Decision will be entered under
VASQUEZ,
2003 | $53,265 | $10,653.00 |
2004 | 26,903 | 5,380.60 |
2005 | 62,991 | 12,598.20 |
Unless otherwise indicated, all section references are to the Internal Revenue Code (Code) in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
After concessions by respondent, 1 the issues for decision are whether petitioner: (1) Is entitled to deduct amounts received as compensation for services from Allstate Insurance Co. (Allstate) and First Command Financial Planning (First Command) as other miscellaneous deductions (miscellaneous itemized deductions) claimed on Schedule A, Itemized Deductions, for 2003, 2004, and 2005; (2) is entitled to deduct expenses for her home health care business claimed on Schedule C, Profit or Loss from Business, for 2003 and 2004; (3) must include in her 2004 gross income the distribution to her from the Savings and Profit 2010 Tax Ct. Memo LEXIS 205">*206 Sharing Fund of Allstate Employees (the distribution); (4) is liable for a 10-percent additional tax under
Some of the facts have been stipulated and are so found. The stipulation of facts and the accompanying exhibits are incorporated by this reference. At the time the petition was filed, petitioner resided in Texas.
Petitioner worked for Allstate as a sales manager in 2003 and as a district manager in 2004 and part of 2005. She worked for First 2010 Tax Ct. Memo LEXIS 205">*207 Command for the remainder of 2005. In 2003, 2004, and 2005 petitioner received $123,533, $126,820, and $226,155, respectively, as compensation. Petitioner included these amounts in her Federal income tax returns for 2003, 2004, and 2005 and claimed miscellaneous itemized deductions in equal amounts. 2
Petitioner also claimed $24,200 in Schedule C deductions for expenses related to her home herbal health care business for 2003. Her deductions were claimed for advertising expenses, automobile expenses, supplies, travel, meals and entertainment, and other expenses. She claimed her house had been flooded and therefore she could not recover any receipts from 2003. She did not give respondent's revenue agent, Cathy Street (Ms. Street), the names of her suppliers or other information to reconstruct the claimed expenses. She also claimed $250 in Schedule C deductions for 2004.
Petitioner received from the Savings and Profit Sharing 2010 Tax Ct. Memo LEXIS 205">*208 Fund of Allstate Employees a distribution of $26,800 by check dated April 30, 2004. Petitioner deposited the check into her interest-bearing checking account at Bank of America. She was 48 years old when she received the distribution. Petitioner did not include the distribution in her income for 2004. Ms. Street issued a summons to petitioner's bank to obtain bank records and performed a bank account analysis to identify the source of the deposit.
At trial petitioner claimed "Allstate Insurance Company is not a trade or business." She also disputed the "W-2s and 1099 information" on the grounds that: Allstate Insurance Company, First Command Financial Planning, and Etta Lowery do not fit within the specific kind and class expressly itemized in the definition of trade or business under
We advised petitioner that her arguments were frivolous and warned her that the Court might impose a penalty under
As a general rule, the taxpayer bears the burden of proving the Commissioner's deficiency determinations incorrect.
Petitioner has not raised a reasonable dispute within the meaning of
Deductions are a matter of legislative grace, and taxpayers have the burden of showing that they are entitled to any deduction 2010 Tax Ct. Memo LEXIS 205">*210 claimed.
Petitioner argues that her compensation from Allstate and First Command is deductible as a miscellaneous itemized deduction because neither Allstate nor First Command is a trade or business. She also claims that she herself is not a trade or business and that she is not an employee of Allstate or First Command.
Petitioner advances shopworn arguments characteristic of tax-protester rhetoric that have been universally rejected by this and other courts. See
Petitioner did not substantiate any of her Schedule C deductions. Accordingly, we sustain respondent's disallowance of the Schedule C deductions.
Generally, a distribution from a qualified retirement plan is includable in the distributee's gross income in the year of the distribution.
Petitioner was 48 years old when she received the distribution in 2004. 4 Petitioner did not offer any evidence of an applicable exception. We therefore sustain respondent's determinations that the distribution is includable in petitioner's income for 2004 and that she is liable for 2010 Tax Ct. Memo LEXIS 205">*212 the 10-percent additional tax. See
Pursuant to
The Commissioner has the burden of production with respect to the accuracy-related penalty.
Whether otherwise applied because of a substantial understatement of income tax or negligence or disregard of rules or regulations, the accuracy-related penalty is not imposed with respect to any portion of the underpayment as to which the taxpayer acted with reasonable cause and in good faith. See
Respondent has satisfied the burden of production. Petitioner's 2003, 2004, and 2005 income tax returns contain understatements of tax greater than $5,000 and greater than 10 percent of the amount of tax required to be shown on the returns.
Petitioner did not offer any evidence of reasonable cause or good faith. Accordingly, we sustain respondent's determination as to the
We warned petitioner that her arguments were frivolous and have been universally rejected by this and other courts. We further advised petitioner that the Court has the discretion to impose a penalty of up to $25,000 if she were to proceed with such arguments.
Although respondent has not moved for a
In reaching all of our holdings herein, we have considered all arguments made by the parties, and to the extent not mentioned above, we conclude they are irrelevant or without merit.
To reflect the foregoing,
1. n1 Respondent concedes income tax adjustments of $2,121 and $5,118 for 2004 and 2005, respectively.
The self-employment tax and related deductions and the amount of petitioner's personal exemption are computational matters. See
Petitioner argued in her pretrial memorandum and at trial that the Court did not have jurisdiction and respondent must pursue the return of the refunds under
2. n2 Petitioner claimed total Schedule A itemized deductions of $154,949, $131,573, and $286,877 for 2003, 2004, and 2005, respectively. Respondent disallowed miscellaneous itemized deductions of $124,256, $127,413, and $288,537 for 2003, 2004, and 2005, respectively.↩
3. n3 The term "qualified retirement plan" includes a plan described in
4. n4 Regardless of whether the additional tax under