sec_361 exchange for all the shares of controlled sec_1032 controlled’s basis in the distributing assets received by controlled in the transaction will be the same as the basis of such assets in the hands of distributing immediately prior to the transaction sec_362 distributing will recognize no gain_or_loss on the distribution of the controlled the transfer by distributing of the business y assets in exchange for all of distributing will recognize no gain_or_loss upon the transfer of assets to controlled will recognize no gain_or_loss on the receipt of the assets in the withdrawing shareholders will recognize no gain_or_loss and no amount the holding_period of the controlled stock to be received by the withdrawing the basis of the controlled stock in the hands of the withdrawing controlled’s holding_period of the distributing assets received by controlled plr-115645-04 in the transaction will include the period during which such assets were held by distributing sec_1223 will be included in the income of the withdrawing shareholders upon the receipt of controlled stock in exchange for their distributing stock sec_355 shareholders will in each instance be the same as the basis of the distributing stock held immediately before the exchange by each such shareholder sec_358 shareholders will in each instance include the period of the distributing stock surrendered in the exchange provided that such stock is held as a capital_asset by each such shareholder on the day of the exchange sec_1223 under other provisions of the code or regulations or the tax treatment of any conditions existing at the time of or effects resulting from the proposed transactions that are not specifically covered by the above rulings in particular no opinion is expressed regarding sec_1_355-2 the earnings_and_profits of distributing or controlled or both and or series of related transactions under sec_355 the code provides that it may not be used or cited as precedent letter is being sent to distributing ii whether the transaction is used principally as a device for the distribution of in accordance with the power_of_attorney on file with this office a copy of this no opinion is expressed about the tax treatment of the proposed transactions iii whether the distribution and an acquisition or acquisitions are part of a plan this ruling is directed only to the taxpayer s requesting it sec_6110 of i whether the distribution satisfies the business_purpose requirement of it is important that a copy of this letter be attached to the federal_income_tax plr-115645-04 returns of the taxpayers involved for the taxable_year in which the transaction covered by this letter is consummated cc sincerely yours ____________________________________ victor penico senior counsel branch office of associate chief_counsel corporate


number release date id office uilc cca-111213-08 ------------------ from ------------------- sent pm to ----------------- cc ---------------------------- subject ------ i looked at the partnership rules--only the activity of a partnership--ie production activity- ok--interesting -and assets of a partnership are attributed to a partner in determining the partner's_distributive_share of partnership income--so that would just be the cost plus -- amount you mentioned so partnership assets would not otherwise be attributed even if the taxpayer were to be considered to be a manufacturer under these new sub f principles thanks--i will get back to you


t c memo united_states tax_court charles o yambo petitioner v commissioner of internal revenue respondent docket no 29926-15l filed date charles o yambo pro_se jeffrey e gold han huang and shari a salu for respondent memorandum opinion lauber judge in this collection_due_process cdp case petitioner seeks review pursuant to sec_6320 and sec_6330 of the determination by the internal_revenue_service irs or respondent to uphold the filing of a notice of federal_tax_lien nftl respondent has moved for summary_judgment under rule contending that there are no disputed issues of material fact and that his determination to sustain the proposed collection action was proper as a matter of law we agree and accordingly will grant the motion background the following facts are based on the parties’ pleadings and respondent’s motion including the attached affidavit and exhibits petitioner resided in mary- land when he filed his petition petitioner and his spouse filed delinquent joint federal_income_tax returns for and but did not pay the tax shown as due the irs subse- quently assessed the tax for all three years plus applicable additions to tax under sec_6651 and and a petitioner made several payments toward his tax_liabilities however after the irs applied these payments and overpay- ment credits from other years a balance due remained for each year in question 1all statutory references are to the internal_revenue_code in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure we round all monetary amounts to the nearest dollar 2the irs issued separate notices of determination to petitioner and his wife this case concerns only mr yambo’s tax_liabilities in an effort to collect these unpaid liabilities the irs sent petitioner a no- tice of federal_tax_lien filing and your right to a hearing and he timely re- quested a cdp hearing in his request he stated i will need to refinance the house to pay the outstanding taxes he sought a collection alternative in the form of an installment_agreement and requested