In Uncategorized on 09/24/2018 at 23:55

I said it years ago: “The old Chinese adage is true: “The worst scrap of paper is better than best human memory.” See my blogpost “Sloppiness Is Its Own Reward,” 1/26/11. And it’s still true.

Just ask Jin Man Park, 2018 T. C. Sum. Op. 48, filed 9/24/18, while I was off on what tort lawyers call “a frolic of my own.”

Jin Man got some money from Bank of America. He first got money by way of a couple mortgages on his house (hi Judge Holmes), which he was paying back, but when Ms. Park and the kids left and divorced him, he stopped paying.

Then, however, he deployed to Africa as an Army reservist, and started paying again.

During the year at issue, Jin Man”…received and cashed a $13,508.38 check from BOA’s customer service. Included with the check was a letter stating that, ‘[b]ased on a recent review of your account, we may not have provided you with the level of service you deserve, and are providing you with this check.’ The letter further stated that petitioner might wish to consult with someone about any possible tax consequences of receiving the funds, included a number for petitioner to call if he had any questions, and concluded by thanking him for his military service. Petitioner called the phone number provided on several occasions, but he was unable to obtain any further information. Considering all the information available, petitioner concluded that he had overpaid his mortgages during the time of his overseas military deployment. Accordingly, he did not report any portion of the $13,508.38 on his … Federal income tax return.” 2018 T. C. Sum. Op. 48, at p. 3.

But BOA sent Jin Man a Form 1099-MISC anyway, and IRS, whenever its computers detect a wayward 1099 and a presumptively wayward taxpayer, marries the two with a SNOD.

Jin Man petitions timely and subpoenas BOA for their records relating to the check. BOA responds with “…[t]he bank is unable to locate any accounts or records requested with the information provided.” 2018 T.C. Sum. Op. 48, at p. 4.

IRS trots out the usual presumptions. Jin Man did have income from his service pay (income-producing activity) and 1099 from BOA. Must be taxable.

Jin Man takes the stand on the trial, and testifies he thought the payment he got wasn’t taxable, as he was getting a refund of an overpayment.

Judge Gerber believes Jin Man’s story. IRS played the Michael Corleone gambit, presumption variation.

“Supporting petitioner’s position, the record includes the letter that accompanied the check from BOA, which indicates that BOA had made a mistake regarding petitioner’s accounts. BOA’s letter admits it was correcting a wrong it had committed regarding petitioner’s accounts and was returning his money and the interest that had accrued on it. Respondent does not offer any argument to the contrary and appears instead to rely on the presumption of correctness which attaches to a notice of deficiency to support the proposition that petitioner’s receipt of the BOA check was a taxable event.” 2018 T. C. Sum. Op. 48, at p. 6.

BOA paid Jin Man interest on his overpayment and gave him a 1099-INT. On that he has to pay tax.


  1. An improved version, maybe?

    “Worst scrap of paper beats best human memory.”


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