T.C. Memo. 2000-246
UNITED STATES TAX COURT
EUGENE W. ALPERN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 20304-98. Filed August 8, 2000.
Eugene W. Alpern, pro se.
Gregory J. Stull, for respondent.
MEMORANDUM OPINION
GOLDBERG, Special Trial Judge: Respondent determined a
deficiency in petitioner’s Federal income tax of $2,139 for the
taxable year 1996. Unless otherwise indicated, section
references are to the Internal Revenue Code in effect for the
year in issue, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
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After a concession by respondent,1 the issues for
determination are: (1) Whether the Tax Court lacks jurisdiction
in this case because of an automatic stay pursuant to 11 U.S.C.
section 362(a)(8) (1994); (2) whether petitioner must include
individual retirement account (IRA) distributions of $6,905 in
gross income for the 1996 taxable year; and (3) petitioner’s
correct filing status for the 1996 taxable year. The
stipulations of fact, the supplemental stipulations of fact, and
the attached exhibits are incorporated herein by this reference.
At the time the petition was filed, petitioner resided in Morton
Grove, Illinois.
Petitioner has degrees in pharmacy and chemistry from the
University of Michigan. Petitioner has worked in the chemistry,
pharmaceutical, and computer consulting fields.
Petitioner married Phyllis Alpern in 1960 and has three sons
from the marriage. Phyllis Alpern ceased living with petitioner
on October 3, 1989, and they were divorced on August 10, 1992,
pursuant to a Judgment for Dissolution of Marriage of the Circuit
Court of Cook County, Illinois, County Department, Domestic
Relations Division (circuit court).2 Petitioner disputes the
1
Respondent concedes that petitioner correctly excluded
his Social Security benefits from gross income in 1996.
2
The Judgment for Dissolution of Marriage incorporated
by reference a related Memorandum Order which the circuit court
(continued...)
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validity of the divorce judgment and contends that he is still
married to Phyllis Alpern.
On April 8, 1993, petitioner filed a voluntary petition in
bankruptcy under chapter 7 of the U.S. Bankruptcy Code in the
U.S. Bankruptcy Court for the Northern District of Illinois,
Eastern Division (bankruptcy court), case No. 93-B-07643. The
bankruptcy court entered an order discharging the debtor in this
case on September 28, 1993. By order dated October 12, 1993, the
bankruptcy court granted petitioner’s motion to convert the case
to a chapter 11 proceeding under the Bankruptcy Code. An order
of Discharge of Debtor under the chapter 11 proceeding was
entered on July 18, 1994, by the bankruptcy court.
In 1996, petitioner received IRA distributions of $12,905.89
from Fidelity Service Co. (Fidelity).3 Though petitioner
reported total IRA distributions of $12,905.89 on line 15a of his
1996 Federal income tax return, he reported only $6,000 as the
taxable amount of his IRA distributions for 1996 on line 15b of
his return. In addition, petitioner did not attach a Form 8606,
Nondeductible IRAs (Contributions, Distributions, and Basis), to
2
(...continued)
had previously entered in the case on May 29, 1992.
3
Fidelity reported two separate IRA distributions for
the 1996 taxable year to the Internal Revenue Service on Forms
1099-R, Statements for Recipients of Distributions From Pensions,
Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance
Contracts, etc., in the amounts of $1,205 and $11,700.
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his 1996 Federal income tax return, a form which is required for
reporting the receipt of IRA distributions.
In a notice of deficiency, respondent determined that all
the IRA distributions from Fidelity for the 1996 taxable year
were includable in gross income and therefore included an
additional $6,905 of 1996 IRA distributions from Fidelity in
petitioner’s 1996 gross income.
Tax Court Jurisdiction
First, petitioner contends that the order of Discharge of
Debtor which was entered in case No. 93-B-7643 on July 18, 1994,
is void ab initio because of fraud on the part of the bankruptcy
court. Therefore he asserts that the bankruptcy petition is
still pending and that the provisions of 11 U.S.C. section
362(a)(8) are applicable. Petitioner specifically alleges that
the judge in the bankruptcy proceedings received a bribe of at
least $6,700. Petitioner contends that any order issued by the
judge in case No. 93-B-7643 is therefore void for fraud.
This Court is a court of limited jurisdiction and may
exercise its jurisdiction only to the extent authorized by
Congress. See sec. 7442; Commissioner v. Gooch Milling &
Elevator Co., 320 U.S. 418, 420, 422 (1943); Naftel v.
