                   T.C. Summary Opinion 2009-152



                      UNITED STATES TAX COURT



                    JOHN H. WONG, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7090-08S.               Filed October 5, 2009.



     John H. Wong, pro se.

     Halvor R. Melom, for respondent.



     DEAN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.   Pursuant to section 7463(b),

the decision to be entered is not reviewable by any other court,

and this opinion shall not be treated as precedent for any other

case.   Unless otherwise indicated, subsequent section references

are to the Internal Revenue Code in effect for the year in issue,
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and all Rule references are to the Tax Court Rules of Practice

and Procedure.

     For 2005 respondent determined a $1,700 deficiency in

petitioner’s Federal income tax resulting from unreported income.

After concessions by petitioner,1 the sole issue for decision is

whether petitioner failed to report $6,812 in income.

                            Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the exhibits received into evidence

are incorporated herein by reference.    When the petition was

filed, petitioner resided in California.

     Petitioner timely filed his Federal income tax return for

2005 and subsequently amended it.   His amended return reported

wage income of $150,350,2 taxable interest of $1,617, ordinary

dividends of $397, and taxable refunds of State and local taxes

of $6,092.   Petitioner did not report any other income for 2005.



     1
      Petitioner conceded that he received and failed to report
(1) $212 in taxable dividends from Charles Schwab & Co.; (2) $16
in capital gains on Schedule D, Capital Gains and Losses, from
the Vanguard Group; and (3) $2 in taxable dividends from the
Vanguard Group. He also conceded that he overreported his tax
withholdings on Form W-2, Wage and Tax Statement, by $13.
Petitioner presented no evidence and made no argument with
respect to $661 of qualified dividends; the Court deems this
issue conceded. See Money v. Commissioner, 89 T.C. 46, 48
(1987); Stutsman v. Commissioner, T.C. Memo. 1961-109.
     2
      Petitioner’s pay statements show earnings of salary and
additional amounts. As listed on petitioner’s pay statements,
one of the additional amounts is “restricted stock release”.
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     On December 17, 2007, respondent issued a notice of

deficiency using third-party-payor information.   Specifically,

respondent determined that petitioner received and failed to

report $6,812, as reported by E*Trade on a Form 1099-B, Proceeds

From Broker and Barter Exchange Transactions (Form 1099).3

     During 2005 petitioner was employed by Providian Bancorp

Services (Providian), and he held restricted Providian stock.

Because he was a restricted shareholder and an employee,

petitioner’s pay statements included amounts for “restricted

stock release” (i.e., income resulting from the expiration or

termination of restrictions on petitioner’s restricted stock).

     In 2005 Providian merged with Washington Mutual.   As part of

the merger, shareholders of Providian exchanged all of their

securities4 for cash and securities in the successor corporation.

Before the merger, Providian notified petitioner that all of his

restricted stock and options, if any, would fully vest at the

merger’s closing, with shares exchanged for cash and securities.

Providian specified that the cash component, net of withholding

taxes, would be placed in petitioner’s E*Trade brokerage account

and that Providian would report the withheld tax on petitioner’s



     3
      Because respondent consistently rounded down the amounts
reported on the Form 1099, the amounts in dispute are slightly
less than those reported on the Forms 1099.
     4
      The term “securities” included stock or options of the
entities.
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Form W-2.5    For additional questions regarding the tax

consequences of the merger transactions, Providian referred

petitioner to the prospectus sent to shareholders before the

August 31, 2005, special meeting of stockholders.    Providian did

not specify whether it would report the income resulting from the

cash received on petitioner’s Form W-2.    Providian merged with

Washington Mutual, and petitioner’s restricted stock vested in

the first week of October 2005.

     As a result of the merger, petitioner received $6,814.27,

which Providian deposited in petitioner’s E*Trade brokerage

account, less taxes withheld of $1,907.98.    Petitioner’s pay

statements also reflected an increase in his restricted stock

release from $5,562.95 to $27,721.75.

     Petitioner received a Form 1099 from E*Trade, showing that

he received cash of $6,814.27 in the merger.    The Form 1099

instructed petitioner to report the amount on a Schedule D (i.e.,

as income).    In a detailed analysis of petitioner’s brokerage

account provided by E*Trade, E*Trade noted that Providian

reported the withheld taxes on petitioner’s Form W-2; however,

E*Trade did not specify whether Providian reported the income on

petitioner’s Form W-2.




     5
      Neither Providian nor E*Trade specified whether the
withheld taxes include Federal, State, and/or local taxes.
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                             Discussion

     Generally, the Commissioner’s determinations of unreported

income in a notice of deficiency are presumed correct, and the

taxpayer has the burden of proving that those determinations are

erroneous.    See Rule 142(a); Welch v. Helvering, 290 U.S. 111,

115 (1933).   In certain circumstances, however, section

7491(a)(1) places the burden of proof on the Commissioner.

