Goldberg v. Commissioner
| Decision Date | 30 October 1989 |
| Docket Number | 39412-86.,Docket No. 39411-86 |
| Citation | 58 TCM (CCH) 519,1989 TC Memo 582 |
| Parties | Bruce Goldberg, Inc. v. Commissioner. Bruce Goldberg v. Commissioner. |
| Court | U.S. Tax Court |
Bruce Goldberg, pro se and as an officer of petitioner Bruce Goldberg, Inc. Sandra M. Gilmore, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent determined deficiencies in and additions to tax as follows:
Additions to Tax
Under
Petitioner Year Deficiency Section 6653(b)2
Bruce Goldberg ............. 1981 $11,487.36 $5,743.68
1982 12,070.53 6,035.27*
1983 10,944.41 5,472.21*
Additions to Tax
Fiscal Year Under
Petitioner Ending Deficiency Section 6653(b)
Bruce Goldberg, Inc. ....... July 31, 1982 $ 533.57 $ 266.78*
July 31, 1983 9,440.313 4,720.16*
* plus 50 percent of the interest due on the portion of the underpayment attributable to fraud
After concessions, in addition to two preliminary matters involving the admissibility of certain documents and a motion by respondent to amend his answer, the issues remaining for our consideration are: (1) whether petitioners are liable for the additions to tax for fraud under section 6653(b) for the taxable years in issue; (2) whether the assessment and collection of taxes and additions to tax for the taxable years 1981 and 1982 are barred by the period of limitations; (3) whether certain amounts conceded by petitioner Bruce Goldberg to be nondeductible as "charitable contributions" to the Universal Life Church are properly deductible under other provisions of the Internal Revenue Code, and (4) whether petitioner Bruce Goldberg, Inc. failed to report certain interest income and failed to substantiate its entitlement to deductions in excess of respondent's determinations.
Evidentiary Objections to ULC Documents.
Respondent has objected to the admission into evidence of various documents upon which petitioner Bruce Goldberg4 claims he relied in setting up and operating a local charter of the Universal Life Church ("ULC"). Petitioner asserts that the documents are relevant to motive and thus relevant to the question of fraud.
Respondent objected on the grounds of "hearsay and relevancy" to the admission of an April 30, 1976 edition of a newsletter called "The Modesto Bee" and to the admission of seven unsigned and undated documents entitled "Free," "Church, "Congregation," "Questions and Answers," "Information Monthly," "Minister" and "Become a Minister and Start a Tax Exempt Church." We find that those documents are admissible insofar as they relate to petitioner's motive or intent in setting up and operating a local charter of the ULC. Having conceded the issue of the deductibility of contributions to his local charter, petitioner apparently did not offer these documents, which primarily contain propaganda about such charters, to prove the truth of the matters contained therein. Because the documents are being offered solely for the purpose of evaluating petitioner's intent, respondent's hearsay objection will be denied. See Rule 801(c), Federal Rules of Evidence ("FRE") (definition of hearsay). We similarly find the documents to be relevant to petitioner's motive and intent as they relate to the issue of fraud, discussed infra. FRE Rule 401.5
Respondent objected to the admission of a document entitled "Instruction for Annual Receipt of Contributions" on the grounds of relevancy, hearsay, and also authenticity. As in the case of the other documents offered by petitioner, respondent's hearsay objection is misplaced, as the document was not offered to prove the truth of the matters contained therein. FRE Rule 801(c). We also find the document in question, which contains instructions from ULC headquarters in Modesto, California ("ULC Modesto") on how to proceed in the event of an Internal Revenue Service audit, relevant to petitioner's motive and intent as they relate to the issue of fraud. FRE Rule 401. With respect to respondent's authenticity objection, we find petitioner's testimony sufficient to authenticate the document under FRE Rule 901(b)(1). The authenticity of the document in question is also supported by its content, taken in conjunction with the circumstances. FRE Rule 901(b)(4).
We do not address respondent's evidentiary objections concerning certain other documents, as the admissibility of such documents would have no bearing on our conclusions.
Respondent's Motion to Amend Answer.
Respondent concedes that, unless fraud is proven, the period of limitations bars the assessment and collection of tax with respect to petitioner's 1981 taxable year and with respect to the corporation's fiscal year ending July 31, 1982.
Respondent moved at the conclusion of trial to amend his answer pursuant to Rule 41(b)(2) to assert that the period of limitations with respect to petitioner's 1982 taxable year was extended under section 7609(e), and is therefore open even absent proof of fraud. Respondent submitted that motion in writing, along with an amended answer, approximately four months after the conclusion of trial. For the reasons discussed below, respondent's motion will be denied.
On March 6, 1984, during the audit of petitioners, respondent's agents served summonses on various financial institutions to obtain the bank records of petitioners and of the ULC charter controlled by petitioner. On March 22, 1984, petitioner on behalf of himself and the corporation filed a petition to quash the summonses in the U.S. District Court for the District of Maryland. On May 31, 1984, the United States District Court entered an Order and Memorandum denying the petition to quash the summonses and granting the government's motion for summary judgment. This case was reported as Goldberg v. Commissioner 84-2 USTC s 9650, 586 F.Supp. 92 (D. Md. 1984).
Section 7609(e) in general terms provides for a suspension of the period of limitations under section 6501 if a taxpayer files a petition to quash a summons of his bank or other financial records. Despite the applicability of the section 7609(e) extension to the instant case, respondent's answers to the petitions filed herein made no mention of that provision. The only extension provision properly raised by respondent in his answers was the provision in section 6501(c)(1) relating to fraud.
At a hearing held three days prior to the commencement of the trial of the instant case, respondent brought to this Court's attention petitioner's refusal to stipulate to facts related to the summons enforcement proceedings. Petitioner's response was that he had refused to stipulate to these facts because this Court had already ruled, in a pretrial motion, to deny respondent's motion to suspend the statute of limitations under section 7609(e).6 Petitioner further stated that Respondent at that time specifically stated that the purpose of offering the facts related to the summons enforcement was "To show the taxpayer's lack of cooperation during the audit." The Court concluded the discussion of this matter by stating that
Respondent's trial memorandum made no mention of the issue related to section 7609(e), and respondent's opening statement at trial ended as follows:
Notwithstanding the above-quoted remarks, respondent moved at the conclusion of trial to "conform the pleadings to the proof" to allege that the period of limitations was open under section 7609(e) with respect to petitioner's 1982 taxable year. Petitioner again asserted that a pretrial motion on this issue had already been denied by this Court. In response to this Court's inquiry about whether there was evidence in the record on the issue related to section 7609(e), respondent stated that the facts related to the summons enforcement proceedings had been stipulated. The Court then determined that it would rule on respondent's motion to conform in its final opinion. The Stipulation of Facts submitted by the parties contained information related to the summons enforcement proceedings, but failed to mention petitioner's prior relevancy objection.
The parties filed seriatim briefs in this case. In his opening brief, respondent argued that the amendment to his answer should be allowed because, "As indicated in the post-trial discussions on the record," petitioner was "advised" prior to trial of respondent's intention to raise the issue related to section 7609(e), and because the period of limitations, generally, was not a new issue in the case. Petitioner asserted again in his answering brief that this Court had already denied respondent's motion concerning section 7609(e) in a pretrial conference call. The brief further argued that respondent had failed to submit the motion in writing as requested by the Court, and that petitioner would be prejudiced by this Court's allowance of the amendment.
Respondent's reply brief reiterates the fact that petitioner was "aware" of respondent's intention to raise the issue...
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