Opinion
8517-24S
08-02-2024
LEE VANG, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Kathleen Kerrigan Chief Judge.
On May 27, 2024, petitioner filed a Petition to commence this case seeking a review of a notice of deficiency issued for petitioner's 2021 taxable year. In that notice of deficiency, the Internal Revenue Service (respondent) contends that petitioner is liable for (1) a deficiency in the amount of $50,942 and (2) a penalty under section 6662(b)(2) and (d) on the ground of substantial understatement of income tax in the amount of $10,188. Petitioner elected to have this case conducted under the Court's small tax case procedures.
On May 28, 2024, the Court issued an Order to Show Cause directing petitioner to show cause in writing why this Court should not remove the small tax case designation. On July 22, 2024, petitioner filed a Response to the Order to Show Cause. Petitioner explains that the deficiency arises from a sale of stock, that respondent calculated the deficiency without taking into account the basis of that stock, and that in calculating income tax liabilities, petitioner is entitled to reduce the proceeds from the sale by that basis. Petitioner asserts that reducing the proceeds by the stock basis would lower the amount of deficiency making this case eligible to be conducted under the small tax case procedures.
Under I.R.C. section 7463(a), a case may not be conducted as a small tax case if "the amount of the deficiency placed in dispute" exceeds $50,000. At this stage of the proceeding the amount in dispute between the parties does indeed exceed $50,000. Petitioner is advised that at a later stage of this proceeding petitioner will have an opportunity to present to the Court any documentary evidence and any arguments as to why the deficiency per the notice of deficiency is incorrect. At this juncture, however, the amount of the deficiency placed in dispute exceeds the jurisdictional threshold for small tax cases.
Accordingly, because this case is ineligible to be conducted under the small tax case procedures, it is
ORDERED that the Court's Order to Show Cause, dated May 28, 2024, is hereby made absolute. It is further
ORDERED that the docket number of this case is amended by deleting the letter "S" therefrom and the Clerk of the Court is hereafter directed to process this case for trial or other disposition as a regular tax case.
Petitioner is encouraged to contact counsel for Respondent (whose name appears on the Answer, filed June 28, 2024) and to discuss documentary evidence concerning the stock sales at issue.