                         T.C. Summary Opinion 2012-42


                        UNITED STATES TAX COURT



                 BRUCE DEVON RUNYAN, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 11747-11S.                        Filed May 7, 2012.



      Bruce Devon Runyan, pro se.

      Tamara L. Kotzker, for respondent.



                             SUMMARY OPINION


      COHEN, 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
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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. All section

references are to the Internal Revenue Code.

         Respondent determined a deficiency of $8,000 in petitioner’s Federal income

tax for 2009. The issue for decision is whether petitioner is entitled to a section

36(a) first-time homebuyer credit in relation to a residence he acquired from a trust

of which he was a beneficiary.

                                       Background

         All of the facts have been stipulated, and the stipulated facts are incorporated

in our findings by this reference.

         Petitioner is one of four beneficiaries of the J.E. Runyan Family Trust (trust)

pursuant to a trust agreement dated October 27, 1993. The trust has been

irrevocable as to petitioner’s interest since the death of his father. Petitioner’s

mother, Kathleen P. Runyan, is the surviving settlor and trustee of the trust.

         On November 9, 2009, petitioner acquired a residence in Santa Fe, New

Mexico, from the trust. Petitioner was a first-time homebuyer, as defined in

section 36(c)(1), and used the residence as his principal residence, within the

meaning of section 36(c)(2), after the purchase and at the time the petition was

filed.
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         On his Federal income tax return for 2009, petitioner claimed an $8,000

credit pursuant to section 36 for the purchase of the Santa Fe residence.

Respondent disallowed the credit in the notice of deficiency on which this case is

based.

                                        Discussion

         Section 36(a), as of the time that petitioner acquired his residence, allowed a

credit not to exceed $8,000 to a first-time homebuyer for the purchase of a principal

residence. Respondent agrees that petitioner was a first-time homebuyer and used

the acquired residence as his principal residence.

         The parties dispute the applicability of section 36(c)(3)(A)(i), which provides

in material part:

               (A) In general.--The term “purchase” means any
         acquisition, but only if--

                      (i) the property is not acquired from a person
               related to the person acquiring such property * * *

Section 36(c)(5) incorporates into the definition of “related persons” section 267,

dealing with disallowance of certain losses. Section 267(b)(6) specifies that no

deduction is allowable in respect of any loss from certain sales or exchanges
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between a fiduciary of a trust and a beneficiary of such trust. As a result of these

sections, petitioner’s acquisition of his residence does not qualify as a purchase for

purposes of the section 36(a) credit.

      Petitioner notes that the “seller” in the transaction was shown on the

documents as the trust, and the title company’s lawyers handling the transaction

urged him to complete the transaction in order to qualify for the credit. He also

suggests that an Internal Revenue Service employee agreed with him that section

267(b)(6) is ambiguous and might mean that the fiduciary and the beneficiary have

to be the same person for the transaction to be disqualified. Neither argument is

relevant or, in any event, persuasive.

      Section 267(a)(1) expressly disallows losses “between persons specified in

any of the paragraphs of subsection (b)”, which would mean losses between the

fiduciary of a trust and the beneficiary of that trust, necessarily disallowing losses

between separate persons in the described capacities. Its scope is not reasonably

interpreted as limited to one person acting in two capacities. Petitioner’s acquisition

of a residence from the trust does not entitle him to the credit.


                                                   Decision will be entered

                                            for respondent.
