T.C. Summary Opinion 2012-42
UNITED STATES TAX COURT
BRUCE DEVON RUNYAN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11747-11S. Filed May 7, 2012.
Bruce Devon Runyan, pro se.
Tamara L. Kotzker, for respondent.
SUMMARY OPINION
COHEN, 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
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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. All section
references are to the Internal Revenue Code.
Respondent determined a deficiency of $8,000 in petitioner’s Federal income
tax for 2009. The issue for decision is whether petitioner is entitled to a section
36(a) first-time homebuyer credit in relation to a residence he acquired from a trust
of which he was a beneficiary.
Background
All of the facts have been stipulated, and the stipulated facts are incorporated
in our findings by this reference.
Petitioner is one of four beneficiaries of the J.E. Runyan Family Trust (trust)
pursuant to a trust agreement dated October 27, 1993. The trust has been
irrevocable as to petitioner’s interest since the death of his father. Petitioner’s
mother, Kathleen P. Runyan, is the surviving settlor and trustee of the trust.
On November 9, 2009, petitioner acquired a residence in Santa Fe, New
Mexico, from the trust. Petitioner was a first-time homebuyer, as defined in
section 36(c)(1), and used the residence as his principal residence, within the
meaning of section 36(c)(2), after the purchase and at the time the petition was
filed.
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On his Federal income tax return for 2009, petitioner claimed an $8,000
credit pursuant to section 36 for the purchase of the Santa Fe residence.
Respondent disallowed the credit in the notice of deficiency on which this case is
based.
Discussion
Section 36(a), as of the time that petitioner acquired his residence, allowed a
credit not to exceed $8,000 to a first-time homebuyer for the purchase of a principal
residence. Respondent agrees that petitioner was a first-time homebuyer and used
the acquired residence as his principal residence.
The parties dispute the applicability of section 36(c)(3)(A)(i), which provides
in material part:
(A) In general.--The term “purchase” means any
acquisition, but only if--
(i) the property is not acquired from a person
related to the person acquiring such property * * *
Section 36(c)(5) incorporates into the definition of “related persons” section 267,
dealing with disallowance of certain losses. Section 267(b)(6) specifies that no
deduction is allowable in respect of any loss from certain sales or exchanges
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between a fiduciary of a trust and a beneficiary of such trust. As a result of these
sections, petitioner’s acquisition of his residence does not qualify as a purchase for
purposes of the section 36(a) credit.
Petitioner notes that the “seller” in the transaction was shown on the
documents as the trust, and the title company’s lawyers handling the transaction
urged him to complete the transaction in order to qualify for the credit. He also
suggests that an Internal Revenue Service employee agreed with him that section
267(b)(6) is ambiguous and might mean that the fiduciary and the beneficiary have
to be the same person for the transaction to be disqualified. Neither argument is
relevant or, in any event, persuasive.
Section 267(a)(1) expressly disallows losses “between persons specified in
any of the paragraphs of subsection (b)”, which would mean losses between the
fiduciary of a trust and the beneficiary of that trust, necessarily disallowing losses
between separate persons in the described capacities. Its scope is not reasonably
interpreted as limited to one person acting in two capacities. Petitioner’s acquisition
of a residence from the trust does not entitle him to the credit.
Decision will be entered
for respondent.