T.C. Summary Opinion 2005-156
UNITED STATES TAX COURT
BRENDA NASH-MILTON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 318-04S. Filed October 26, 2005.
Brenda Nash-Milton, pro se.
Miriam C. Dillard, for respondent.
PANUTHOS, Chief 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. The decision
to be entered is not reviewable by any other court, and this
opinion should not be cited as authority. Unless otherwise
indicated, all subsequent section references are to the Internal
Revenue Code in effect at relevant times, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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Respondent determined a deficiency of $833 in petitioner’s
Federal income tax for 2001. The issues for decision are: (1)
Whether petitioner received and failed to report unemployment
compensation for the year in issue; (2) whether petitioner is
entitled to a deduction for contributions to an Individual
Retirement Account (IRA) for the year in issue; and (3) whether
petitioner is entitled to deduct Schedule C, Profit or Loss From
Business, expenses claimed on a Form 1040X, Amended U.S.
Individual Income Tax Return, submitted to respondent.
Background
Some of the facts have been stipulated, and they are so
found. The stipulation of facts and the attached exhibits are
incorporated by this reference. Petitioner resided in Orlando,
Florida, at the time the petition was filed.
This case was called for trial at a trial session of the
Court in Tampa, Florida, on September 20, 2004. Counsel for
respondent appeared at trial; however, there was no appearance by
or on behalf of petitioner. Respondent advised the Court that
petitioner and respondent had executed a stipulation of facts,
and, accordingly, this stipulation with attached exhibits was
filed and made part of the record. Petitioner provided no
explanation for her failure to appear at the trial session. By
order dated September 20, 2004, the Court deemed the matter
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submitted as fully stipulated. See Rule 149(a). Respondent’s
trial memorandum was filed on the same date.
On October 1, 2004, respondent filed a Notice of Proceeding
in Bankruptcy advising that petitioner had filed a petition with
the U.S. Bankruptcy Court for the District of Arizona under 11
U.S.C. chapter 13 on June 3, 2004.1 By order dated October 18,
2004, the Court stayed all proceedings under 11 U.S.C. section
362(a)(8) and vacated the pertinent part of the September 20,
2004, order in which the case was deemed submitted.
On February 1, 2005, the bankruptcy court confirmed
petitioner’s chapter 13 plan which provided for 60 monthly
payments. On July 30, 2005, the bankruptcy court granted
respondent’s motion to modify the automatic stay to permit the
Tax Court proceeding to continue.
By order dated August 31, 2005, petitioner was given until
September 22, 2005, to file an objection, if any, to submission
of this case fully stipulated. Petitioner did not file an
objection, and on October 5, 2005, the Court deemed this case
submitted fully stipulated.
As previously noted, petitioner failed to appear or present
argument, and, accordingly, the factual background is based on
the stipulation of facts and exhibits submitted to the Court.
During the taxable year 2001 petitioner received wages of $15,808
1
The petition was filed on Jan. 7, 2004.
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and unemployment compensation from the State of Arizona of
$3,485.
Tax Return and Notice of Deficiency
Petitioner timely filed a Form 1040, U.S. Individual Income
Tax Return, for 2001. A copy of the return was not made part of
this record, but the parties did attach a copy of a RTVUE, which
is a type of Internal Revenue Service electronic transcript
reflecting relevant information from the 2001 return.2
Petitioner did not report, on the 2001 return, the $3,485 of
unemployment compensation received from the State of Arizona.
Petitioner also claimed an IRA deduction in the amount of $2,000.
In an amended return, Form 1040X (stamped received by the IRS on
April 29, 2004), petitioner attached a Schedule C wherein she
reported gross receipts of zero and claimed expenses of $5,302.
In the notice of deficiency, respondent determined that
petitioner received unreported unemployment compensation income
of $3,485. Respondent further disallowed the claimed IRA
deduction.3
2
The Court notes that the RTVUE reflects wages of $17,808.
The stipulation of facts reflects wages of $15,808. The record
does not explain this discrepancy. The Court’s findings are
premised on the stipulation of facts.
3
The Schedule C, Profit or Loss From Business, deduction
of $5,302 was not claimed by petitioner until after the notice of
deficiency was issued and after the petition was filed.
Accordingly, the claimed deduction is considered by the Court as
if properly raised by amendment to petition.
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Discussion
Petitioner did not assert or present evidence or argument
that she satisfied the requirements of section 7491(a). We
conclude that the burden of proof does not shift in this case.
Petitioner failed to appear in this case to present any argument
or evidence that the adjustments made in the notice of deficiency
are incorrect. Further, petitioner presented no evidence to
support the Schedule C expenses claimed on the Form 1040X. The
fact that this case was submitted on the basis of the stipulated
record does not change the burden of proof. Rule 122(b);
Borchers v. Commissioner, 95 T.C. 82, 91 (1990), affd. on other
issues 943 F.2d 22 (8th Cir. 1991).
Section 61 provides that all income, from whatever source
derived, is includable in gross income unless specifically
excluded by another provision. See Commissioner v. Glenshaw
Glass Co., 348 U.S. 426, 431 (1955). “In the case of an
individual, gross income includes unemployment compensation.”
Sec. 85(a). “[T]he term ‘unemployment compensation’ means any
amount received under a law of the United States or of a State
which is in the nature of unemployment compensation.” Sec.
85(b). “The amount of any item of gross income shall be included
in the gross income for the taxable year in which received by the
taxpayer”. Sec. 451(a).
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Deductions, which are strictly construed, are a matter of
legislative grace, and the burden of clearly showing the right to
the claimed deduction is on the taxpayer. INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992). Section 219 permits,
subject to limitations, a deduction for a qualified retirement
contribution. Section 162 permits a deduction for ordinary and
necessary expenses paid or incurred in carrying on a trade or
business.
There is no evidence in this record indicating that a
contribution was made to a qualified retirement plan during the
year in issue or that petitioner paid or incurred expenses in
carrying on a trade or business. There are neither documents nor
testimony to establish entitlement to the claimed deductions.
Accordingly, petitioner is not entitled to the claimed $2,000
deduction for a contribution to an IRA or the claimed $5,302
deduction on Schedule C of the amended return.
In conclusion, we find in favor of respondent on all issues.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered for
respondent.