Court Opinion

ID: 4336843
Source: CourtListenerOpinion
Date Created: 2018-11-14 03:02:25.614455+00
Date Added: 2024-06-11T14:47:11.307737
License: Public Domain

T.C. Memo. 2007-348

                         UNITED STATES TAX COURT

                     CHARLES R. CUTLER, Petitioner v.
              COMMISSIONER OF INTERNAL REVENUE, Respondent

        Docket No. 7590-02.             Filed November 26, 2007.

        Charles R. Cutler, pro se.

        Scott T. Welch, for respondent.

                            MEMORANDUM OPINION

        HAINES, Judge:    This case is before the Court on

respondent’s motion for summary judgment filed pursuant to Rule

121.1       Respondent argues that the factual allegations deemed

        1
      All section references are to the Internal Revenue Code, as
amended. Rule references are to the Tax Court Rules of Practice
and Procedure. Amounts are rounded to the nearest dollar.
                                 -2-

admitted by petitioner under Rule 90(c) establish that petitioner

is liable for a Federal income tax deficiency of $2,261.

                              Background

       Petitioner resided in Kinder, Louisiana, at the time the

petition was filed.

       Petitioner filed a Form 1040, U.S. Individual Income Tax

Return, for 1999, reporting as nontaxable a $7,000 individual

retirement account (IRA) distribution.     On January 30, 2002,

respondent issued petitioner a notice of deficiency for 1999,

determining that the $7,000 IRA distribution is taxable and that

petitioner received an additional taxable IRA distribution of

$12,651.    Petitioner filed a petition with the Court claiming

that an IRA inherited from a parent was not taxable, that the

Government owed him money related to a denied patent application,

and that he should not have to pay taxes because as a Louisiana

prison inmate, he cannot vote for President of the United States,

while inmates in Maine can.

       On July 20, 2006, respondent filed with the Court requests

for admissions, which had been served on petitioner the previous

day.    Petitioner failed to respond, and pursuant to Rule 90(c)

each matter set forth in the requests for admissions was deemed

admitted 30 days after the date of service.     The following is a

summary of the matters petitioner is deemed to have admitted.
                                 -3-

     Petitioner’s father died in 1999 owning two IRAs with Edward

D. Jones & Co.   Petitioner was a beneficiary of both IRAs in the

event of his father’s death.    No nondeductible contributions were

made to either of the IRAs.    In 1999, after the death of his

father, petitioner received lump-sum distributions from the IRAs

of $7,000 and $12,561.   Petitioner reported the $7,000

distribution on his 1999 return but listed it as nontaxable.

Petitioner did not report the $12,561 distribution on his 1999

return.

     After the requests for admissions were deemed admitted,

respondent filed a motion for summary judgment seeking judgment

in respondent’s favor on all issues.       Petitioner filed a timely

response stating only that he “respectfully OBJECTS to

Respondent’s MOTION FOR SUMMARY JUDGMENT.”

                              Discussion

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials.       Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).       The Court may grant

summary judgment when there is no genuine issue of material fact

and a decision may be rendered as a matter of law.      Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.

17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753,

754 (1988).   Rule 121(d) states:

     When a motion for summary judgment is made and
     supported as provided in this Rule, an adverse party
                                 -4-

     may not rest upon the mere allegations or denials of
     such party's pleading, but such party's response, by
     affidavits or as otherwise provided in this Rule, must
     set forth specific facts showing that there is a
     genuine issue for trial. If the adverse party does not
     so respond, then a decision, if appropriate, may be
     entered against such party.

     The moving party bears the burden of proving that there is

no genuine issue of material fact.     Dahlstrom v. Commissioner, 85
T.C. 812, 821 (1985); Naftel v. Commissioner, 85 T.C. 527, 529

(1985).    The Court will view any factual material and inferences

in the light most favorable to the nonmoving party.    Dahlstrom v.

Commissioner, supra at 821; Naftel v. Commissioner, supra at 529.

Summary judgment is appropriate where the facts deemed admitted

pursuant to Rule 90(c) support a finding that there is no genuine

issue as to any material fact.    Morrison v. Commissioner, 81 T.C.
644, 651-652 (1983).

     Based upon our review of the record, we are satisfied that

there is no genuine issue of material fact and that respondent is

entitled to judgment as a matter of law.    The deficiencies in

this case arise from petitioner’s mistaken belief that

distributions made to a beneficiary of a decedent’s IRA are not

taxable.

     A distribution to the beneficiary of a decedent’s IRA is

includable in the gross income of the beneficiary.    Secs.

408(d)(1), 691(a)(1); Estate of Kahn v. Commissioner, 125 T.C.
227, 232 (2005).   When such a distribution is made in a lump sum
                                  -5-

to the beneficiary, the portion equal to the value of the IRA on

the date of the decedent’s death, less any nondeductible

contributions made to the IRA, is income in respect of a decedent

(IRD) under section 691(a)(1).2    Estate of Kahn v. Commissioner,

supra.   That portion is includable in the gross income of the

beneficiary in the year the distribution is received.3     Sec.

691(a)(1); Estate of Kahn v. Commissioner, supra.    Any balance of

the distribution, which represents appreciation and income

accruing between the date of death and the date of the

distribution, is taxable to the beneficiary under sections

408(d)(1) and 72.   Estate of Kahn v. Commissioner, supra.

     The factual allegations deemed admitted by petitioner

establish:   (1) Petitioner was the beneficiary of his deceased

father’s IRAs; (2) petitioner received lump-sum distributions

from the IRAs during 1999; and (3) no nondeductible contributions

were made to the IRAs.   Therefore, we hold that the IRA

     2
      Sec. 691(a)(1) provides that items of gross income in
respect of a decedent that are not properly includable by the
decedent in the year of his death or in a prior period are
included in the gross income for the taxable year when received
of the person who acquires the right to receive that amount.
Sec. 408(d)(1) provides that distributions made from an IRA are
included in the gross income of the distributee in the manner
provided under sec. 72.
     3
      The recipient of an item of IRD, such as the beneficiary of
a decedent’s IRA, is allowed an income tax deduction equal to the
amount of Federal estate tax attributable to the IRD. Sec.
691(c); Estate of Smith v. United States, 391 F.3d 621, 626 (5th
Cir. 2004); Estate of Kahn v. Commissioner, 125 T.C. 227, 232
(2005).
                                 -6-

distributions were properly taxable to petitioner as determined

by respondent.

     Petitioner’s claim with respect to the denied patent

application is not properly before this Court.     The Tax Court is

a court of limited jurisdiction, and we may exercise that

jurisdiction only to the extent authorized by Congress.      Naftel

v. Commissioner, supra at 529.    We do not have jurisdiction to

consider claims related to a denied patent application.      As to

petitioner’s arguments with respect to the denial of his right to

vote, the Internal Revenue Code simply does not provide that an

inmate denied the right to vote is exempt from taxation.

     In the absence of any genuine dispute as to a material fact

in this case, we shall grant respondent’s motion for summary

judgment.

     To reflect the foregoing,

                                       An appropriate order and

                                 decision will be entered.