subordination of the tax_lien he did not indicate an intention to challenge his underlying tax_liability for any year in question upon receiving petitioner’s case a settlement officer so from the irs ap- peals office reviewed his administrative file and confirmed that the tax_liabilities in question had been properly assessed and that all other requirements of appli- cable law and administrative procedure had been met on date the so sent petitioner a letter scheduling a telephone cdp hearing for date she reminded him that in order for her to consider his request for an in- stallment agreement he needed to submit form 433-a collection information statement for wage earners and self-employed individuals form 433-d install- sec_6751 provides that n o penalty under this title shall be assessed unless the initial determination of such assessment receives supervisory approval this provision does not apply to any addition_to_tax under sec_6651 sec_6654 or sec_6655 sec_6751 accordingly the so was not required to verify that the additions to tax assessed against petitioner under sec_6651 and sec_6654 had been approved by a supervisor ment agreement and copies of signed tax returns for and petitioner had previously been advised of the need to supply financial information by the irs letter confirming receipt of his hearing request the so asked that pe- titioner supply the two forms within days of her letter and the signed tax returns within days of her letter petitioner provided none of the requested documentation before the cdp hearing on date petitioner asked that the hearing be rescheduled and the so granted that request on date petitioner participated in the re- scheduled cdp hearing the so noted that he had not submitted any of the re- quired financial information and asked whether he had filed his delinquent and tax returns he replied that he was trying to get funds together to pay hi sec_2014 liability and after paying that liability would request an installment agree- ment petitioner asked that his case be left open for an additional days but the so advised him that she would not able to do this petitioner did not raise during the hearing any challenge to his underlying tax_liability for any year in question because petitioner failed to submit the required financial information and did not supply copies of executed returns for and the so determined that he was not eligible for a collection alternative she accordingly closed the case and on date issued a notice_of_determination concerning collection action sustaining the nftl filing on date petitioner timely petitioned this court for review in his petition he stated i misunderstood the advice of the settlement officer after informing her that i was going to pay my tax and then establish another con- ference to establish my eligibility he stated that he had taken out a home equity loan and paid the irs a total of dollar_figure in taxes for the three years in question on date respondent filed a motion for summary_judgment to which we directed petitioner to respond our order informed him that if he dis- agreed with any facts stated in the irs motion he should point out those factual disputes we also informed him that failure to respond to our order would be grounds for granting respondent’s motion and entering a decision against him he did not respond to this court’s order and has not otherwise responded to the irs motion for summary_judgment a summary_judgment discussion the purpose of summary_judgment is to expedite litigation and avoid cost- ly time-consuming and unnecessary trials fla peach corp v commissioner 90_tc_678 under rule b the court may grant summary_judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law 98_tc_518 aff’d 17_f3d_965 7th cir in deciding whether to grant summary_judgment we construe factual materials and inferences drawn from them in the light most favorable to the nonmoving party ibid however the nonmoving party may not rest upon the mere allegations or denials of his pleadings but instead must set forth specific facts showing that there is a genuine dispute for trial rule d see sundstrand corp t c pincite because petitioner did not respond to the motion for summary_judgment we could enter decision against him for that reason alone see rule d we will nevertheless consider the motion on its merits we conclude that no material facts are in dispute and that this case is appropriate for summary adjudication b standard of review neither sec_6320 nor sec_6330 prescribes the standard of review that this court should apply in reviewing an irs administrative determina- tion in a cdp case where as here there is no challenge to the amounts of a tax- payer’s underlying tax_liabilities the court reviews the irs determination for 4petitioner did not challenge his underlying tax_liabilities during the cdp hearing or in his petition to this court he is thus precluded from challenging continued abuse_of_discretion 114_tc_176 abuse_of_discretion exists when a determination is arbitrary capricious or without sound basis in fact or law see 125_tc_301 aff’d 469_f3d_27 1st cir c analysis the only question is whether the irs properly sustained the nftl filing to facilitate collection of petitioner’s unpaid and tax_liabilities we review the record to determine whether the so properly verified that the re- quirements of applicable law or administrative procedure have been met con- sidered any relevant issues petitioner raised and considered whether any pro- posed