Or, Why is Mona Lisa Smiling?

Initially, Mona Lisa Herrington had little to smile about. A single mother of two, she owned an H & R Block franchise, but worked off-season at a prison detention center. She was recently divorced, her father had just died, and her mother moved in with her to care for her children.  And on top of that, she met The Boyfriend.

The Boyfriend had a heavy-duty criminal record. His hobby was beating Mona Lisa. Here’s her story from the pen of Judge Thornton in Mona Lisa Herrington, T.C.Mem. 2011-73, released 3/30/11, at p. 3:  “Petitioner’s relationship with the boyfriend was marked by intimidation and physical abuse. When she failed to do his bidding or attempted to leave him,  he reacted violently. He once threw her from a moving car. Another time when she threatened to leave him, he placed a gun against her forehead and cocked the hammer. On another occasion, in midwinter, he hit her in the head with a beer bottle and threw her from a boat into a lake. On another occasion, she testified credibly, he ‘gave me a picture of my daughter with her face shot out, and told me that’s what would happen to her if I tried to leave’.” A charming fellow, this.

On top of that, this paragon opened a series of video poker  establishments, and when the State lifted his license for selling alcohol to minors, he persuaded Mona Lisa to take out licenses, and proceeded to loot the businesses.  Of course certain income tax returns were not filed, although The Boyfriend claimed he would do so. Mona Lisa wound up pleading guilty to Section 7203 criminal non-filing charges.

Judge Thornton to the rescue. He finds that, while Mona Lisa cannot deduct The Boyfriend’s stolen cash as compensation, because she cannot show any intent to pay, or that the moneys stolen were ordinary and necessary expenses for whatever work The Boyfriend did or services he provided (and for such services one would hardly pay), she can deduct the theft losses and leaves these for a Rule 155 computation.

Reading Louisiana law, where Mona Lisa lived, he finds that her passive acceptance of The Boyfriend’s thievery was not consent, but rather the result of The Boyfriend’s intimidation and battering. Therefore, the moneys he stole were indeed stolen, and constituted a business loss. Also he imposed no fraud penalties, although IRS sought these, apparently because Mona Lisa was a victim.

So Mona Lisa can smile again. And I’m sure we wish her better luck next time.