T.C. Memo. 2003-8
UNITED STATES TAX COURT
BELLA VISTA CHIROPRACTIC TRUST, ROBERT HOGUE, TRUSTEE,
Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3296-02. Filed January 8, 2003.
Jeremy L. McPherson and Melinda G. Williams, for respondent.
MEMORANDUM OPINION
DAWSON, Judge: This case was assigned to Special Trial
Judge Robert N. Armen, Jr., pursuant to the provisions of section
7443A(b)(5) and Rules 180, 181, and 183.1 The Court agrees with
and adopts the opinion of the Special Trial Judge, which is set
forth below.
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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OPINION OF THE SPECIAL TRIAL JUDGE
ARMEN, Special Trial Judge: This matter is before the Court
on respondent’s motion to dismiss for lack of jurisdiction, as
supplemented. Respondent maintains that the petition was not
filed by a trustee authorized to bring suit on behalf of Bella
Vista Chiropractic Trust (Bella Vista).2 Bella Vista opposes
respondent’s motion to dismiss. As discussed in detail below, we
shall grant respondent’s motion, as supplemented, and dismiss
this case for lack of jurisdiction.
Background
A. Notice of Deficiency
Respondent issued a notice of deficiency to Bella Vista
determining deficiencies in its Federal income taxes and
accuracy-related penalties under section 6662(a) as follows:
Year Deficiency Accuracy-related Penalty
1997 $89,261 $17,852
1998 106,028 21,206
The deficiencies in income taxes are based on the disallowance of
deductions claimed by Bella Vista on Schedules C, Profit or Loss
From Business. In this regard, respondent determined that the
deductions:
2
Use of the terms “trust” and “trustee” (and their
derivatives) are intended for narrative convenience only. Thus,
no inference should be drawn from our use of such terms regarding
any legal status or relationship.
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are disallowed because you failed to establish the
amount if any, that was paid during the taxable year
for ordinary and necessary business expenses. And you
failed to establish the cost or other basis of the
property claimed to have been used in business.
B. Petition
The Court subsequently received and filed a petition for
redetermination challenging the notice of deficiency. The
petition was signed by Robert Hogue as Bella Vista’s purported
“trustee”.
Paragraph 4. of the petition, which sets forth the bases on
which Bella Vista challenges the notice of deficiency, alleges as
follows:
(1) The District Director issued a Statutory Notice of
Deficiency claiming petitioner had a tax liability
without there being a statutorily procedural correct
lawful tax assessment. (2) Attached to the Notice of
Deficiency, IRS Form 4549-A, income tax examination
changes, line 11 states, “Total Corrected Tax
Liability.” Respondent has failed to provide the
petitioners [sic] with the internal revenue code
section or regulation that was used to calculate this
total corrected tax liability. (3) The respondent has
failed to provide the petitioners [sic] with certified
assessment information as per Internal Revenue
Regulation 301.6203-1. (4) Respondent has failed to
identify the individual who will certify to the tax
adjustments the determination was based on. Therefore,
the deficiency is unenforceable as the determination
was based on unfounded evidence. (5) There can be no
meaningful administrative hearing until respondent
provides petitioner with the above requested
information, and until that time, petitioner will
disagree with all of the alleged Tax Liability. (6)
There has been no meaningful examination of books and
records therefore we believe this is a Naked
Assessment.
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C. Respondent’s Motion and Supplement
Respondent filed a motion to dismiss for lack of
jurisdiction. In the motion, respondent asserts that this case
should be dismissed for lack of jurisdiction “on the ground that
the petition was not filed by a trustee authorized to bring suit
on behalf of the trust.”
Upon the filing of respondent’s motion to dismiss, the Court
issued an Order directing Bella Vista to file an objection, if
any, to respondent’s motion, taking into account Rule 60 and
attaching to its objection a copy of the trust instrument or
other documentation showing that the petition was filed on behalf
of a fiduciary legally entitled to institute a case on Bella
Vista’s behalf.
Shortly after the issuance of the foregoing Order,
respondent filed a Supplement to respondent’s motion to dismiss,
attaching thereto copies of certain documents that respondent had
just received from Robert Hogue. The Court then extended the
time within which Bella Vista was to file any objection to
respondent’s motion to dismiss, as supplemented.
