Court Opinion

ID: 4336168
Source: CourtListenerOpinion
Date Created: 2018-11-14 02:40:46.608245+00
Date Added: 2024-06-11T07:50:07.335420
License: Public Domain

CARLOS H. AND MARIA C. GONZALEZ, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, RespondentGonzalez v. Comm'rNo. 8709-04SUnited States Tax CourtT.C. Summary Opinion 2006-163; 2006 Tax Ct. Summary LEXIS 66; October 10, 2006, Filed *66  PURSUANT TO INTERNAL REVENUE CODE SECTION 7463(b), THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY OTHER CASE.  Michael Stearns, for petitioners.Gordon P. Sanz, for respondent.  Couvillion, D. IrvinD. IRVIN COUVILLIONCOUVILLION, Special Trial Judge: This case was heard pursuant to section 7463 in effect when the petition was filed. 1 The decision to be entered is not reviewable by any other court, and this opinion should not be cited as authority.Respondent determined deficiencies in petitioners' Federal income taxes for 2000 and 2001 in the amounts of $ 11,620 and $ 12,348, respectively, and accuracy-related penalties under section 6662(a) for those years in the amounts of $ 2,324 and $ 2,470, respectively.The issues for decision are: (1) Whether petitioners were engaged in an export activity during the years at issue, and, if so, whether such activity*67  was an activity not engaged in for profit under section 183; (2) whether petitioners are entitled to deductions for expenses relating to that activity under section 162(a); and (3) whether petitioners are liable for the section 6662(a) accuracy- related penalties. 2Some of the facts were stipulated. Those facts, with the exhibits annexed thereto, are so found*68  and made part hereof. Petitioners resided at Katy, Texas, at the time the petition was filed.Carlos H. Gonzalez (petitioner) is a senior petroleum engineer for Conoco, Inc. (Conoco), a major oil company in Houston, Texas. Petitioner has a bachelor of science degree in petroleum engineering and has been an employee of Conoco for over 27 years. Maria C. Gonzalez, petitioner's spouse, was also employed during the years at issue, earning wage and salary income of $ 5,560 and $ 18,166, respectively, for the 2 years at issue.Petitioners are natives of Colombia, South America. Both are U.S. citizens. Petitioners have maintained contacts with their families and friends in Colombia.For the years 2000 and 2001, petitioners included with their Federal income tax returns Schedules C, Profit or Loss From Business, related to an activity called Special Supply Co., with the business purpose described as the "Export of Industrial Supplies". The income and expenses of the activity for the year 2000 were reported as follows:Income                       -0-Expenses: Advertising        $    899 Car & truck expenses    12,245*69   Legal & professional      649 Office expenses        373 Travel            4,348 Other expenses      n122,978             ________  Total expenses     $ 41,492Loss                      ($ 41,492) Footnotes1. Unless otherwise indicated, subsequent section references are to the Internal Revenue Code in effect for the years at issue.↩2. Under sec. 7491(a), where a taxpayer introduces credible evidence with respect to any factual issue relevant to ascertaining the liability of the taxpayer, the burden of proof shifts to the Commissioner. Petitioners have not produced credible evidence with respect to the principal issue, nor have petitioners, under sec. 7491(a)(2)(B), maintained records required with regard to substantiating their claimed expenses; therefore, the burden of proof does not shift to respondent. However, as to the penalties, the burden of production is on respondent. Sec. 7491(c). The Court's holding in this case is based upon due regard to the requirements of sec. 7491.↩