T.C. Summary Opinion 2019-20
UNITED STATES TAX COURT
DIANA DOUCOURE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 11326-16S, 25317-16S Filed August 12, 2019.
Diana Doucoure, pro se.
Lyle B. Press, Gennady Zilberman, Byron M. Huang, and Jonathan
Bartolomei, for respondent.
SUMMARY OPINION
COLVIN, Judge: These cases were heard pursuant to the provisions of
section 74631 of the Internal Revenue Code in effect when the petitions were filed.
1 Section references are to the Internal Revenue Code in effect for the years at issue. Rule references are to the Tax Court Rules of Practice and Procedure. Petitioner was a resident of New York when the petition was filed. -2-
Pursuant to section 7463(b), the decisions to be entered are not reviewable by any
other court, and this opinion shall not be treated as precedent for any other case.
By notices of deficiency dated April 22 and October 17, 2016, respondent
determined deficiencies of $4,980 and $5,065 in petitioner’s Federal income tax
for 2014 and 2015, respectively. After concessions, the issue for decision is
whether petitioner is eligible for the earned income tax credit for 2014 or 2015.
We hold she is not.
Background
Some of the facts have been stipulated and are so found.
A. Petitioner’s Street Vending Activity
Petitioner was self-employed as a street vendor in New York, New York,
during 2014 and 2015. She sold socks, T-shirts, and hats. She obtained items to
sell from people who approached her on the street. She paid cash for those items
and did not keep inventory records.
Petitioner’s customers usually paid her in cash, and she rarely recorded
sales. She usually did not give receipts to her customers. At the end of each
workday, petitioner counted the money she had received and then decided how
much to keep for her personal use. -3-
Petitioner had a bank account at Citibank during 2014 and 2015. She
sometimes deposited money from her street vending activity into her bank
account. Petitioner closed the account in 2016 and did not retain any of the
records for the account.
B. Petitioner’s Tax Returns for 2014 and 2015
Petitioner timely filed Forms 1040, U.S. Individual Income Tax Return, for
2014 and 2015 which included Schedules C, Profit or Loss From Business, for her
street vending activity. On her 2014 Schedule C petitioner reported gross sales
receipts of $16,889, business expenses of $1,355, and a net profit of $15,534. On
her 2015 Schedule C she reported gross sales receipts of $17,110, no business
expenses, and a net profit of $17,110. Petitioner claimed that she was eligible for
an earned income tax credit of $5,460 for 2014 and $5,548 for 2015.
C. IRS Audit
The only documents petitioner provided to the Internal Revenue Service
(IRS) relating to her street vending activity were six receipts (totaling $1,612.252)
for items she purchased for resale during 2014. Petitioner timely filed petitions for
both notices of deficiency. We consolidated the cases on December 11, 2017.
2 The receipts are in the amounts of $355, $250, $156, $350, $400, and $101.25. -4-
Discussion
A. Burden of Proof
The Commissioner’s determination in a notice of deficiency is generally
presumed correct, and the taxpayer bears the burden of proving otherwise. Rule
142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Petitioner does not contend that she
satisfied the requirements of section 7491 for shifting the burden of proof. See
Rule 142(a). Thus, the burden of proof for all factual issues remains with
petitioner.
B. Analysis
Eligible individuals may be entitled to an earned income tax credit against
their income tax liabilities if they meet the requirements of section 32(a)(1). As
earned income increases, the amount of the credit also increases, then reaches a
peak, and then decreases and ultimately phases out as income further increases.
Petitioner contends that she had earned income in the amounts reported on her
Forms 1040 for 2014 and 2015. Petitioner claims the amount of her earned
income from her street vending activity was $15,534 for 2014 and $17,110 for
2015. Those amounts would qualify her for the highest earned income tax credit -5-
available to a taxpayer with the number of dependents she claimed for those
years.3 2014 Form 1040 Instructions, at 63; 2015 Form 1040 Instructions, at 64.
Petitioner provided only the six purchase receipts and her testimony to
establish the amounts of her gross receipts and expenses for 2014 and 2015. She
testified that she had gross sales receipts and business expenses in the amounts
reported on her 2014 Schedule C. She also testified that she relied on documents
from her Citibank account in reporting the amounts of her gross sales receipts.
However, she offered no bank records into evidence in these cases, and she
testified that she closed the account at some point in 2016 and discarded all of her
bank records.