Commissioner, 85 T.C. 527, 529 (1985). This includes Federal
income, estate, and gift taxes which are subject to the
deficiency notice requirements of sections 6212(a) and 6213(a).
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Because this Court is a court of limited jurisdiction,
petitioner’s fraud argument is misplaced. The Court lacks
jurisdiction to review or set aside the order of discharge
entered by the bankruptcy court. Therefore, petitioner’s
contention that the bankruptcy discharge is void because of fraud
on the court is not proper subject matter for our decision.
We accordingly reject petitioner’s contention that the
property of the estate is still under the consideration of the
bankruptcy court and the order of Discharge of Debtor, dated July
18, 1994, has no force and effect. According to petitioner’s
contentions, the automatic stay of Tax Court proceedings under 11
U.S.C. section 362(a)(8) was still in effect when he filed the
Tax Court petition, his petition is premature, and the Tax Court
lacks jurisdiction to determine petitioner’s tax liability for
the year in issue.
Section 6212(a) expressly authorizes the Commissioner, after
determining a deficiency, to send a notice of deficiency to the
taxpayer by certified or registered mail. The taxpayer, in turn,
generally has 90 days from the date the notice of deficiency is
mailed to file a petition in this Court for a redetermination of
the deficiency. See sec. 6213(a).
An exception to the normal 90-day filing period arises where
the taxpayer has filed a petition for relief under the Bankruptcy
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Code. In particular, 11 U.S.C. section 362(a)(8) provides in
pertinent part:
(a) Except as provided in subsection (b) of this
section, a petition filed under section 301, 302, or
303 of this title, * * * operates as a stay, applicable
to all entities, of–-
* * * * * * *
(8) the commencement or continuation of a proceeding
before the United States Tax Court concerning the
debtor.
In short, the filing of a bankruptcy petition invokes the
automatic stay that precludes the commencement or continuation of
proceedings in this Court. See Allison v. Commissioner, 97 T.C.
544, 545 (1991).
The period that the automatic stay remains in effect is
prescribed in 11 U.S.C. section 362(c) (1994) as follows:
(c) Except as provided in subsections (d), (e), and (f) of
this section--
(1) the stay of an act against property of the estate
under subsection (a) of this section continues until such
property is no longer property of the estate; and
(2) the stay of any other act under subsection (a) of
this section continues until the earliest of--
(A) the time the case is closed;
(B) the time the case is dismissed; or
(C) if the case is a case under chapter 7 of this title
concerning an individual or a case under chapter 9, 11, 12,
or 13 of this title, the time a discharge is granted or
denied.
While we do not have subject matter jurisdiction to
determine whether a tax deficiency has been discharged in a
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bankruptcy proceeding, it is clear that we do have jurisdiction
to determine whether we lack jurisdiction because of the
continuance of an automatic stay. See Moody v. Commissioner, 95
T.C. 655, 658 (1990). If the stay pursuant to 11 U.S.C. section
362(a)(8) had been in effect on December 22, 1998, the date on
which petitioner filed a petition, the Tax Court would not have
jurisdiction. The record, however, reflects that the order of
Discharge of Debtor was entered by the bankruptcy court on July
18, 1994, and terminated the stay pursuant to 11 U.S.C. section
362(c)(2)(C).
Petitioner’s contention that the automatic stay continues
until the property is no longer property of the bankruptcy
estate, at which time the bankruptcy proceeding is completely
closed, is based on 11 U.S.C. section 362(c)(1). However, the
proceedings before us fall under 11 U.S.C. section 362(c)(2)(C),
wherein the stay of “any other act” is lifted upon order of
discharge in a chapter 11 bankruptcy proceeding. The proceeding
before us is not an act against the property of the bankruptcy
estate per 11 U.S.C. section 362(c)(1). See Bigelow v.
Commissioner, 65 F.3d 127, 128 (9th Cir. 1995).
We therefore find that the automatic stay ended with the
entry of the July 18, 1994, order of Discharge of Debtor. Since
petitioner filed his petition with this Court on December 22,
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1998, we hold that we have jurisdiction to adjudicate
petitioner’s Federal tax liability for the year in issue.
Individual Retirement Account
Respondent determined that petitioner received taxable
distributions from his IRA during the year in issue of $12,905.89
and that petitioner failed to include $6,9054 of that amount in
gross income for the 1996 taxable year.
