T.C. Summary Opinion 2007-84
UNITED STATES TAX COURT
MARLIN D. CUTSHALL, SR., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23959-05S. Filed May 24, 2007.
Marlin D. Cutshall, Sr., pro se.
Ronald E. Collins, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code.
Unless otherwise indicated, all section references are to the
Internal Revenue Code as in effect for the year at issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure. 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.
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Respondent determined for 2003 a deficiency in petitioner’s
Federal income tax of $678. After concessions,1 the sole issue
for decision is whether petitioner is entitled to claim a
business loss deduction of $10,000 on Schedule C, Profit or Loss
From Business.
Background
The exhibits received into evidence are incorporated herein
by reference. At the time the petition in this case was filed,
petitioner resided in York, Pennsylvania.
Petitioner filed separately from his spouse, a Form 1040,
U.S. Individual Income Tax Return, for 2003. On Schedule C
petitioner claimed a deduction of $10,000 for a business loss
from the taxable year 1982.
Respondent issued to petitioner a statutory notice of
deficiency for 2003 disallowing the claimed deduction for lack of
substantiation.
Discussion
The Commissioner’s determinations are presumed correct, and
generally taxpayers bear the burden of proving otherwise.2 Rule
1
Petitioner concedes that the Social Security retirement
benefits of $7,404 and the pension from the Public School
Employees Retirement System of $8,260 that he received in 2003
are includable in gross income.
2
Petitioner has not raised the issue of sec. 7491(a), which
shifts the burden of proof to the Commissioner in certain
situations. The Court concludes that sec. 7491 does not apply
(continued...)
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142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).
Moreover, tax deductions are a matter of legislative grace with a
taxpayer bearing the burden of proving entitlement to the
deductions claimed. Rule 142(a)(1); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992).
In 1982, petitioner leased a parcel of land on which he and
his family ran a small produce stand out of a moveable type
structure. Petitioner contends that, despite his lease, a “group
of lawyers” wanted to build a motel on the land. Petitioner
claims that when he refused to move, “they took a truck in and
took everything that I had”. As a result, petitioner’s produce
stand was forced to shut down, and petitioner allegedly sustained
a business loss of $10,000.
On his 1982 return, petitioner claimed a business loss of
$10,000 for his produce stand. Petitioner’s testimony suggests
that he expected the Internal Revenue Service (IRS) to reimburse
him, in actual dollars, for the business loss claimed on the
return. When petitioner did not receive any form of response
from the IRS, he continued to claim a business loss of $10,000 on
each and every return that he filed with the IRS after 1982
because he wanted “a sense of fairness from the IRS.”
2
(...continued)
because petitioner has not produced any evidence that establishes
the preconditions for its application.
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Petitioner complained on part V of Schedule C for 2003 that
the IRS has never given him a business loss, that the “mafia
lawyer” stole all he owned, and that he has fought with “them”
for 25 years.
Contrary to petitioner’s belief, he was apparently allowed a
business loss deduction of $10,000 for each year from 1982 to
2002. Under section 6212(a), if respondent determines that there
is a deficiency, he is authorized to issue to petitioner a notice
of deficiency. Respondent, however, did not issue to petitioner
a notice of deficiency or otherwise notify him that the
deductions claimed on the returns for 1982 to 2002 were
disallowed. See secs. 6212(a), 6320, 6330. Petitioner therefore
had the benefit of reducing his gross income by $10,000 for each
year from 1982 to 2002.
At trial, petitioner further complains that even though he
claimed a business loss on each and every return filed on and
after 1982, he was not granted an opportunity to appear before
the Court until the 2003 return was filed.
For the taxable year 2003, respondent finally disallowed the
business loss deduction of $10,000, determined a deficiency, and
issued to petitioner a notice of deficiency, often described as
the “ticket to the Tax Court”. Boyd v. Commissioner, 124 T.C.
296, 303 (2005), affd. 451 F.3d 8 (1st Cir. 2006); see sec.
6213(a).
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The Court has reviewed the evidence presented by petitioner
and respondent at trial. The Court agrees with respondent’s
determination in the deficiency notice that petitioner has failed
to substantiate that he had a business loss of $10,000 in 1982.
See Hradesky v. Commissioner, 65 T.C. 87 (1975), affd. per curiam
540 F.2d 821 (5th Cir. 1976) (holding that taxpayers bear the
burden of substantiating the amount and purpose of any claimed
deduction). Moreover, even if petitioner had substantiated that
he had a business loss in 1982, that loss would not be deductible
against his income in 2003. See sec. 165; United States v.
Skelly Oil Co., 394 U.S. 678, 684 (1969) (multiple deductions of
the same item are generally precluded).
Accordingly, petitioner is not entitled to claim a Schedule
C business loss deduction of $10,000 for 2003.
To reflect the foregoing,
Decision will be entered
for respondent.