Court Opinion

ID: 9839119
Source: CourtListenerOpinion
Date Created: 2023-09-11 19:02:50.780338+00
Date Added: 2024-06-11T09:10:59.114014
License: Public Domain

United States Tax Court

                        T.C. Summary Opinion 2023-28

            JIE RANIERI a.k.a. JIE HU AND PAUL RANIERI,
                               Petitioners

                                           v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                     —————

Docket No. 4690-19S.                                    Filed September 11, 2023.

                                     —————

Jie Ranieri a.k.a. Jie Hu and Paul Ranieri, pro sese.

Massimiliano Valerio and Marc L. Caine, for respondent.

                              SUMMARY OPINION

       GREAVES, Judge: This case was heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect when
the petition was filed. 1 Pursuant to section 7463(b), the decision to be
entered is not reviewable by any other court, and this opinion shall not
be treated as precedent for any other case.

      The Internal Revenue Service (IRS or respondent) determined
income tax deficiencies and accuracy-related penalties under section
6662(a) with respect to petitioners’ Federal income tax for 2013 and
2014 (years at issue). This case is before the Court on respondent’s
Motion for Summary Judgment, contending that there are no disputed
issues of material fact and that his determinations in the notice of

        1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the
Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and
Rule references are to the Tax Court Rules of Practice and Procedure.

                                 Served 09/11/23
                                          2

deficiency were proper as a matter of law. For the reasons set forth
below, we will grant respondent’s motion.

                                    Background

      The following facts are based on the parties’ pleadings and motion
papers, including attached declarations and exhibits and, unless
otherwise stated, are not disputed. Some facts have been deemed
admitted under Rule 90(c) because of petitioners’ failure to timely
respond to respondent’s request for admissions. 2 Petitioners resided in
New York when the petition was filed.

       In 2012 petitioner Paul Ranieri’s (Paul) mother executed a “Gift
of Property Share,” in which she announced her intent to transfer a one-
half interest in real property in Long Beach, New York, to Paul as a
tenant-in-common. After execution of this document, Hurricane Sandy
hit New York and damaged the Long Beach property. Petitioners filed
a joint income tax return for 2012 to which they attached Form 4684,
Casualties and Thefts. On that form they claimed a casualty loss of
$225,000 due to Hurricane Sandy with respect to the Long Beach
property. Petitioners did not carry back the excess casualty net
operating loss (NOL), nor did they elect out of carryback.

       Petitioners prepared and filed joint income tax returns for the
years at issue. On those tax returns petitioners carried forward
$183,452 and $85,555 of the NOL for 2013 and 2014, respectively. 3
Petitioners also claimed a capital loss of $940 for 2014.

      The IRS examined petitioners’ returns for the years at issue.
Respondent determined deficiencies of $34,093 and $24,051, as well as
accuracy-related penalties under section 6662(a) and (b)(1) of $6,819 and
$4,810 for the respective years at issue. Among other adjustments,
respondent disallowed the NOL carryforward for the years at issue and
the capital loss for 2014.

       2  On February 3, 2023, respondent filed and served on petitioners a First
Request for Admissions, and on March 8, 2023, respondent filed and served on
petitioners a Second Request for Admissions. Both requests advised petitioners of the
consequences of failing to respond in accordance with Rule 90(b). Petitioners failed to
respond to either request, and thus the assertions in the First and Second Request for
Admissions are deemed admitted. See Rule 90(c).
       3 All dollar amounts are rounded to the nearest dollar.
                                           3

       On December 4, 2018, respondent mailed a notice of deficiency to
petitioners. In response petitioners timely filed a petition to commence
this case. The petition assigned errors to the following determinations:
(1) “2013 [S]chedule E expenses were incorrectly assessed” and (2) “2014
[S]chedule E expenses were incorrectly reversed (100%).” On January
23, 2023, we granted respondent’s Motion for Partial Summary
Judgment filed July 5, 2022, disallowing petitioners’ NOL deductions
for the years at issue. Petitioners filed two Motions for Reconsideration,
but we denied both motions. 4

       On April 19, 2023, respondent filed a Motion for Summary
Judgment for the remaining issues: whether petitioners (1) are entitled
to deduct a $940 capital loss for tax year 2014 and (2) are liable for
section 6662(a) accuracy-related penalties for the years at issue. We
ordered petitioners to file an objection to the Motion. On May 21, 2023,
petitioners filed a Response to Motion for Summary Judgment, asking
the Court for additional time to gather documentation. On the same
day, petitioners filed a First Amendment to Response to Motion for
Summary Judgment, attaching their account transcripts. On May 25,
2023, petitioners filed an Objection to Motion for Summary Judgment.
On June 4, 2023, petitioners filed a second Objection to Motion for
Summary Judgment.

