                                 T.C. Memo. 2016-181



                         UNITED STATES TAX COURT


                    SHENITA A. HILL, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 24549-15.                          Filed September 27, 2016.



      Shenita A. Hill, pro se.

      Catherine S. Tyson, for respondent.



                           MEMORANDUM OPINION


      GERBER, Judge: This matter is before the Court to address respondent’s

July 14, 2016, motion for summary judgment (motion) pursuant to Rule 121.1



      1
      Unless otherwise indicated, all section references are to the Internal
Revenue Code in effect for the year in issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                                        -2-

[*2] Respondent contends that no genuine issue exists as to any material fact and

that the determination in the notice of deficiency with respect to petitioner’s 2013

income tax liability and accuracy-related penalty should be sustained. Petitioner’s

response to respondent’s motion was filed August 8, 2016. The issues for our

consideration are whether petitioner failed to report $28,704 of income and is

liable for an accuracy-related penalty under section 6662(a) and (b)(2).

                                    Background

      At the time the petition was filed, petitioner resided in Missouri.

Petitioner filed a Federal income tax return for 2013 which did not include

$28,629 of unemployment compensation that she had received from the State of

Connecticut. Petitioner during the administrative proceeding contended that she

used an online method for filing her return and was not aware that the

unemployment compensation needed to be included because it was not “earned

income”. Petitioner also did not include $75 that she received in connection with

her health savings account during 2013. In a June 29, 2015, notice of deficiency,

respondent determined a $6,193 deficiency in petitioner’s 2013 income tax and a

$141 accuracy-related penalty for an underpayment attributable to a substantial

understatement of income tax within the meaning of section 6662(d).
                                         -3-

[*3] Petitioner timely filed a petition for redetermination and alleged that she

was not aware that the unemployment compensation was includible because it was

not earnings and unemployment compensation was not “described” in the online

program she used to file her return. She also alleged that she did not receive

information concerning the unemployment compensation until after she had used

the online return preparation. In her petition to this Court, petitioner did not

specifically contest the inclusion of the $28,629 of unemployment compensation

or reference the $75 health account adjustment.2 Finally, petitioner did not

specifically contest the accuracy-related penalty in her petition.

      In her 2013 income tax return, petitioner reported negative taxable income

of $9,183, an earned income credit of $4,490, and a child tax credit of $1,000.

After inclusion of the $28,629 of unemployment compensation and the $75 health

account adjustment, petitioner’s corrected taxable income was $19,521.

      After this case was set on a St. Louis, Missouri, trial session, respondent

moved for summary judgment with respect to the 2013 income tax deficiency and

the penalty, stating that there was no genuine issue of material fact. Petitioner, in

her response to respondent’s motion, stated that she had contacted the Internal

      2
       The income tax deficiency was also based on other mathematical
adjustments that were purely computational and generated by the determination of
increased income.
                                        -4-

[*4] Revenue Service Taxpayer Advocate Service (Advocate), who advised that

petitioner could still amend her 2013; return and she asked the Court to allow her

time to amend her return so that the “fee” (sic penalty) would not be assessed.

Petitioner also stated that she is “now disputing the amount owed, due to the

information that * * * [she] received from the Advocate.”

                                     Discussion

      Summary judgment is intended to expedite litigation and to avoid

unnecessary and expensive trials. Shiosaki v. Commissioner, 61 T.C. 861, 862

(1974). Summary judgment may be granted where the pleadings and other

materials show that there is no genuine dispute as to any material fact and that a

decision may be rendered as a matter of law. Rule 121(b); see Schlosser v.

Commissioner, T.C. Memo. 2007-298, 2007 Tax Ct. Memo LEXIS 300, at *6,

aff’d, 287 F. App’x 169 (3d Cir. 2008). The burden is on the moving party to

demonstrate that no genuine dispute as to any material fact remains and that he is

entitled to judgment as a matter of law. FPL Grp., Inc. & Subs. v. Commissioner,

116 T.C. 73, 74-75 (2001). In all cases the evidence is viewed in the light most

favorable to the nonmoving party. Bond v. Commissioner, 100 T.C. 32, 36

(1993). However, the nonmoving party is required “to go beyond the pleadings

and by her own affidavits, or by the ‘depositions, answers to interrogatories, and
                                        -5-

[*5] admissions on file,’ designate ‘specific facts showing that there is a genuine

issue for trial.’” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); see also

Rauenhorst v. Commissioner, 119 T.C. 157, 175 (2002); FPL Grp., Inc. & Subs. v.

Commissioner, 115 T.C. 554, 559 (2009).

      Respondent’s motion made allegations of fact based upon documents

attached to the motion. Petitioner’s response made no statements concerning or in

other respects showing that respondent’s alleged facts were incorrect and/or that

there was any dispute concerning them. In the documents attached to respondent’s

motion, petitioner’s written responses to respondent tacitly agreed that the

unemployment compensation was taxable and that she failed to report it in her

2013 return. Under these circumstances, we must find and hold that respondent’s

determination that petitioner had unreported income of $28,704 was not in error.

      With respect to the $141 accuracy-related penalty under section 6662(a),

petitioner did not specifically contest that determination in her petition. Section

6662(a) imposes an accuracy-related penalty equal to 20% of the underpayment to

which section 6662 applies. Section 6662 applies to the portion of any

underpayment which is attributable to, inter alia, negligence or disregard of rules

or regulations, sec. 6662(b)(1), or a substantial understatement of income tax, sec.

6662(b)(2). In this case the notice of deficiency attributed the penalty to a
                                         -6-

[*6] “substantial understatement of income tax”. There is a substantial

understatement of income tax for any taxable year if the amount of the

understatement exceeds the greater of 10% of the tax required to be shown on the

return for the taxable year or $5,000. Sec. 6662(d)(1)(A). Petitioner reported

negative taxable income of $9,183, an earned income credit of $4,490, and a child

tax credit of $1,000. Her income tax deficiency exceeds $5,000, which is greater

than 10% of the tax required to be shown on the return. After inclusion of the

$28,704 of unreported income, petitioner’s corrected taxable income was $19,521.

Accordingly, the understatement for the 2013 year comes within the definition of a

substantial understatement.

      Section 6664(c)(1) provides that the penalty under section 6662(a) shall not

apply to any portion of an underpayment if it is shown that there was reasonable

cause for the taxpayer's position and that the taxpayer acted in good faith with

respect to that portion. See Higbee v. Commissioner, 116 T.C. 438, 448 (2001).

      Petitioner did not specifically raise the penalty in her petition, but she raised

the question of the “fee” (which we interpret to mean “penalty”) in her response to

respondent’s motion. Petitioner’s explanation that the online software did not

reference the unemployment compensation and/or that she did not receive

information from the State of Connecticut until after she had filed her return does
                                        -7-

[*7] not, in the context of this case, constitute reasonable cause for which

petitioner may be relieved of the penalty. Accordingly, respondent’s

determination with respect to the section 6662(a) accuracy-related penalty is not in

error.

         Accordingly, we will grant respondent’s motion.

         To reflect the foregoing,


                                                    An appropriate order

                                              and decision will be entered.