Petitioner contends that he is entitled to exclude from
gross income $6,905.89 of the IRA distribution on the grounds
that he had a basis in the IRA contributions.
Section 408(d)(1) provides generally that “any amount paid
or distributed out of an individual retirement plan shall be
included in gross income by the payee or distributee, as the case
may be, in the manner provided under section 72.” The term
“individual retirement plan” includes an IRA. Sec.
7701(a)(37)(A).
For this purpose, all IRA’s are treated as one contract, all
distributions during any taxable year are treated as one
distribution, and the value of the contract, the income on the
contract, and the investment in the contract are computed as of
4
Though petitioner failed to include $6,905.89 of IRA
distributions in gross income on his 1996 Federal income tax
return, respondent determined in the notice of deficiency that
the correct amount includable in gross income for the 1996
taxable year was $6,905.
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the close of the calendar year in which the taxable year begins.
See sec. 408(d)(2).
Generally, a taxpayer is allowed a basis in IRA
contributions to the extent the contributions are considered an
“investment in the contract”. Secs. 408(d)(2), 72. Section
72(e)(6) defines generally “investment in the contract” as being
the consideration paid for the contract less amounts previously
received under the contract that are excludable from gross
income. Thus, nondeductible contributions a taxpayer has made to
a retirement plan may be excluded from gross income when such
distributions are made. See Campbell v. Commissioner, 108 T.C.
54 (1997). In addition, Form 8606 must be attached to the return
for reporting the receipt of IRA distributions if the taxpayer
made any nondeductible IRA contributions before or during the
taxable year.
The derivation and computation of the amounts reported on
the Forms 1099-R by Fidelity are not in dispute. The only
question is whether these amounts are includable in petitioner's
gross income.
At trial, petitioner testified that he did not remember how
he calculated the excluded portion of his IRA or whether any
portion of the IRA distributions was from nondeductible IRA
contributions. In addition, petitioner failed to produce any tax
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records which would have established nondeductible IRA
contributions during, or before, the 1996 taxable year.
In sum, the record is devoid of any evidence regarding
petitioner’s alleged nondeductible IRA contributions except for
petitioner's brief self-serving testimony. We are not required
to accept a taxpayer's self-serving, unverified, and undocumented
testimony, and we decline to do so here. See Tokarski v.
Commissioner, 87 T.C. 74, 77 (1986).
Petitioner failed to establish that he was entitled to
exclude the $6,905 portion of his IRA distributions for 1996 from
gross income for the taxable year in issue. Respondent is
sustained on this issue.
Filing Status
Petitioner contends that his correct filing status for the
1996 taxable year is married, filing separately. Respondent
contends that petitioner’s correct filing status for 1996 is
single because petitioner and his wife were divorced on August
10, 1992, as evidenced by the Judgment for Dissolution of
Marriage, and petitioner was unmarried during the year in issue.
As with the bankruptcy order discussed above, petitioner
contends that the divorce judgment of the circuit court was
obtained by fraud and is also void ab initio. Petitioner claims
that the fraud perpetrated in the circuit court included the
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failure of Phyllis Alpern to file a valid petition in the divorce
proceeding.
As stated above, this Court is a court of limited
jurisdiction. Petitioner seeks a remedy, to set aside the
Judgment for Dissolution of Marriage, which cannot be properly
addressed in this forum. Particularly in the area of family law,
we must rely on the premise that “‘the whole subject of the
domestic relations of husband and wife, parent and child, belongs
to the laws of the states and not to the laws of the United
States’”. Ohio ex rel. Popovici v. Agler, 280 U.S. 379, 383
(1930) (quoting Ex parte Burrus, 136 U.S. 586, 594 (1890)).
Therefore, we have long recognized that marital status for tax
purposes generally is governed by local law. See Lee v.
Commissioner, 64 T.C. 552 (1975), affd. per curiam 550 F.2d 1201
(9th Cir. 1977). Consequently, we decline to disregard the
divorce judgment or treat it as a nullity.
In this case, petitioner merely alleges that the divorce was
not final and has introduced no evidence to support that
allegation. We find that petitioner and Phyllis Alpern were
divorced as of August 10, 1992, and that petitioner was unmarried
during the year in issue. Petitioner’s correct filing status for
1996 is single. Respondent is sustained on this issue.
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To reflect the foregoing,
Decision will be entered
under Rule 155.