D. Bella Vista’s Objection
Ultimately, the Court received an Objection, leave for the
filing of which was granted, to respondent’s motion to dismiss,
as supplemented. The Objection, which was signed by Robert
Hogue, has as its core thesis that this case should be
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dismissed for lack of Subject Matter Jurisdiction on
the grounds that the Notice of Deficiency issued by
respondent was issued on heresay [sic] evidence.
Petitioner demands that respondent provide certified
facts or evidence of a statutory correct assessment or
tax liability to support any claimed deficiency.
Lacking a statutory correct assessment or tax liability
the notice of deficiency is null and void and this
court does not have Subject Matter Jurisdiction.
The Objection also states that Robert Hogue has authority to
represent the trust in this matter.
Attached to the Objection are copies of two purported trust
instruments. The first purported trust instrument is dated
January 1, 1994, and it identifies E.E. Salera D.C. as the
“creator”3 of Bella Vista Chiropractic Clinic Trust.4 This
instrument states that the trust shall have at least two
trustees. Although the instrument identifies a Michael Welch and
an Edmond A. Salera as the trustees, only Michael Welch
purportedly executed the document accepting his appointment as a
trustee; in contrast, there is nothing in the document (or
otherwise in the record) demonstrating that Edmond A. Salera
purported to accept his appointment as a trustee.
3
E.E. Salera, also known as Edmond E. Salera, has a case
pending before the Court assigned docket No. 3051-02. It appears
that the letters “D.C.” following his name in the purported trust
instrument are an abbreviation for doctor of chiropractic.
4
The record indicates that Bella Vista Chiropractic Clinic
Trust and Bella Vista Chiropractic Trust are one and the same.
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The second purported trust instrument is dated January 13,
1997, and it identifies a Carol Ruthenberg as the “creator” (or
“sovereign creator”) of Bella Vista Chiropractic Trust and Robert
Hogue as “legal trustee” (or “sovereign trustee”).
Notwithstanding its date of January 13, 1997, the instrument
identifies as an “article of personal property” subject to the
trust “One 2000 Honda Accord Lic# 4kmx 255" (Emphasis added).
The instrument also states that there need not be more than one
trustee.
Both purported trust instruments represent that they were
executed within the State of California and that California State
law is controlling.
E. Respondent’s Response
At the Court’s direction, respondent filed a Response to the
foregoing Objection. Simultaneously respondent filed a
Declaration, attaching thereto (inter alia) copies of Forms 1041,
U.S. Income Tax Return for Estates and Trusts, filed in the name
of Bella Vista Chiropractic Trust for 1997 and 1998. These
returns, which were executed by Robert Hogue on October 7, 1998,
and October 15, 1999, respectively, list the date the entity was
created as January 1, 1994.
F. Bella Vista’s Failure To Reply
After considering respondent’s Response and Declaration, the
Court directed Bella Vista to file a reply. Bella Vista failed
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to do so.
G. Hearings on Respondent’s Motion
This matter was called for hearing at the Court’s motions
sessions held in Washington, D.C., on September 25, 2002 and
October 23, 2002. Counsel for respondent appeared at the
hearings and offered argument and evidence in support of
respondent’s motion to dismiss, as supplemented. There was no
appearance by or on behalf of Bella Vista at either hearing, nor
did Bella Vista file any written statement pursuant to Rule
50(c).
Discussion
According to respondent, Bella Vista failed to show that
Robert Hogue is its duly appointed trustee. Respondent asserts
that as a result, no valid petition has been filed and the Court
must dismiss this case for lack of jurisdiction. We agree.
It is well settled that the taxpayer has the burden of
proving the Court’s jurisdiction by affirmatively establishing
all facts giving rise to our jurisdiction. See Patz Trust v.
Commissioner, 69 T.C. 497, 503 (1977); Fehrs v. Commissioner, 65
T.C. 346, 348 (1975); Wheeler's Peachtree Pharmacy, Inc. v.
