Court Opinion

ID: 621256
Source: CourtListenerOpinion
Date Created: 2012-01-20 22:40:02+00
Date Added: 2024-06-11T17:50:55.889748
License: Public Domain

FILED
                                                          United States Court of Appeals
                                                                  Tenth Circuit

                                                               January 20, 2012
                    UNITED STATES COURT OF APPEALS
                                                 Elisabeth A. Shumaker
                                                                  Clerk of Court
                                 TENTH CIRCUIT

 PAUL DOUGLAS MOREDOCK and
 CANDACE LOUISE MOREDOCK,
                                                        No. 11-9015
               Petitioners - Appellants,
          v.                                     (United States Tax Court)
 COMMISSIONER OF INTERNAL                        (Tax Court No. 10704-09)
 REVENUE,

               Respondent - Appellee.

                            ORDER AND JUDGMENT *

Before LUCERO, ANDERSON, and GORSUCH, Circuit Judges.

      After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist in the determination

of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

      *
       This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
         Plaintiffs and appellants, Paul Douglas Moredock and Candace Louise

Moredock, appeal an adverse determination by the Tax Court, upholding the

decision by the Commissioner of Internal Revenue (“Commissioner”) that the

Moredocks were liable for income tax deficiencies and a penalty. For the

following reasons, we affirm.

                                  BACKGROUND

         We begin by noting that this is not the first time the Moredocks have been

involved in litigation. Mr. Moredock was formerly an Asylum Officer with the

Immigration and Naturalization Service (“INS”). His employment there was

contentious, and he ultimately left the INS, settling an adverse employment action

claim against the INS by means of a written settlement agreement. Mr. Moredock

subsequently believed the INS settlement was not properly funded (he challenged

the tax treatment of the settlement proceeds), so he filed a petition with the Merit

Systems Protection Board seeking enforcement of the settlement agreement in the

way he believed was appropriate. The Board ruled against Mr. Moredock, who

then appealed to the Federal Circuit. It also rejected his claims, finding them all

to be “without merit.” Moredock v. DOJ, 2003 WL 26098542 (Fed. Cir. Jan. 10,

2003).

         The Moredocks have also been involved in three prior tax litigations. The

Moredocks filed a petition relating to a deficiency the Commissioner had

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determined for the tax year 2000. That case was ultimately settled. There was

also a petition relating to the tax year 2006, which was dismissed for lack of

jurisdiction. Finally, there was a petition relating to the tax year 1989, with Tax

Court case number 6556-89, which appears unrelated to the instant case. 1

      With respect to the instant case, the Moredocks filed Form 1040 federal

income tax returns for the years 2006 and 2007, in which they claimed various

amounts of income or loss, including fuel tax credits of $142 in 2006 and $171 in

2007, and “other credits” of $10,789 in 2006. They did not cite any credit

recognized by the Internal Revenue Code (“IRC”) as the basis for the “other

credits” claimed. Rather, they claimed they could credit “refunds withheld” for

the years 2001, 2004 and 2005 (and amounts of OASDI (Social Security) and

Medicare taxes attributable to the year 2000), against their tax liability for 2006.

      After an audit, the Commissioner determined that the Moredocks owed

income tax deficiencies of $10,279 for 2006 and $22,218 for 2007, as well as a

failure-to-timely-file penalty of $5,551 for 2007. 2 The Moredocks appealed that

determination to the Tax Court, which agreed with the Commissioner’s

assessments, stating, in part, as follows:

      1
       Neither the briefs nor the record provide much specific information about
these earlier tax cases.
      2
       The Moredocks did not file their 2007 return until September 8, 2008,
several months after the April 15, 2008 deadline.

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              During the trial, the Court struggled to follow the logic of
      petitioners’ argument. The Court believed that petitioners would
      address the adjustments determined in the notices of deficiency. As
      to those matters, however, petitioners had nothing to say. They
      focused their efforts on their position that the INS had over-withheld
      or continues to over-withhold employment taxes on payments under
      the life annuity . . . and on the culpability of the IRS in permitting
      that over-withholding to take place. It is now apparent that that is
      what they conceive this proceeding to be about. It was the focus of
      their petition . . . . It was the focus of their pretrial memorandum.
      . . . Finally, it was the focus of argument at trial. However, that
      matter does not bear any connection to any of the adjustments
      determined in the notices of deficiency.

             At trial petitioners did not specifically address any of the
      adjustments determined by respondent in the notices of deficiency for
      2006 and 2007, including respondent’s determination that petitioners
      are liable for the failure-to-file penalty for taxable year 2007. Based
      upon the record of this case, the adjustments determined by
      respondent in the notices of deficiency must be sustained.

Decision at 20-21, R. Vol. I (emphasis added). This appeal from the Tax Court’s

decision followed.

                                   DISCUSSION

      We review the decision of the Tax Court “in the same manner and to the

same extent as decisions of the district courts in civil actions tried without a

jury.” 26 U.S.C. § 7482(a)(1). Accordingly, we review factual questions for

clear error and legal questions de novo. Cox v. Comm’r, 514 F.3d 1119, 1123

(10th Cir. 2008); Olpin v. Comm’r, 270 F.3d 1297, 1298 (10th Cir. 2001);

Schelble v. Comm’r, 130 F.3d 1388, 1391 (10th Cir. 1997). The Tax Court’s

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evidentiary and sanctions determinations are reviewed for abuse of discretion.

Arnett v. Comm’r, 242 Fed. Appx. 496, 497 (10th Cir. 2007). As a general rule,

the Commissioner’s determinations are presumed correct, and the taxpayer bears

the burden of proving that those determinations are erroneous. See INDOPCO v.

Comm’r, 503 U.S. 79, 84 (1992).

      Furthermore, deductions are a matter of legislative grace, and the taxpayer

bears the burden of proving the entitlement to any deduction claimed. Id. (citing

Interstate Transit Lines v. Comm’r, 319 U.S. 590, 593 (1943)). Additionally, the

Tax Court is not bound to accept as true the unverified and undocumented

testimony of a taxpayer. Hradesky v. Comm’r, 65 T.C. 87, 90 (1975), aff’d, 540

F.2d 821 (5th Cir. 1976). And, as the Tax Court here observed, a taxpayer’s

failure to introduce documentary evidence which is within his possession or

control and which he implies would be favorable to him, gives rise to the

presumption that, if it was produced, it would be unfavorable to the taxpayer.

Recklitis v. Comm’r, 91 T.C. 874, 890 (1988).

      The Tax Court did not find any part of its brief decision to be difficult or

doubtful. It applied the general principles, as stated above, to the Moredocks’

case, and found that the Moredocks’ claims were either unfounded or based on

principles of law not recognized by our legal system. After carefully reviewing

the Moredocks’ brief and the record, we agree with the Tax Court that they have

presented no persuasive argument for reversing the Tax Court’s decision, or the

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arguments they have presented on appeal have been waived because they failed to

argue them below. We accordingly affirm the Tax Court’s decision, for

substantially the reasons stated in that decision.

                                   CONCLUSION

      For the foregoing reasons, we AFFIRM the decision of the Tax Court.

                                                ENTERED FOR THE COURT

                                                Stephen H. Anderson
                                                Circuit Judge

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