FILED
United States Court of Appeals
Tenth Circuit
January 20, 2012
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
PAUL DOUGLAS MOREDOCK and
CANDACE LOUISE MOREDOCK,
No. 11-9015
Petitioners - Appellants,
v. (United States Tax Court)
COMMISSIONER OF INTERNAL (Tax Court No. 10704-09)
REVENUE,
Respondent - Appellee.
ORDER AND JUDGMENT *
Before LUCERO, ANDERSON, and GORSUCH, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination
of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Plaintiffs and appellants, Paul Douglas Moredock and Candace Louise
Moredock, appeal an adverse determination by the Tax Court, upholding the
decision by the Commissioner of Internal Revenue (“Commissioner”) that the
Moredocks were liable for income tax deficiencies and a penalty. For the
following reasons, we affirm.
BACKGROUND
We begin by noting that this is not the first time the Moredocks have been
involved in litigation. Mr. Moredock was formerly an Asylum Officer with the
Immigration and Naturalization Service (“INS”). His employment there was
contentious, and he ultimately left the INS, settling an adverse employment action
claim against the INS by means of a written settlement agreement. Mr. Moredock
subsequently believed the INS settlement was not properly funded (he challenged
the tax treatment of the settlement proceeds), so he filed a petition with the Merit
Systems Protection Board seeking enforcement of the settlement agreement in the
way he believed was appropriate. The Board ruled against Mr. Moredock, who
then appealed to the Federal Circuit. It also rejected his claims, finding them all
to be “without merit.” Moredock v. DOJ, 2003 WL 26098542 (Fed. Cir. Jan. 10,
2003).
The Moredocks have also been involved in three prior tax litigations. The
Moredocks filed a petition relating to a deficiency the Commissioner had
-2-
determined for the tax year 2000. That case was ultimately settled. There was
also a petition relating to the tax year 2006, which was dismissed for lack of
jurisdiction. Finally, there was a petition relating to the tax year 1989, with Tax
Court case number 6556-89, which appears unrelated to the instant case. 1
With respect to the instant case, the Moredocks filed Form 1040 federal
income tax returns for the years 2006 and 2007, in which they claimed various
amounts of income or loss, including fuel tax credits of $142 in 2006 and $171 in
2007, and “other credits” of $10,789 in 2006. They did not cite any credit
recognized by the Internal Revenue Code (“IRC”) as the basis for the “other
credits” claimed. Rather, they claimed they could credit “refunds withheld” for
the years 2001, 2004 and 2005 (and amounts of OASDI (Social Security) and
Medicare taxes attributable to the year 2000), against their tax liability for 2006.
After an audit, the Commissioner determined that the Moredocks owed
income tax deficiencies of $10,279 for 2006 and $22,218 for 2007, as well as a
failure-to-timely-file penalty of $5,551 for 2007. 2 The Moredocks appealed that
determination to the Tax Court, which agreed with the Commissioner’s
assessments, stating, in part, as follows:
1
Neither the briefs nor the record provide much specific information about
these earlier tax cases.
2
The Moredocks did not file their 2007 return until September 8, 2008,
several months after the April 15, 2008 deadline.
-3-
During the trial, the Court struggled to follow the logic of
petitioners’ argument. The Court believed that petitioners would
address the adjustments determined in the notices of deficiency. As
to those matters, however, petitioners had nothing to say. They
focused their efforts on their position that the INS had over-withheld
or continues to over-withhold employment taxes on payments under
the life annuity . . . and on the culpability of the IRS in permitting
that over-withholding to take place. It is now apparent that that is
what they conceive this proceeding to be about. It was the focus of
their petition . . . . It was the focus of their pretrial memorandum.
. . . Finally, it was the focus of argument at trial. However, that
matter does not bear any connection to any of the adjustments
determined in the notices of deficiency.
At trial petitioners did not specifically address any of the
adjustments determined by respondent in the notices of deficiency for
2006 and 2007, including respondent’s determination that petitioners
are liable for the failure-to-file penalty for taxable year 2007. Based
upon the record of this case, the adjustments determined by
respondent in the notices of deficiency must be sustained.
Decision at 20-21, R. Vol. I (emphasis added). This appeal from the Tax Court’s
decision followed.
DISCUSSION
We review the decision of the Tax Court “in the same manner and to the
same extent as decisions of the district courts in civil actions tried without a
jury.” 26 U.S.C. § 7482(a)(1). Accordingly, we review factual questions for
clear error and legal questions de novo. Cox v. Comm’r, 514 F.3d 1119, 1123
(10th Cir. 2008); Olpin v. Comm’r, 270 F.3d 1297, 1298 (10th Cir. 2001);
Schelble v. Comm’r, 130 F.3d 1388, 1391 (10th Cir. 1997). The Tax Court’s
-4-
evidentiary and sanctions determinations are reviewed for abuse of discretion.
Arnett v. Comm’r, 242 Fed. Appx. 496, 497 (10th Cir. 2007). As a general rule,
the Commissioner’s determinations are presumed correct, and the taxpayer bears
the burden of proving that those determinations are erroneous. See INDOPCO v.
Comm’r, 503 U.S. 79, 84 (1992).
Furthermore, deductions are a matter of legislative grace, and the taxpayer
bears the burden of proving the entitlement to any deduction claimed. Id. (citing
Interstate Transit Lines v. Comm’r, 319 U.S. 590, 593 (1943)). Additionally, the
Tax Court is not bound to accept as true the unverified and undocumented
testimony of a taxpayer. Hradesky v. Comm’r, 65 T.C. 87, 90 (1975), aff’d, 540
F.2d 821 (5th Cir. 1976). And, as the Tax Court here observed, a taxpayer’s
failure to introduce documentary evidence which is within his possession or
control and which he implies would be favorable to him, gives rise to the
presumption that, if it was produced, it would be unfavorable to the taxpayer.
Recklitis v. Comm’r, 91 T.C. 874, 890 (1988).
The Tax Court did not find any part of its brief decision to be difficult or
doubtful. It applied the general principles, as stated above, to the Moredocks’
case, and found that the Moredocks’ claims were either unfounded or based on
principles of law not recognized by our legal system. After carefully reviewing
the Moredocks’ brief and the record, we agree with the Tax Court that they have
presented no persuasive argument for reversing the Tax Court’s decision, or the
-5-
arguments they have presented on appeal have been waived because they failed to
argue them below. We accordingly affirm the Tax Court’s decision, for
substantially the reasons stated in that decision.
CONCLUSION
For the foregoing reasons, we AFFIRM the decision of the Tax Court.
ENTERED FOR THE COURT
Stephen H. Anderson
Circuit Judge
-6-