Commissioner, 35 T.C. 177, 180 (1960); Natl. Comm. To Secure
Justice v. Commissioner, 27 T.C. 837, 838-839 (1957).
Furthermore, unless the petition is filed by the taxpayer, or by
someone lawfully authorized to act on the taxpayer's behalf, we
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are without jurisdiction. See Fehrs v. Commissioner, supra at
348.
Rule 60(a)(1) requires that a case be brought "by and in the
name of the person against whom the Commissioner determined the
deficiency * * * or by and with the full descriptive name of the
fiduciary entitled to institute a case on behalf of such person."
Rule 60(c) states that the capacity of a fiduciary or other
representative to litigate in the Court “shall be determined in
accordance with the law of the jurisdiction from which such
person's authority is derived.” The record shows that California
State law is controlling in this case.
Under California law, a trustee is authorized to commence
litigation on behalf of a trust. Cal. Prob. Code sec. 16249
(West Supp. 2002). However, Bella Vista has failed to provide
the Court with the documentary evidence necessary to support its
contention that Robert Hogue was vested with authority to
institute this action on its behalf. As it pertains to the
question of Robert Hogue’s status as a duly appointed trustee of
Bella Vista, the record in this case is, at best, muddled.
As previously discussed, Bella Vista presented the Court
with two versions of the purported trust instrument. The first
document, dated January 1, 1994, identifies E.E. Salera D.C. as
“creator” and a Michael Welch and an Edmond A. Salera as
trustees. The second document, dated January 13, 1997,
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identifies a “Carol Ruthenberg” as “creator” and Robert Hogue as
trustee. Significantly, Bella Vista made no attempt to explain
the patent discrepancies in the two purported trust
documents-–particularly the change in identity of the trust
“creator” and the change in identity of the trustees. We note
further that although the 1994 version of the trust instrument
required a minimum of two trustees, the 1997 version required
only one trustee.
In the absence of any persuasive basis for concluding that
Robert Hogue was duly appointed as the trustee of Bella Vista, we
shall dismiss this case for lack of jurisdiction consistent with
respondent’s motion, as supplemented.5
5
Robert Hogue has filed numerous petitions with the Court
on behalf of various so-called trusts. As is the case here,
those petitions were dismissed on the ground they were not filed
by a proper party. See Remedios Chiropractic Clinic Trust,
Robert Hogue, Legal Tr., docket No. 11070-01; JREP Trust, Robert
Hogue, Tr. v. Commissioner, docket No. 9795-01L; PERJ Trust,
Robert Hogue, Tr. v. Commissioner, docket No. 9794-01L; R&R
Trust, Robert Hogue, Tr. v. Commissioner, docket No. 7379-01S;
Family Chiropractic Trust, Robert Hogue, Tr. v. Commissioner,
docket No. 7378-01; PERJ Trust, Robert Hogue, Tr. v.
Commissioner, docket No. 6727-01; JREP Trust, Robert Hogue, Tr.
v. Commissioner, docket No. 6726-01; MARFRAN Trust, Robert Hogue,
Legal Tr. v. Commissioner, docket No. 12427-00S; Remedios
Chiropractic Clinic Trust, Robert Hogue, Legal Tr. v.
Commissioner, docket No. 12426-00; BLR-SLR Trust, Robert Hogue,
Legal Tr. v. Commissioner, docket No. 12425-00S; Rancho
Residential Facility Trust, Robert Hogue, Tr. v. Commissioner,
docket No. 9120-00; Residential Mgmt. Servs. Trust, Robert Hogue,
Tr. v. Commissioner, docket No. 9119-00; Home Health Servs.
Trust, Robert Hogue, Tr. v. Commissioner, docket No. 9118-00;
Sunshine Trust, Robert Hogue, Tr. v. Commissioner, docket No.
9117-00; Residential Mgmt. Servs. Trust, Robert Hogue, Tr. v.
(continued...)
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All of the arguments and contentions that have not been
analyzed herein have been considered, but do not require any
further discussion.
In order to give effect to the foregoing,
An appropriate order will be
entered.
5
(...continued)
Commissioner, docket No. 10400-99, filed as T.C. Memo. 2001-297.