Not, not the television game show, but the games played by Bruce E. Phillips, 2013 T. C. Memo. 215, filed 9/10/13, as told by Judge Morrison. Mr. Phillips claims he didn’t make any dollars, only took losses.

Mr. Phillips got hit with a $3400 deficiency for the year at issue, which he petitioned. He claimed he was bowling for dollars, and these were business expenses. He had claimed other business expenses, but IRS didn’t mention those in the SNOD.

Judge Morrison: “…the IRS sent Mr. Phillips a letter requesting documents establishing that Mr. Phillips was engaged in the trade or business of bowling… and that Mr. Phillips was entitled to the deductions he claimed on his Schedule C. The letter requested that Mr. Phillips mail these documents to the IRS….

“…the parties spoke on the phone. Mr. Phillips stated that he would provide documents only to a Tax Court Judge. The IRS informed Mr.  Phillips that it would seek to amend its answer to assert that all deductions claimed on his Schedule C should be disallowed.” 2013 T. C. Memo. 215, at pp. 5-6.

Would it be mere surplusage to point out to Mr. Phillips and others similarly situated that the answer he gave was an invitation to get hammered?

And of course, “(A)t the end of the trial the IRS moved to amend its answer to assert that all of Mr. Phillips’ claimed Schedule C deductions should be disallowed and to assert that Mr. Phillips is liable for the accuracy-related penalty. The motion calculated that the deficiency is $5,800, the understatement is $5,800, the tax required to be shown on his return is $8,388, and the penalty is $1,160.” 2013 T. C. Memo. 215, at p. 8.

Judge Morrison finds no unfair surprise. Even though Mr. Phillips is not a lawyer and doesn’t know to object when IRS wild-cards into evidence that which is at variance with the pleadings, he did know IRS was going to shoot down all his deductions and nail him with the five-and-ten (10% or $5000 understatement of tax). He says he didn’t know that the penalty was 20% of the tax due, but Judge Morrison doesn’t care; Mr. Phillips had plenty of time to prepare a defense.

Except that Mr. Phillips hadn’t made money from bowling in seven years, flunked all but one of the Section 183 trade-or-business-for-profit tests (and the one he didn’t flunk was neutral), and had only seven pages of bank statements to support his claimed expenses, except they didn’t.

“The underpayment is also due to negligence. Mr. Phillips was negligent in claiming business expenses for his bowling activities. He made no effort to comply with the Federal income tax laws. He did not maintain any records. He admitted that at least some of his reported expenses were related to bowling. He was unable to point to expenses related to bowling. He provided no evidence to substantiate any of his claimed expenses.” 2013 T. C. Memo. 215, at p. 31. I think Judge Morrison meant that Mr Phillips admitted some of his expenses were unrelated to bowling.

Best of all is the claimed Section 6664 good-faith reliance. “Mr. Phillips credibly testified that he went to a tax return preparer for his…return, but that he provided the preparer with only the seven pages from bank statements that he provided to the IRS and introduced at trial. The preparer refused to sign the return because he was afraid of an audit. A reasonable and prudent person would not have disregarded a tax return preparer’s warnings without making at least a minimal effort to ensure there was some legal basis for doing so.” 2013 T. C. Memo. 215, at p. 31.

Ya can’t make this stuff up.