Court Opinion

ID: 9365169
Source: CourtListenerOpinion
Date Created: 2023-01-22 05:01:50.751882+00
Date Added: 2024-06-11T17:15:43.536294
License: Public Domain

United States Tax Court

                         T.C. Summary Opinion 2023-1

  JOHN M. VASSILIADES AND ELIZA ORTIZLUIS VASSILIADES,
                       Petitioners

                                            v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                      —————

Docket No. 12283-20S.                                         Filed January 9, 2023.

                                      —————

John M. Vassiliades and Eliza Ortizluis Vassiliades, pro sese.

Jeffrey A. Rodgers and James D. Lyon, for respondent.

                               SUMMARY OPINION

       PANUTHOS, Special Trial 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.

       In a notice of deficiency dated September 21, 2020, respondent
determined a deficiency in petitioners’ federal income tax of $2,500 for
taxable year 2018 (year in issue). The deficiency is attributable entirely
to the disallowance of the American Opportunity Credit (AOC) that
petitioners claimed on their 2018 federal income tax return. The sole

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

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

                                  Served 01/09/23
                                       2

issue for decision is whether petitioners are entitled to an AOC for the
year in issue.

                                 Background

      Some of the facts have been stipulated and are so found. We
incorporate the Stipulation of Facts and the attached Exhibits by this
reference. The record consists of the Stipulation of Facts with attached
Exhibits and the testimony of John M. Vassiliades (petitioner).

         Petitioners resided in California when the Petition was timely
filed.

I.       Education Expenses

       Petitioner has a daughter, AM, from a prior relationship, who was
enrolled in postsecondary education at University College London (UCL)
during the year in issue. 2 UCL is a university in London, United
Kingdom (UK). AM was enrolled full time at UCL as a student in the
division of medicine, pursuing a bachelor’s degree from September 2017
to July 2020.

      AM had a bank account at Westminister Bank in the UK while
she was enrolled in UCL. Petitioner would wire funds to AM’s account,
and AM would pay for school tuition, fees, and other expenses. The UCL
Student Fees Department notes an online payment on AM’s account of
£3,083 on September 12, 2017. Payment was made by “Online Payment
by credit or debit card from Mrs Anna Theorides.” Anna Theorides is
AM’s mother and not a party to this matter.

      On December 11, 2017, petitioner wired £2,000 to AM converted
from $2,762.40 as an international wire transfer from petitioner’s
account at Bank of America (BOA). On March 8, 2018, petitioner
ordered 2,000€, converted from $2,610.60 via BOA Foreign Currency
Services to be picked up at a local BOA branch in La Palma, California.
On December 15, 2018, petitioner wired £2,313.57 to AM, converted
from $3,000.

        2 It is the policy of this Court not to identify minor children by name.

Petitioner’s daughter’s age is unclear from the record. Therefore, we refer to
petitioner’s daughter by her initials. See Rule 27(a)(3).
                                     3

       Petitioners’ home was burglarized on November 4, 2018, resulting
in the theft of valuables and various important documents. A police
report was filed describing the burglary and listing missing property.

II.   Petitioners’ Tax Return and Examination

       Petitioners timely filed their 2018 Form 1040, U.S. Individual
Income Tax Return, on March 22, 2019. A paid return preparer assisted
petitioners. Petitioners claimed AM as a dependent for the year in issue.

       On their Form 8863, Education Credits (American Opportunity
and Lifetime Learning Credits), petitioners claimed the AOC, consisting
of a nonrefundable education credit of $1,500 and a refundable
education credit of $1,000 due to qualified education expenses paid
during AM’s enrollment at UCL for the year in issue. Petitioners did
not receive a Form 1098–T, Tuition Statement, from UCL for the year
in issue.

       Upon examination of the return, petitioners failed to establish to
respondent’s satisfaction that they paid qualified education expenses
during the taxable year. On September 21, 2020, respondent issued a
notice deficiency to petitioners for the year in issue disallowing $2,500
of claimed AOC.

                                Discussion

I.    Burden of Proof

       In general, the Commissioner’s determination set forth in a notice
of deficiency is presumed correct, and the taxpayers bear the burden of
proving that the determination is in error. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Like deductions, tax credits are a
matter of legislative grace, and the taxpayer bears the burden of proving
that he or she is entitled to any credit claimed. See Rule 142(a); Deputy
v. du Pont, 308 U.S. 488, 493 (1940); New Colonial Ice Co. v. Helvering,
292 U.S. 435, 440 (1934). Taxpayers must also maintain adequate
records to substantiate the amounts of any credits. See § 6001; Treas.
Reg. § 1.6001-1(a).

       In certain circumstances the burden of proof shifts to the
Commissioner if the taxpayers introduce credible evidence with respect
to any factual issues relevant to ascertaining the taxpayers’ tax liability.
See § 7491(a)(1). Because petitioners have not alleged or shown that
section 7491(a) applies, the burden of proof remains on them.
                                           4

II.    Education Credits

       The Code allows for a variety of education credits, including the
AOC. The AOC provides for a credit against tax equal to 100% of
qualified tuition and related expenses paid by a taxpayer during the
taxable year up to $2,000, plus 25% of such expenses paid that exceed
$2,000 but do not exceed $4,000, allowing for a maximum credit of
$2,500. § 25A(b)(1). “Qualified tuition and related expenses” include
tuition and fees at an eligible educational institution that the taxpayer,
the taxpayer’s spouse, or the taxpayer’s dependent attends, as well as
course materials. § 25A(f)(1)(A), (D). Up to 40% of the credit may be
refundable. § 25A(i). The credit is allowed for the first four years of
postsecondary education for qualified tuition and expenses including
required course materials. § 25A(b)(2)(C), (f)(1)(D). The credit is
available only if (among other things) the student is enrolled at least
half time for at least one academic period that begins during the taxable
year. See § 25A(b)(2)(B).

       AM was claimed as a dependent by petitioners and was enrolled
full time at UCL, an eligible, accredited institution during the year in
issue. To substantiate AM’s education expenses, petitioners provided
receipts of various wire transfers to AM, conversions of currency, and a
receipt for an online payment made to UCL in 2017. While AM received
money from petitioner during the year in issue, the submitted UCL
receipt is for a different year and notes that the payment was not made
by petitioner nor AM. Rather the payment for that year was made by
AM’s mother, who is not a party to this matter. Petitioner testified that
he was unable to produce a tuition receipt for the year in issue because
of the home burglary in November 2018. Further, he testified he was
unable to travel to the UK to retrieve relevant documents and that AM
was unavailable to access receipts from UCL. 3

      While we are sympathetic to petitioners’ loss and difficulty in
procuring documents, from the record before us we are unable to
conclude that petitioners paid qualified tuition and related expenses to
UCL. While it is likely that payments were made to UCL in 2018 for

        3 At trial the Court expressed concern about petitioners’ failure to provide

evidence to substantiate payments to UCL in 2018. Among other options, the Court
suggested that AM might be approached to provide some evidence of payments to UCL.
The Court left the record open to permit petitioner to consider additional filings. In a
subsequent Joint Status Report the parties reported they were unable to confer with
AM, and petitioner indicated that he had no further information or documents to
provide to the Court.
                                   5

AM’s continuing education, the record does not support petitioner’s
claim that he made any such payments. For these reasons, petitioners
have failed to demonstrate their entitlement to the AOC for the year in
issue.

      We have considered all of the parties’ arguments, and, to the
extent not addressed herein, we conclude that they are moot, irrelevant,
or without merit.

      To reflect the foregoing,

      Decision will be entered for respondent.