Opinion
26566-22
01-17-2024
JACQUELINE GARCIA-BRAVO, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF SERVICE OF TRANSCRIPT
Richard T. Morrison Judge
Pursuant to Rule 152(b) of the Tax Court Rules of Practice and Procedure, it is
ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in this case before the undersigned judge at the Los Angeles, California Trial Session containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155.
Bench Opinion by Judge Richard T. Morrison
November 28, 2023
Jacqueline Garcia-Bravo v. Commissioner of Internal Revenue
Docket No. 26566-22
THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. The oral findings of fact and opinion are made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code and Tax Court Rule 152. Rule references in this opinion are to the Tax Court Rules of Practice and Procedure, and section references are to the Internal Revenue Code, in effect at all relevant times.In this case, petitioner seeks a redetermination of the $5,000 deficiency determined by respondent for tax year 2020.
On the evidence before us, and using the burden-of-proof principle explained below, the Court finds the following facts:
FINDINGS OF FACT
Petitioner resided in California when she filed her petition in this case.
In 2020, petitioner's son was enrolled in East Los Angeles College.
In 2020, petitioner paid Best Buy $656.99 for a new computer.
In 2020, petitioner paid Alex Garcia $2,500 for a used computer.
In 2020, petitioner paid Amazon $55.17 for an office chair.
In 2020, petitioner paid Amazon $94.10 for a laptop messenger bag.
In 2020, petitioner paid Amazon $31.89 for an ink cartridge for a printer.
In 2020, petitioner paid the college's bookstore for eight books for her son to use in his course of study.
On her 2020 return, petitioner claimed the American Opportunity Credit totaling $5,000 for two students, herself and her son.
On her 2020 return, petitioner reported her modified adjusted gross income was $79,802.
On October 28, 2022, respondent issued petitioner a notice of deficiency disallowing the $5,000 American Opportunity Credit. Petitioner timely filed her petition for redetermination of the deficiency.
OPINION
Under Rule 142(a)(1), petitioner bears the burden of proof.
Petitioner does not dispute that her modified adjusted gross income for 2020 precludes her from claiming the Lifetime Learning Credit provided by section 25A(c)(1).
The American Opportunity Credit under section 25A(b)(1) is equal to 100% of "qualified tuition and related expenses" paid by a taxpayer during the tax year for an eligible student up to $2,000, plus 25% of expenses so paid that exceed $2,000 but do not exceed $4,000. The term "qualified tuition and related expenses" is defined by section 25A(f)(1)(A) as "tuition and fees required for the enrollment or attendance of-(i) the taxpayer, (ii) the taxpayer's spouse, or (iii) any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151, at an eligible educational institution for courses of instruction of such individual at such institution."
Section 25A(b)(2)(C) provides that the American Opportunity Credit is available only for the first four years of postsecondary education. Petitioner does not dispute that her educational expenses are ineligible for credit because she has already claimed the credit for four prior tax years.
Treasury Regulation § l.25A-2(d)(1) provides that the term qualified tuition and related expenses means tuition and fees required for the enrollment or attendance of a student for courses of instruction at an eligible educational institution. Treasury Regulation § l.25A-2(d)(2)(ii) provides that "[q]ualified tuition and related expenses include fees for books, supplies, and equipment used in a course of study only if the fees must be paid to the eligible educational institution for the enrollment or attendance of the student at that institution."
At trial, petitioner contended that her qualified tuition and related expenses for 2020 include four expenses for which petitioner introduced receipts into evidence (the expenses for the two computers, the office chair, the laptop messenger bag, and the ink cartridge for a printer). Petitioner also contended that qualified tuition and related expenses include the expenses of books paid by petitioner, through her son, at the college bookstore for her son's course of study. The books were paid for in cash and petitioner did not introduce receipts for them into evidence. These five types of expenses are the only expenses that petitioner contended at trial are qualified tuition and related expenses. Of the five types of expenses, only the book expense was required to be paid to the college. Thus, only the book expense falls within the category of qualified tuition and related expenses. Respondent contends that the book expenses are unproven as to the amount paid. However, petitioner and petitioner's son credibly testified that eight books were purchased at a cost per book of at least $100. Under the Cohan principle, we reasonably estimate that the cost of each book was $100 and that the total cost of the books was $800. Cohan v. Commissioner, 39 F.2d 540, 543-44(2d Cir. 1930). To the extent respondent contends that the book expenses were not "required" within the meaning of the Code and the Regulations, we find that the book expenses were required for the enrollment and attendance of petitioner's son for courses of instruction at the college he attended.
In conclusion, we hold that the $800 cost of the books are qualified tuition and related expenses within the meaning of section 25A(b)(1). We further hold that these are the only qualified tuition and related expenses that are creditable to the petitioner under the American Opportunity Credit for 2020.
The parties shall submit computations under Rule 155 to allow us to decide the redetermined amount of the deficiency.
This concludes the Court's oral findings of fact and opinion in this case.
(Whereupon, at 4:32 p.m., the above-entitled matter was concluded.)
CERTIFICATE OF TRANSCRIBER AND PROOFREADER
CASE NAME: Jacqueline Garcia-Bravo v. Commissioner
DOCKET NO.: 26566-22
We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 9 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Sierra Self on November 28, 2023 before the United States Tax Court at its session in Los Angeles, CA, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording.
Susan Patterson, CDLT-174 12/14/23
Transcriber Date
Traci Fine, CDLT-169 12/18/23
Proofreader Date