We decide whether a witness’ testimony is credible by relying on objective
facts, the reasonableness of the testimony, the consistency of statements made by
the witness, and the demeanor of the witness. See Quock Ting v. United States,
140 U.S. 417, 420-421 (1891); Wood v. Commissioner, 338 F.2d 602, 605 (9th
Cir. 1964), aff’g 41 T.C. 593 (1964); Pinder v. United States, 330 F.2d 119, 124-
125 (5th Cir. 1964); Concord Consumers Hous. Coop. v. Commissioner, 89 T.C.
105, 124 n.21 (1987). Witness testimony could almost always be said to be “self-
3 The largest earned income tax credit for an eligible individual with two qualifying children was $5,460 for 2014 and $5,548 for 2015. -6-
serving”, but that factor alone is not a reason to automatically reject the evidence
as unreliable. Lupyan v. Corinthian Colls., Inc., 761 F.3d 314, 320-321, 321 n.2
(3d Cir. 2014). We may discount testimony which we find to be unworthy of
belief, see Tokarski v. Commissioner, 87 T.C. 74, 77 (1986), but we may not
arbitrarily disregard testimony that is competent, relevant, and uncontradicted, see
Conti v. Commissioner, 39 F.3d 658, 664 (6th Cir. 1994), aff’g and remanding 99
T.C. 370 (1992), and T.C. Memo. 1992-616.
Petitioner testified she relied on her memory in knowing that she had
business expenses of $1,355 for 2014. However, the purchase receipts provided to
the IRS show her business expenses for 2014 exceeded $1,600. She reported on
her Schedule C for 2015 that she had no business expenses during that year, but at
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T.C. Summary Opinion 2019-20
UNITED STATES TAX COURT
DIANA DOUCOURE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 11326-16S, 25317-16S Filed August 12, 2019.
Diana Doucoure, pro se.
Lyle B. Press, Gennady Zilberman, Byron M. Huang, and Jonathan
Bartolomei, for respondent.
SUMMARY OPINION
COLVIN, Judge: These cases were heard pursuant to the provisions of
section 74631 of the Internal Revenue Code in effect when the petitions were filed.
1 Section references are to the Internal Revenue Code in effect for the years at issue. Rule references are to the Tax Court Rules of Practice and Procedure. Petitioner was a resident of New York when the petition was filed. -2-
Pursuant to section 7463(b), the decisions to be entered are not reviewable by any
other court, and this opinion shall not be treated as precedent for any other case.
By notices of deficiency dated April 22 and October 17, 2016, respondent
determined deficiencies of $4,980 and $5,065 in petitioner’s Federal income tax
for 2014 and 2015, respectively. After concessions, the issue for decision is
whether petitioner is eligible for the earned income tax credit for 2014 or 2015.
We hold she is not.
Background
Some of the facts have been stipulated and are so found.
A. Petitioner’s Street Vending Activity
Petitioner was self-employed as a street vendor in New York, New York,
during 2014 and 2015. She sold socks, T-shirts, and hats. She obtained items to
sell from people who approached her on the street. She paid cash for those items
and did not keep inventory records.
Petitioner’s customers usually paid her in cash, and she rarely recorded
sales. She usually did not give receipts to her customers. At the end of each
workday, petitioner counted the money she had received and then decided how
much to keep for her personal use. -3-
Petitioner had a bank account at Citibank during 2014 and 2015. She
sometimes deposited money from her street vending activity into her bank
account. Petitioner closed the account in 2016 and did not retain any of the
records for the account.
B. Petitioner’s Tax Returns for 2014 and 2015
Petitioner timely filed Forms 1040, U.S. Individual Income Tax Return, for
2014 and 2015 which included Schedules C, Profit or Loss From Business, for her
street vending activity. On her 2014 Schedule C petitioner reported gross sales
receipts of $16,889, business expenses of $1,355, and a net profit of $15,534. On
her 2015 Schedule C she reported gross sales receipts of $17,110, no business
expenses, and a net profit of $17,110. Petitioner claimed that she was eligible for
an earned income tax credit of $5,460 for 2014 and $5,548 for 2015.
C. IRS Audit
The only documents petitioner provided to the Internal Revenue Service
(IRS) relating to her street vending activity were six receipts (totaling $1,612.252)
for items she purchased for resale during 2014. Petitioner timely filed petitions for
both notices of deficiency. We consolidated the cases on December 11, 2017.