Petitioner has not alleged that section 7491 is applicable, nor

has he established compliance with the requirements of section

7491(a)(2)(A).   Therefore, the burden of proof does not shift to

respondent under section 7491(a).

     Under section 6201(d), the burden of production may shift to

the Commissioner where an information return, such as a Form

1099, serves as the basis for a deficiency determination.    If a

taxpayer asserts a “reasonable dispute” with respect to any item

of income reported on a third-party information return and he has

fully cooperated6 with the Commissioner, the Commissioner will

have the burden of producing reasonable and probative information

concerning the item of income in addition to the information

return.

     In Dennis v. Commissioner, T.C. Memo. 1997-275, the Court

found that the taxpayer failed to allege a reasonable dispute as


     6
      There is no evidence that petitioner has failed to fully
cooperate, and respondent does not allege petitioner failed to
fully cooperate.
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to any item of income on a Form 1099 because the taxpayer tacitly

admitted to receiving the income and failed to present evidence

demonstrating that the income reported on the Form 1099 was not

attributable to him.   Because the taxpayer failed to produce

evidence or offer an explanation as to why he could not produce

it, the Court found that the taxpayer failed to assert a

reasonable dispute as to the income reported on the Form 1099,

pursuant to section 6201(d).

     Likewise, in McQuatters v. Commissioner, T.C. Memo. 1998-88,

the taxpayer acknowledged that a portion of nonemployee

compensation reported on a Form 1099 was for payments made to him

as an independent dealer of merchandise for Masterguard.   But the

taxpayer argued that a portion of the amount reported on the Form

1099 could have resulted from merchandise refunds and because the

Commissioner failed to determine what portion was due to

merchandise refunds, the Form 1099 was invalid.   Absent credible

evidence that the Form 1099 was incorrect as to amount, the Court

concluded that the taxpayer’s testimony was consistent with the

Commissioner’s determinations and that the taxpayer had failed to

raise a reasonable dispute as to any item of income reported on

the Form 1099.

     Petitioner stipulated the Form 1099, both as to its accuracy

and to his receipt of $6,814.27 as reported by E*Trade.

Petitioner did not assert that the issuance of the Form 1099 was
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erroneous or fraudulent.    Rather, petitioner alleges double

reporting; i.e., that E*Trade reported the income and that

Providian reported the same income on his Form W-2.    As in Dennis

v. Commissioner, supra, and McQuatters v. Commissioner, supra,

petitioner admits he received the Form 1099 and the corresponding

income and does not deny that it was taxable as income to him

upon receipt.    Furthermore, petitioner failed to present any

credible evidence demonstrating that Providian reported the

income on his Form W-2.     Because petitioner failed to raise a

reasonable dispute as to any item of income reported on an

information return, the Court finds that the burden of production

does not shift to respondent.

       Petitioner disputes that he was required to report the

income on the Form 1099 separate from wages reported on his Form

W-2 because he believes Providian reported the income on his Form

W-2.    In support of this assertion, petitioner presented

testimony and pay statements demonstrating that between September

30 and October 15, 2005, during the time his shares vested, the

value of restricted stock release reported on his earnings

statement increased from $5,562.95 to $27,721.75.    Petitioner

believes this increase is due in part to the cash received in the

merger, with the balance resulting from the vesting of his

remaining Providian shares before they were exchanged for

Washington Mutual shares.    Petitioner testified further that
                               - 8 -

E*Trade told him that “that amount that they had awarded, the

$6,000, * * * was part of that total package.”   While not

entirely clear, it seems petitioner interpreted E*Trade’s

correspondence to mean that Providian included this income on his

Form W-2 and that he was not required to separately report this

income.   Petitioner did not produce additional records or

documents demonstrating that Providian reported this income on

his Form W-2.

     Petitioner alleged that he was unable to obtain a detailed

analysis of his Form W-2 as reported by Providian, because

neither Providian nor Washington Mutual existed as operating

companies at the time of trial.

     Petitioner, however, could have sought the records from the

successor corporation to Washington Mutual.   He also could have

provided other evidence demonstrating that Providian included the

income on his Form W-2.   As a shareholder of Providian and

Washington Mutual, petitioner presumably had within his control

evidence concerning the number of shares held and the fair market

value of those shares at the time of the merger.   Petitioner

could have also provided his final pay statement for 2005.

Presumably, petitioner’s final pay statement for 2005 listed the

total amount of petitioner’s salary and restricted stock release.

These documents would allow petitioner to reconstruct his Form W-

2 income and might show whether Providian reported the $6,814.27
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on his Form W-2.   Petitioner also could have introduced the

prospectus Providian sent to shareholders, which provided

information on the tax consequences of the merger transactions.

Petitioner failed to introduce such evidence or offer an

explanation as to why he could not produce it.

     Absent credible evidence demonstrating that Providian

reported the income on petitioner’s Form W-2, the Court finds

that petitioner has failed to meet his burden of proof, and

respondent’s determination is sustained.

     To reflect the foregoing,


                                         Decision will be entered

                                     for respondent.
