Trammer v. Comm'r of Internal Revenue, 6615-22 (T.C. Apr 18, 2023)
Apr 18, 2023OUTCOME: While working at the Office of Chief Counsel, Peter won this case for the government.
Court's Holding: 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 an ... d opinion may not be relied upon as precedent in any other case. These 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. The Trammers filed tax returns for 2019 and 2020, reporting their income and myriad personal and business expenses. To prepare those returns, they took their receipts to a return preparer who decided how and where to report items on the Trammers' returns. Some of the personal expenses, such as home mortgage interest were reported in multiple places and double or triple counted. Many personal expenses, such as home maintenance and improvement, were reported as business expenses. Indirect business expenses were reported as direct business expenses. The Commissioner disallowed the expenses for lack of substantiation. At trial, the Trammers offered testimony and documents to support many of their expenses, but their evidence generally failed to establish either the amount of a particular expense or its deductibility. But they clearly established that the errors were those of their return preparer on whom they relied. As a result, we hold that they are liable for the tax determined by the Commissioner but not for the penalties.
