Court Opinion

ID: 218739
Source: CourtListenerOpinion
Date Created: 2011-06-14 00:01:29+00
Date Added: 2024-06-11T17:28:37.445641
License: Public Domain

FILED
                            NOT FOR PUBLICATION                              JUN 13 2011

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

FANNIE MARTIN, Special representative            No. 09-71517
of the Estate of Strown Martin, Deceased,
                                                 Tax Ct. No. 10686-05
              Petitioner,

  v.                                             MEMORANDUM *

COMMISSIONER OF INTERNAL
REVENUE,

              Respondent.

                            Appeal from a Decision of the
                              United States Tax Court

                              Submitted June 7, 2011 **
                                Pasadena, California

Before: BEEZER, TROTT, and RYMER, Circuit Judges.

       Because the parties are familiar with the facts and circumstances underlying

this appeal, we repeat them only as necessary to explain our decision.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      The Martins were the beneficiaries in 2000 of an arbitration award in the

amount of $616,000. The Internal Revenue Service determined that this award was

includable in the Martin’s income for that year, a determination which the Martins

dispute, along with other issues relating to allegedly deductable business-related

expenses.

      The Tax Court ruled in favor of the IRS, holding that as cash-basis

taxpayers, the Martins were required to recognize their award as income in the year

the award was received. The Court also ruled that the Martin’s claimed business

expenses were not proper or substantiated, and upheld the IRS’s determination of

deficiencies and penalties.

      We affirm the Tax Court’s decision of September 3, 2008. Monetary

damages such as those received by the Martins are clearly income and must be

reported as such in the year of receipt. 26 U.S.C. §§ 61(a), 451(a); Comm’r v.

Schleier, 515 U.S. 323, 328-31 (1995); United States v. Burke, 504 U.S. 229, 242

(1992), modified on other grounds by Small Business Job Protection Act of 1996,

Pub. L. No. 104-188, § 1605, 110 Stat. 1838; Polone v. Comm’r, 505 F.3d 966,

969-70 (9th Cir. 2007).

      Moreover, the Martins clearly failed to carry their burden of proving an

entitlement to the claimed business expenses as deductions. New Colonial Ice Co.

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v. Helvering, 292 U.S. 435, 440 (1934). Also, it appears that the expenses had

already been taken into account in the calculation of their arbitration award.

      Finally, the record supports the assessment of accuracy-related penalties. 26

U.S.C. § 6662. The record does not support the Martins’ claim of good faith and

reasonable cause for their underpayment. 26 C.F.R. § 1.6662-1.

      The Martins’ remaining issues have no merit.

      AFFIRMED.

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