                                     Discussion

I.     Summary Judgment Standard

       The purpose of summary judgment is to expedite litigation and
avoid costly, unnecessary, and time-consuming trials. See FPL Grp.,
Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). We may grant
summary judgment where there is no genuine dispute of material fact
and a decision may be rendered as a matter of law. See Rule 121(a)(2);
Elec. Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002). Furthermore,
we construe the facts and draw all inferences in the light most favorable
to the nonmoving party to decide whether summary judgment is
appropriate. See Bond v. Commissioner, 100 T.C. 32, 36 (1993). The
nonmoving party may not rest upon the mere allegations or denials of
his pleading but must set forth specific facts showing that there is a
genuine dispute for trial. See Rule 121(d); Bond, 100 T.C. at 36. We

        4 Petitioners attempted to again place into issue the deductions relating to the

NOL for the years at issue, but the Court resolved the NOL deduction issue in the
Court’s order issued on January 23, 2023. We do not reconsider that issue here.
                                    4

conclude that no material facts are in dispute and that the case may be
adjudicated summarily.

II.    Capital Loss Deduction

       Section 165(a) permits a taxpayer to deduct “any loss sustained
during the taxable year” if “not compensated for by insurance or
otherwise.” Rule 34(b)(1)(G) requires that a petition filed in this Court
shall contain clear and concise assignments of each and every error that
the taxpayer alleges to have been committed by the Commissioner in the
determination of the deficiency and the additions to tax or penalties in
dispute. Any issue not raised in the pleadings is deemed to be conceded.
See Rule 34(b)(1)(G); Jarvis v. Commissioner, 78 T.C. 646, 658 n.19
(1982); Gordon v. Commissioner, 73 T.C. 736, 739 (1980). Petitioners
failed to assign error in their petition to the disallowance of the capital
loss deduction for tax year 2014. Thus, petitioners concede that the $940
capital loss claimed for 2014 is not deductible.

III.   Accuracy-Related Penalties

       Section 6662(a) and (b)(1) imposes an accuracy-related penalty
equal to 20% of the portion of an underpayment in tax required to be
shown on a return which is attributable to negligence. Negligence
includes “any failure to make a reasonable attempt to comply with the
provisions of the internal revenue laws or to exercise ordinary and
reasonable care in the preparation of a tax return.” Treas. Reg.
§ 1.6662-3(b)(1).

       Generally, the Commissioner bears the burden of production with
respect to penalties. See § 7491(c). However, where a petition fails to
assign error with respect to penalties, the Commissioner incurs no
obligation to produce evidence in support of such penalty determinations
pursuant to section 7491(c). See Funk v. Commissioner, 123 T.C. 213,
218 (2004); Swain v. Commissioner, 118 T.C. 358, 363–65 (2002).

      Again, petitioners failed to assign error to the determination that
they were liable for accuracy-related penalties under section 6662(a).
Thus, the issue is deemed conceded, and respondent bears no burden of
production with respect to the penalties. See Funk, 123 T.C. at 218;
Swain, 118 T.C. at 363–65. Because the issue is conceded, petitioners
may not claim that they had a reasonable cause defense to the penalties.
See Morales v. Commissioner, T.C. Memo. 2013-192, at *6–7, aff’d, 633
F. App’x 884 (9th Cir. 2015). Thus, petitioners concede that they are
                                   5

liable for accuracy-related penalties under section 6662(a) and (b)(1) of
$6,819 and $4,810 for the respective years at issue.

      Petitioners are deemed to have conceded the remaining issues.
Accordingly, we will grant respondent’s Motion for Summary Judgment
under Rule 121.

      To reflect the foregoing,

      An appropriate order and decision will be entered.