NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JAN 23 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

PATRICK JOSEPH SIMONELLI;                       No.    18-70664
JACQUELINE CARLIN SIMONELLI,
                                                Tax Ct. No. 17301-14
                Petitioners-Appellants,

 v.                                             MEMORANDUM*

COMMISSIONER OF INTERNAL
REVENUE,

                Respondent-Appellee.

                           Appeal from a Decision of the
                             United States Tax Court

                           Submitted January 21, 2020**
                             San Francisco, California

Before: W. FLETCHER and R. NELSON, Circuit Judges, and MOLLOY,***
District Judge.

      Patrick and Jacqueline Simonelli appeal the Tax Court’s determination that



      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      ***
              The Honorable Donald W. Molloy, United States District Judge for
the District of Montana, sitting by designation.
there were deficiencies in their income tax for taxable years 2011 and 2012

because they were not entitled to deduct expenses related to a claimed law practice

and to a vacation home they occasionally rented out. We have jurisdiction under

26 U.S.C. § 7482(a) and affirm.

      We review for “clear error the Tax Court’s factual determination that a

taxpayer has failed to produce sufficient evidence to substantiate a deduction.”

Sparkman v. Commissioner, 

, 1159 (9th Cir. 2007). We also review

“findings of negligence by the Tax Court under the clear error standard.” Hansen

v. Commissioner, 

, 1028 (9th Cir. 2006) (internal quotation marks

omitted). The Tax Court did not clearly err in determining that Patrick was not

engaged in a law practice in 2011 and 2012, that Jacqueline was not a real-estate

professional in 2011 and 2012, and that the Simonellis are liable for accuracy-

related penalties.

      1. The Tax Court correctly determined that the Simonellis were not entitled

to a deduction for expenses Patrick claimed were incurred in law practice with his

son in 2011 and 2012. Patrick was not licensed in California or Singapore, where

he was supposedly practicing law, and no evidence suggests Patrick held himself

out as an attorney or sought clients. Instead, the evidence shows that the legal

work Patrick performed—including on two personal lawsuits for his son and

probate work for his brother’s estate—generated no fees, and almost none of the


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work on those matters occurred in 2011 or 2012. The Simonellis therefore failed

to prove they were involved in the practice of law with continuity and regularity

with a primary purpose of making a profit in 2011 and 2012. See Commissioner v.

Groetzinger, 

, 35 (1987). Nor may the Simonellis deduct these

expenses under 26 U.S.C. § 183 because they reported no gross income from

Patrick’s law-related activities during those taxable years.

      2. The Tax Court also correctly determined that the Simonellis were not

entitled to a deduction for rental real-estate losses in 2011 and 2012. The

resolution of this issue depends on whether Jacqueline qualified as a real-estate

professional during those years. The Tax Court properly found that she did not.

Jacqueline did not spend more than 750 hours in real-property trades or business in

either of those years. 26 U.S.C. § 469(c)(7)(B)(ii). Instead, she spent many hours

on personal activities that do not qualify as real-property trades or business.

Moreover, we decline to consider whether Jacqueline qualified as a “Property

Manager” because the Simonellis raised this issue for the first time on appeal.

Bolker v. Commissioner, 

, 1042 (9th Cir. 1985).

      3. Finally, the Simonellis waived any challenge to the imposition of

accuracy-related penalties by failing to raise that issue in their Opening Brief.

Wagner v. Cty. of Maricopa, 

, 1059 (9th Cir. 2013). Even if the

issue were not waived, the Tax Court correctly determined that the Simonellis are


                                          3
liable for such penalties because they negligently failed “to keep adequate books

and records or to substantiate items properly.” 26 C.F.R. § 1.6662-3(b)(1).

      AFFIRMED.




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