collection action balances the need for the efficient collection_of_taxes with the legitimate concern of petitioner that any collection action be no more intrusive than necessary see sec_6330 as to the first point this court has authority to review an so’s satisfaction of the verification requirement regardless of whether the taxpayer raised that issue continued those liabilities here see rule b any issue not raised in the assign- ments of error shall be deemed to be conceded 140_tc_173 a taxpayer is precluded from disputing the underlying liability if it was not properly raised in the cdp hearing sec_301_6330-1 q a-f3 proced admin regs at the cdp hearing see 131_tc_197 however petitioner did not allege in his petition that the so failed to satisfy the verification requirement that issue is therefore deemed conceded see rule b any issue not raised in the assignments of error shall be deemed to be conceded triola v commissioner tcmemo_2014_166 108_tcm_185 dinino v commissioner tcmemo_2009_284 in any event even if petitioner had properly preserved this issue he has set forth no facts suggesting that any of the assessments was improper at his cdp hearing petitioner was entitled to make offers of collection al- ternatives such as an installment_agreement or lien subordination see sec_6330 and sec_301_6320-1 q a-e6 proced admin regs this right however carries with it certain obligations on the taxpayer’s part as provided in the regulations t axpayers will be expected to provide all relevant information requested by the appeals officer including financial statements for her consideration of the facts and issues involved in the hearing sec_301_6330-1 proced admin regs in his cdp hearing request petitioner expressed interest in an installment_agreement and lien subordination with respect to the former the irs told him on three separate occasions that if he desired consideration of a collection alterna- tive he needed to supply completed forms supporting financial information and copies of signed tax returns for and he did not submit any of these documents and did not in fact propose an installment_agreement with respect to lien subordination petitioner stated in his cdp hearing re- quest that he would need to refinance the house to pay the outstanding taxes petitioner apparently had taken out one home equity loan already and had used the dollar_figure proceeds from this loan to make payments toward his and tax_liabilities the so confirmed that he had made these payments but de- termined that he still had a balance due for each year petitioner evidently sought to have the tax_lien subordinated in order to facilitate his securing another home equity loan that would enable him to pay these outstanding balances sec_6325 allows the irs to subordinate a federal_tax_lien if it con- cludes among other things that the amount realizable by the united_states will ultimately be increased and that the ultimate collection of the tax liabil- ity will be facilitated by such subordination the internal_revenue_manual irm instructs settlement officers that the service must exercise good judgment in weighing the risks and deciding whether to subordinate the federal_tax_lien irm pt date see 136_tc_178 a settlement officer has discretion to subordinate a lien but only if she determines that it is in the best interest of the government irm pt date although petitioner indicated his desire to have the lien subordinated he did not provide the so with any financial or other information that would justify granting his request because lien subordination is a collection alternative sec_301_6320-1 q a-e6 proced admin regs petitioner was required to provide the so relevant information for her to consider in determining whether lien subordination was warranted under the irm guidelines he did not do so the so gave petitioner ample time to submit the required_documentation cf szekely v commissioner tcmemo_2013_227 106_tcm_375 the so initially asked him to provide the form 433-a and form 433-d within days and the signed tax returns within days he did not supply any documents on or before october the date of the rescheduled cdp hearing the so waited another days before closing the case on november petitioner asked the so to keep his case open for an additional days but he offered no excuse for neglecting to supply the information we have consistently held that it is not an abuse_of_discretion for an ap- peals officer to reject collection alternatives and sustain the proposed collection action where the taxpayer has failed after being given sufficient opportunities to supply the so with the required forms and supporting financial information see huntress v commissioner tcmemo_2009_161 prater v commissioner tcmemo_2007_241 roman v commissioner tcmemo_2004_20 we have likewise held that it is not an abuse_of_discretion for an appeals officer to reject a collection alternative where the taxpayer is not in compliance with his ongoing tax obligations as petitioner was not for hi sec_2013 and sec_2014 tax years see hull v commissioner tcmemo_2015_86 109_tcm_1438 irm pt date we will accordingly grant summary_judgment for respondent and affirm the proposed collection action as to all tax years we note that petitioner is free to submit to the irs at any time for its consideration and possible acceptance a request for an installment_agreement supported by the nec- essary financial information to reflect the foregoing an appropriate order and decision will be entered