Court Opinion

ID: 4605218
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:35:54.093914+00
Date Added: 2024-06-11T07:53:09.023714
License: Public Domain

LYLE CURTIS AND NANCY ELAINE HEDGES, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, RespondentCurtis v. CommissionerDocket No. 4566-86United States Tax CourtT.C. Memo 1990-465; 1990 Tax Ct. Memo LEXIS 510; 60 T.C.M. (CCH) 624; T.C.M. (RIA) 90465; August 28, 1990, Filed Lyle Curtis and Nancy Elaine Hedges, pro se. Steven K. Dick and Terry L. Zabel, for the respondent.  PARR, Judge.  PARRMEMORANDUM FINDINGS OF FACT AND OPINION Respondent determined a $ 4,470 deficiency in petitioners' joint individual Federal income tax for calendar year ending December 31, 1982.  The deficiency resulted from the inclusion in income of the $ 20,000 lump sum payment petitioners received under title VII of the Regional Rail Reorganization Act of 1973 (herein "3R Act"), 1*511  as amended by the Northeast Rail Service Act of 1981 (herein "NERSA"); 2 and a $ 138.60 decrease in taxable income for sales taxes.  This case is presently before the Court on respondent's Motion for Summary Judgment filed pursuant to Rule 121. The issues for decision are whether (1) the payment made to petitioners under the 3R Act, as amended by NERSA, is includable in gross income under section 61, or exempt from taxation under 45 U.S.C. section 797d(b) (1982); and (2) if includable, whether the benefit is "in the nature of unemployment compensation" and, therefore, taxable under section 85.  Unless otherwise indicated, all section references are to the Internal Revenue Code, as amended and in effect for taxable year 1982.  All Rule references are to the Tax Court Rules of Practice and Procedure. Petitioners resided in Wilmington, Ohio, at the time they filed their petition in this case.  Unless otherwise indicated all references to petitioner are to Lyle Curtis Hedges. *512 During 1982 petitioner, employed with Consolidated Rail Corp. (herein "Conrail"), was laid off work due to actions taken under NERSA.  NERSA eliminated thousands of employee positions, repealed 3 the employee protection scheme set forth in title V of the 3R Act, 4 and created title VII employee protection benefits.  Pub. L. 97-35, section 1143(a), 95 Stat. 661 (codified as amended at 45 U.S.C. sections 797-797m (1982)).  Petitioner met the requirements and was, therefore, one of approximately 4,600 employees eligible to receive the title VII benefits.  Petitioner could elect to receive (1) a lump sum $ 20,000 separation allowance, or (2) to remain in furlough status, retain seniority, and receive a daily subsistence allowance, continued health and welfare coverage, new career training assistance, and reimbursement for moving expenses, up to a maximum benefit of $ 20,000.  Petitioner elected to receive the lump sum payment. *513  Petitioner received the $ 20,000 title VII benefit during 1982.  No amounts were withheld from the check.  Moreover, petitioner did not receive any Forms 1099 or W-2 reflecting the benefit payment.  Accordingly, petitioner failed to include the amount on the 1982 return. Respondent determined that the amount received was taxable "U.S. Railroad Retirement" income for the 1982 taxable year. Petitioners assert that the title VII benefits should not be taxable, and that their case should not be controlled by Martin v. Commissioner, 90 T.C. 1078 (1988), affd.  877 F.2d 449">877 F.2d 449 (6th Cir. 1989). Petitioners rely on Sutherland v. United States, 664 F. Supp. 211 (W.D. Pa 1987), revg. on motion for reconsideration 664 F. Supp. 207">664 F. Supp. 207 (W.D. Pa. 1986), 5 in support of their position.  *514  On May 25, 1990, respondent filed his Motion for Summary Judgment. Petitioners filed their notice of objection to respondent's motion on June 29, 1990. Under Rule 121(a) either party may move, with or without supporting affidavits, for a summary adjudication in his favor upon all or any part of the legal issues in controversy.  However, summary judgment is appropriate only "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." Rule 121(b).  See Naftel v. Commissioner, 85 T.C. 527">85 T.C. 527, 529 (1985); Jacklin v. Commissioner, 79 T.C. 340">79 T.C. 340, 344 (1982); Espinoza v. Commissioner, 78 T.C. 412">78 T.C. 412, 416 (1982). Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials of "phantom factual questions." Shiosaki v. Commissioner, 61 T.C. 861">61 T.C. 861, 862 (1974). See Cox v. American Fidelity and Casualty Co., 249 F.2d 616">249 F.2d 616, 618 (9th Cir. 1957). It is not a substitute for trial; disputed factual*515  issues are not to be resolved in such proceedings. Espinoza v. Commissioner, supra.The party moving for summary judgment has the burden of showing the absence of a genuine issue of material fact. Naftel v. Commissioner, supra; Espinoza v. Commissioner, supra.See Weinburger v. Hynson, Westcott, and Dunning, Inc., 412 U.S. 609">412 U.S. 609, 621-622 n.18 (1973); Adickes v. S. H. Kress and Co., 398 U.S. 144">398 U.S. 144, 157 (1970). We are required to view the factual material and inferences drawn therefrom in the light most favorable to the party opposing the motion.  Naftel v. Commissioner, supra; Jacklin v. Commissioner, supra; Espinoza v. Commissioner, supra.Based on the record before us, we are satisfied that respondent carried his burden of proving that there are no genuine issues as to any material fact, and that a decision in this case may be rendered as a matter of law. On May 24, 1988, this Court rendered its opinion in Martin v. Commissioner, 90 T.C. 1078">90 T.C. 1078 (1988), affd.  877 F.2d 449">877 F.2d 449 (6th Cir. 1989). 6 We*516  declined to follow Sutherland v. United States, supra, and held that benefits received under title VII constituted gross income, not exempted from taxation under 45 U.S.C. section 797d(b) (1982).  Additionally, we held that the payments were not "unemployment compensation" within the meaning of section 85.  Based on our opinion in Martin v. Commissioner, supra, respondent's motion will be granted. An appropriate order will be issued.  Footnotes1. Pub. L. 93-236, 87 Stat. 985 (1974) (codified as amended at 45 U.S.C. secs. 701-794 (1982)↩).2. The Northeast Rail Service Act of 1981 was enacted as part of the Omnibus Budget Reconciliation Act of 1981, Pub. L. 97-35, secs. 1131-1169, 95 Stat. 357, 643-687 (codified as amended at scattered sections of 45 U.S.C.).↩3. NERSA, Pub. L. 97-35, sec. 1144(a)(1), 95 Stat. 357, 669.↩4. "Title V of the 3R Act, 45 U.S.C. sections 771-780 (1976), created various employee protection benefits for Conrail employees, including monthly displacement allowances, separation allowances, and relocation allowances." Martin v. Commissioner, 90 T.C. 1078">90 T.C. 1078, 1079 (1988), affd.  877 F.2d 449">877 F.2d 449↩ (6th Cir. 1989).5. Sutherland v. United States, 664 F. Supp. 211">664 F. Supp. 211 (W.D. Pa. 1987), revg. on motion for reconsideration 664 F. Supp. 207">664 F. Supp. 207 (W.D. Pa. 1986), gave a broader reading to 45 U.S.C. sec. 797d(b)↩ and its legislative history, and held that lump sum payments are nontaxable.6. Martin v. Commissioner, 90 T.C. 1078">90 T.C. 1078 (1988), affd.  877 F.2d 499">877 F.2d 499↩ (6th Cir. 1989), was chosen as the test case involving the taxability of title VII benefits received by approximately 4,500 former employees of Conrail.