John C. and Margaret T. Ramig, (2011)

Docket Number: 29149-08

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John C. and Margaret T. Ramig, (2011)

T.C. Memo. 2011-147

UNITED STATES TAX COURT JOHN C. AND MARGARET T. RAMIG, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 29149-08. Filed June 27, 2011.

Kevin O'Connell and Katherine de la Forest (specially recognized), for petitioners.

John D. Davis and Katherine Caballero, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION MORRISON, Judge: On September 5, 2008, respondent (the 'IRS') issued petitioners a notice of deficiency for tax years 2004 and 2005. The notice stated that the IRS (i) determined deficiencies in tax of $953 for 2004 and $22,1141 for 2005 and (ii) determined that the Ramigs were liable for penalties under section 6662(a)2 of $190.60 for 2004 and $4,442.80 for 2005. The Ramigs timely filed a petition disputing these determinations; on the date of filing, they were Oregon residents.

The Ramigs claim they are entitled to the following deductions: (i) $8,781 for 2004 for expenses of a rental property; (ii) $6,719.43 for 2004 and $6,573.58 for 2005 for legal expenses; and (iii) $46,131.40 for 2005 for the worthlessness of purported loans. We find that the Ramigs are entitled to the deductions for legal expenses but not for the rental property expenses or the worthlessness of the purported loans.

1The notice of deficiency and its attached explanation are inconsistent as to the amount of the deficiency in tax for 2005. The first page of the notice states that the deficiency is $22,114. But the attached explanation states that the deficiency is $22,214. The Ramigs do not assert that this error means that $22,114 is the upper bound of the deficiency we can decide in this proceeding. In any event, because we find the Ramigs are entitled to deductions disallowed by the notice of deficiency, the deficiency we decide will be less than $22,114.

2Unless otherwise indicated, section references are to the Internal Revenue Code, as amended, effective during the years at issue, and Rule references are to the Tax Court Rules of Practice and Procedure.

FINDINGS OF FACT The parties stipulated some facts; those facts are so found. John C. Ramig3 is an attorney; he is licensed in Oregon. After graduating from the Univers...

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