T.C. Summary Opinion 2011-39
UNITED STATES TAX COURT
JEFFREY LAURENCE MARCHISIO, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 30806-09S. Filed March 30, 2011.
Jeffrey Laurence Marchisio, pro se.
James R. Bamberg, 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. 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. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code,
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and all Rule references are to the Tax Court Rules of Practice
and Procedure.
Respondent determined a deficiency of $1,170 in petitioner’s
2007 Federal income tax. The issue for decision is whether
petitioner received cancellation of indebtedness income of
$5,358.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Florida at the time the petition was filed.
Petitioner and his former spouse married in 1990. In 1997
petitioner’s spouse apparently sold her automobile and purchased
a new vehicle. She signed a retail installment contract
(financing contract). The financing contract listed petitioner
and his spouse as buyers and included two signatures. The amount
of the loan reflected in the financing contract was $14,423.01.
Petitioner was unaware of this transaction, did not sign the
financing contract, and never saw the new vehicle. Petitioner
and his spouse divorced in 2005.
In 2007 Wells Fargo Financial Acceptance, Inc. (Wells
Fargo), issued a Form 1099-C, Cancellation of Debt, to petitioner
reflecting the cancellation of the outstanding loan balance of
$5,358. Petitioner did not report the cancellation of
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indebtedness amount as income on his 2007 individual Federal
income tax return.
On September 28, 2009, the IRS issued a notice of deficiency
to petitioner determining a deficiency of $1,170. Petitioner
timely filed a petition contesting the deficiency. Petitioner
has consistently denied knowledge of a canceled loan.
Petitioner made multiple requests to Wells Fargo to obtain
information regarding the financing contract. Petitioner
ultimately obtained a copy of the financing contract from Wells
Fargo. Petitioner then contacted an Appeals officer (AO) about
the deficiency and informed the AO that he had no knowledge of a
loan with Wells Fargo but had been able to obtain a copy of the
financing contract. The AO informed petitioner that he would
make a notation in the administrative file regarding their
conversation, and petitioner faxed a copy of the financing
contract to the AO to include in the administrative file.
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct, and the taxpayer bears
the burden of showing that the determination is in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Under
certain circumstances, the burden may shift where a taxpayer
introduces credible evidence with respect to any factual issue
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relevant to ascertaining the income tax liability of the
taxpayer. Sec. 7491(a)(1).
Gross income includes any income from whatever source
derived, including income from discharge of indebtedness. Sec.
61(a)(12). Section 6201(d) provides that in any court
proceeding, where a taxpayer asserts a reasonable dispute with
respect to any item of income reported on an information return
and the taxpayer has fully cooperated with the Secretary, the
Secretary has the burden of producing reasonable and probative
information concerning the deficiency in addition to the
information on the information return.
Petitioner disputes that he borrowed money from Wells Fargo
or that he was a signatory to a financing agreement. Petitioner
provided a copy of the financing contract to respondent, and the
parties provided a copy of the financing contract to the Court.
The financing contract includes two signatures, that of
petitioner’s former spouse and a purported signature of Jeffrey
Marchisio. Petitioner asserts that the purported signature is
not his. The Court notes that the purported signature on the
financing contract does not appear to match petitioner’s
signature on the petition or on the stipulation of facts.
Petitioner credibly testified that he did not own, never
saw, and could not identify the vehicle listed in the financing
contract. Petitioner testified that he never saw his former
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spouse with the vehicle during the 8-year period from 1997, the
date of the financing contract, until the divorce in 2005. A
third-party witness corroborated petitioner’s testimony. We
conclude that petitioner has asserted a reasonable dispute as to
the Form 1099-C.1 Accordingly, the burden shifts to respondent
under section 6201(d).
Respondent has not produced any evidence to show that
petitioner borrowed funds from Wells Fargo or purchased the
vehicle which was the subject matter of the financing contract.
Nor has respondent rebutted any of the testimony provided by
petitioner or the witness. Respondent has failed to produce
reasonable and probative information beyond the information
return. We note that the evidence of the existence of the loan
was initially provided by petitioner to respondent with an
explanation that the financing contract was not signed by
petitioner. On the basis of this record, we conclude that
petitioner did not receive income from discharge of indebtedness
from Wells Fargo in 2007.
To reflect the foregoing,
Decision will be entered
for petitioner.
1
Respondent has not argued and the record does not
demonstrate that petitioner failed to fully cooperate with
respondent. Additionally, respondent has not refuted the
application of sec. 6201(d).