In re Bechtelheimer, Bankruptcy No. 96-02352-8G3.
| Decision Date | 27 July 1999 |
| Docket Number | Bankruptcy No. 96-02352-8G3. |
| Citation | 239 BR 616 |
| Parties | In re Paul D. BECHTELHEIMER, Nelda K. Bechtelheimer, Debtors. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
Richard B. Feinberg, Patrick R. Smith, Feinberg, Isaak & Smith, P.A., Tampa, Florida, for debtors.
B. Gray Gibbs, Gibbs & Runyan, P.A., St. Petersburg, Florida, for debtors.
John A. Galotto, Trial Attorney, Tax Division, United States Department of Justice, Washington, D.C., for the United States of America.
Charles R. Wilson, United States Attorney, Tampa, Florida, for the United States of America.
Terry E. Smith, Bradenton, Florida, trustee.
ORDER OVERRULING OBJECTION TO THE CLAIM OF DEPARTMENT OF TREASURY — INTERNAL REVENUE SERVICE
THIS CASE came on for hearing on Objection to the Claim of Department of Treasury — Internal Revenue Service filed by Paul D. and Nelda K. Bechtelheimer (the "Debtors") and the Response to Debtors' Objection to Claim filed by the United States of America. The Internal Revenue Service ("IRS") filed an amended proof of claim in the amount of $48,387.23 for unpaid taxes and penalties assessed against the Debtors (Claim No. 18). The claim is both a priority and general unsecured claim. The Debtors object to the claim, specifically because the claim arises from the disallowance of certain income tax deductions for the tax years 1991, 1992, 1993, and 1994.
Paul Bechtelheimer was born in 1935 and raised in Sebetha, Kansas. He met his wife, Nelda, there, and they were married there in 1957. He lived most of his early adult life in Kansas, driving a truck, working in a warehouse in Topeka, working in insurance in Manhattan, working in a bank in Kansas City, and working for a small manufacturing company in Shawnee. He then "tried to make things go" in Florida and "they didn't work," moved to St. Louis, "worked for a company out of Oklahoma for a couple of years," "went back to my original company in Kansas City, ending my employment there in early '88, and at that point in time, we went on the road full time." (Transcript pp. 13, 14).
Since early 1988, the Debtors have been self-employed as artists or crafters. They purchase or cast plaster items, paint them, and sell them at arts and crafts shows. They sell these products "at arts and craft shows where we feel that the market may be conducive to our products." (T. 15). "During the winter months, we do come to Florida normally for about six months, try to anyhow; and then the rest of the time, we're traveling over the country selling our wares." (T. 15). During the years in question, the Debtors traveled to approximately 40 shows a year. (T. 16). Typically, the length of the shows ranged from two to ten days. The shows were held at convention centers, outdoor festivals, and malls. During the tax years in question, the Debtors traveled to shows in Florida, Pennsylvania, New York, Maryland, New Jersey, Ohio, Missouri, and Colorado. (T. 18). Mr. Bechtelheimer recalls that they attended more shows in Florida than in any other state. (T. 19).
In 1989, the Debtors acquired a Pace Arrow motor home. They traveled to the arts and crafts shows in the motor home, and lived in the motor home while participating in the shows. (T. 22). The motor home was 38 feet in length, had a dining area, a kitchen area, a bathroom, and a bedroom. Inside the motor home was a refrigerator, a stove, a microwave, a washer, a dryer, two television sets, a couch, a chair, and a bed. The motor home was heated by propane furnaces attached to the motor home, was air conditioned, received electricity from a generator on the motor home that was powered by gas on the motor home, and had running water from a reservoir tank and battery powered pump that were attached to the motor home. A trailer attached to the motor home was used for storage of their inventory. The motor home was the Debtors' only means of transportation during the years in question after they disposed of their automobile in December, 1992. The Debtors lived and slept in their motor home while attending craft shows and while traveling between craft shows.
Also in 1989, the Bechtelheimers sold their home in Gardner, Kansas.
In early 1990, approximately six months after selling their home in Kansas (T. 23), and after acquiring the Pace Arrow motor home, the Bechtelheimers bought a mobile home and lot at 9101 Kosimo Street, New Port Richey, Florida (the Kosimo property). The mobile home was on blocks, had attached porches in the front and rear, an outbuilding with a washer and dryer, electricity, a pump for water, and a septic tank. The mobile home had a living room, a kitchen-dining area, two bedrooms, and one and one-half bathrooms. The mobile home contained a kitchen table and chairs, a refrigerator and stove, a television, and "it had a mattress on the floor." The Debtors obtained a homestead tax exemption for their mobile home and lot. Mr. Bechtelheimer testified that since the value of the mobile home and lot was less than $25,000, the maximum amount of the homestead tax exemption, they did not pay any property taxes. Also, as Mr. Bechtelheimer explained, "We applied for homestead . . . which means you have to register to vote in that county, have a Florida driver's license, and tag your vehicles there." The Debtors also claimed the mobile home and lot as their homestead on the schedule of exemptions which they filed with their petition.
When the Debtors were at the Kosimo property, however, they parked their motor home in the driveway, connected the motor home to an outdoor electrical outlet, and used the motor home for sleeping. Mr. Bechtelheimer testified that during the tax years in question, when the Debtors were at the Kosimo property, they ate and worked in the mobile home, using it to mold and paint their crafts. They also used it to store their crafts and overstock. (T. 56). (T. 53). "We used it as a shop, and had we gone in there and cleaned out all the molds and everything, there was no reason in the world why it couldn't have been habitable." (T. 53). In a letter dated April 15, 1996, from the Debtor's accountant to the IRS relating to "1992 Audit Review Information," the following statement signed by the Debtor was included:
Mr. Bechtelheimer testified that although this letter was written to support his positions in the audit of tax years in question, it contained some mistakes and described the property as it was in 1996 rather than as it was in 1991 through 1994.
The Bechtelheimers have two children, both of whom were adults and were not living with their parents during the tax years in question, and both of whom live in Kansas. Mr. Bechtelheimer also testified that for approximately six months his son lived at the Kosimo property while he looked unsuccessfully for work, and for approximately another six months his daughter lived at the Kosimo property while she looked unsuccessfully for work. "It was not real comfortable for them, I guess, but it was a place for them to stay."
During the tax years in question, the Bechtelheimers received mail at the Kosimo property address, and also maintained a post office box in Kansas.
The following chart shows, for 1992 by month, the number of days which the Debtors were at the Kosimo property:
Number of Days at
Month Kosimo Property
January 8
February 13
March 3
April 0
May 0
June 0
July 4
August 0
September 3
October 7
November 0
December 0
________ __
Total 38
This appears to be typical of the amount of time which the Debtors spent at the Kosimo property during the tax years in question. The Debtors have indicated that they spent 35 to 40 days at the Kosimo property during each of the tax years in question.
It also appears that the Debtors had 247, 240, 248, and 233 actual show days during 1991, 1992, 1993, and 1994, respectively.
The Debtors always traveled together. There was never a time during the four years in question when one of the Debtors stayed at the Kosimo property while the other was away or at a show. (T. 47).
On February 28, 1996, the Debtors filed their Voluntary Petition for Relief pursuant to Chapter 13 of the Bankruptcy Code.
Title 26 U.S.C. § 162(a)(2) provides:
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