Opinion
7896-19
11-09-2023
CASSANDRA TUCKER & EDWARD BRODIE, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
TAMARA W. ASHFORD, JUDGE.
On July 17, 2023, after trial and briefing, the Court issued a Memorandum Findings of Fact and Opinion (T.C. Memo. 2023-87). The Opinion ended by stating that a "[d]ecision will be entered under Rule 155", i.e., the Tax Court Rule under which the parties are to submit computations according to the Court's Opinion, showing the correct amount of the tax liability for each taxable year at issue to be included in the decision.
On September 29, 2023, respondent filed his computation for entry of decision, attaching thereto the proposed decision. On October 20, 2023, pursuant to the Court's October 4, 2023, Notice of Filing of Computation Under Rule 155, petitioners filed an alternative computation for entry of decision with respect to two of the three taxable years at issue (i.e., 2015 and 2016, but not 2017). On October 31, 2023, petitioners filed a revised, alternative computation with respect to 2016 only.
The details of the computation are reflected on a Form 5278, Statement - Income Tax Changes.
Respondent's computation for 2015 results in a deficiency in income tax due from petitioners of $2,525.00 and no section 6662(a) penalty due from petitioners.Respondent's computation for 2016 results in a deficiency in income tax due from petitioners of $23,283.00, a section 6651(a)(1) addition to tax due from petitioners of $1,561.75, and no section 6662(a) penalty due from petitioners. Respondent's computation for 2017 results in a deficiency in income tax due from petitioners of $8,325.00 and no section 6662(a) penalty due from petitioners.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times.
Petitioners' alternative computations for 2015 and 2016, as revised, result in deficiencies in income tax due of $1,415.00 and $13,758.00, respectively. These lower deficiency amounts are attributable to petitioners' having (1) not made an adjustment of $18,526.00 to their 2016 income relating to mortgage interest on line 7g, Itemized Deductions, of Form 5278; (2) seemingly used different tax rates than respondent to arrive at the "Corrected Tax Liability" amounts for 2015 and 2016 on line 14 of Form 5278; (3) claimed an American Opportunity Tax Credit of $1,000 for 2015 on line 15c of Form 5278; and (4) claimed a Child Tax Credit of $900 for 2016 on line 15b of Form 5278.
Petitioners' alternative computations for 2015 and 2016, as revised, are incorrect. Regarding the $18,526.00 adjustment relating to mortgage interest, by way of a Stipulation of Settled Issues (and reiterated in the First Stipulation of Facts), petitioners conceded this adjustment, and thus it must be taken into account with respect to the 2016 computation. Regarding the tax rates used for 2015 and 2016, respondent correctly used (and petitioners did not) the tax rates applicable to petitioners' various items of income. Regarding the American Opportunity Tax Credit, petitioners are attempting to claim this credit for the first time; they neither claimed it on their 2015 joint federal income tax return nor asserted that they were entitled to it before this Court until now, and they have not provided a scintilla of evidence with their computation that they are entitled to it. Accordingly, it is improper for petitioners to do so now. Finally, regarding the Child Tax Credit, this was disallowed in the notice of deficiency, but until now petitioners have not raised their entitlement to it. Accordingly, like the American Opportunity Tax Credit, it is improper for petitioners to do so now.
Both documents recite the following: "Respondent concedes $9,250.00 of the adjustment to itemized deductions of $27,776.00 for taxable year 2016, relating to cash charitable contributions. Petitioners concede the remainder of the adjustment [$18,526.00], relating to mortgage interest."
The Court is satisfied that respondent's computations for 2015-17 are consistent with our Opinion and are therefore correct. It is hereby
ORDERED and DECIDED that there are deficiencies in income tax due from petitioners for the 2015, 2016, and 2017 taxable years in the amounts of $2,525.00, $23,283.00, and $8,325.00, respectively. It is further
ORDERED and DECIDED that there is an addition to tax due from petitioners under I.R.C. section 6651(a)(1) for the 2016 taxable year in the amount of $1,561.75. It is further
ORDERED and DECIDED that there are no penalties due from petitioners under I.R.C. section 6662(a) for the 2015, 2016, and 2017 taxable years.