2 The receipts are in the amounts of $355, $250, $156, $350, $400, and $101.25. -4-
Discussion
A. Burden of Proof
The Commissioner’s determination in a notice of deficiency is generally
presumed correct, and the taxpayer bears the burden of proving otherwise. Rule
142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Petitioner does not contend that she
satisfied the requirements of section 7491 for shifting the burden of proof. See
Rule 142(a). Thus, the burden of proof for all factual issues remains with
petitioner.
B. Analysis
Eligible individuals may be entitled to an earned income tax credit against
their income tax liabilities if they meet the requirements of section 32(a)(1). As
earned income increases, the amount of the credit also increases, then reaches a
peak, and then decreases and ultimately phases out as income further increases.
Petitioner contends that she had earned income in the amounts reported on her
Forms 1040 for 2014 and 2015. Petitioner claims the amount of her earned
income from her street vending activity was $15,534 for 2014 and $17,110 for
2015. Those amounts would qualify her for the highest earned income tax credit -5-
available to a taxpayer with the number of dependents she claimed for those
years.3 2014 Form 1040 Instructions, at 63; 2015 Form 1040 Instructions, at 64.
Petitioner provided only the six purchase receipts and her testimony to
establish the amounts of her gross receipts and expenses for 2014 and 2015. She
testified that she had gross sales receipts and business expenses in the amounts
reported on her 2014 Schedule C. She also testified that she relied on documents
from her Citibank account in reporting the amounts of her gross sales receipts.
However, she offered no bank records into evidence in these cases, and she
testified that she closed the account at some point in 2016 and discarded all of her
bank records.
We decide whether a witness’ testimony is credible by relying on objective
facts, the reasonableness of the testimony, the consistency of statements made by
the witness, and the demeanor of the witness. See Quock Ting v. United States,
140 U.S. 417, 420-421 (1891); Wood v. Commissioner, 338 F.2d 602, 605 (9th
Cir. 1964), aff’g 41 T.C. 593 (1964); Pinder v. United States, 330 F.2d 119, 124-
125 (5th Cir. 1964); Concord Consumers Hous. Coop. v. Commissioner, 89 T.C.
105, 124 n.21 (1987). Witness testimony could almost always be said to be “self-
3 The largest earned income tax credit for an eligible individual with two qualifying children was $5,460 for 2014 and $5,548 for 2015. -6-
serving”, but that factor alone is not a reason to automatically reject the evidence
as unreliable. Lupyan v. Corinthian Colls., Inc., 761 F.3d 314, 320-321, 321 n.2
(3d Cir. 2014). We may discount testimony which we find to be unworthy of
belief, see Tokarski v. Commissioner, 87 T.C. 74, 77 (1986), but we may not
arbitrarily disregard testimony that is competent, relevant, and uncontradicted, see
Conti v. Commissioner, 39 F.3d 658, 664 (6th Cir. 1994), aff’g and remanding 99
T.C. 370 (1992), and T.C. Memo. 1992-616.
Petitioner testified she relied on her memory in knowing that she had
business expenses of $1,355 for 2014. However, the purchase receipts provided to
the IRS show her business expenses for 2014 exceeded $1,600. She reported on
her Schedule C for 2015 that she had no business expenses during that year, but at
trial she testified that the amount of her 2015 business expenses was identical to
the amount she had for 2014. Because of anomalies and inconsistences in her
testimony, and the inadequately explained disappearance of her banking records,
we do not find her testimony regarding the amounts of her income and expenses
for 2014 and 2015 to be credible. Thus, petitioner has not established the amount
of her earned income for 2014 and 2015, and she provided no evidence on which
we can estimate the amounts of her income and expenses. -7-
Petitioner contends that she is entitled to a tax refund for 2015 because she
timely filed her 2015 tax return and submitted the documents requested of her.
However, merely filing a return and claiming a credit does not qualify a taxpayer
for a refund. Petitioner also contends that she has a constitutional right to receive
a tax refund. We disagree. Petitioner has no right to receive a refund based on an
earned income tax credit if she does not meet the statutory requirements for that
credit. Thus, petitioner has not shown that she is entitled to an earned income tax
credit for 2014 or 2015.
To reflect the foregoing,
Decisions will be entered under
Rule 155.