As promised here is another gripping installment of IYFD. Apologies to those who were waiting in breathless anticipation for another exciting action packed US Tax Court decision.
Today’s case is PRECIOUS DELORES JONES, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
Ms. Jones is an enterprising entrepreneur who supports herself by braiding hair in her home. Being a complaint taxpayer she dutifully reported her income of $14,850 on her 1040. Due to her income level and circumstances entitled her to the earned income credit and additional child credit.
The Commissioner made the claimed she made $0. Are your joking? Of course the commissioner was claiming that she was reporting false income to get the tax credits. (Which granted does happen with some frequency)
Some question – Why didn’t the IRS do a lifestyle analysis or check for other sources of income? How did this case make it out of appeals? Why did Ms. Jones have to take it to tax court?
For whatever reason she had her day in court and she won! I truly hope she got to gloat as the judges ruled in her favor.
Now if anyone gets their hair braided or has friends that get this process done it was clear Ms. Jones’ testimony was credible, as the judges noted.
Per the court
We found petitioner to be a credible witness. Her testimony was consistent and reasonably detailed, and the numbers of customers and prices for services to which she testified were generally consistent with the amount of income reported on her return. Accordingly, we credit her testimony that she earned $14,850 in income during 2007 from her work braiding hair.
So often in a Pro se case the taxpayer is not prepared for what they will encounter and they lose pitifully – but not in this case. There is a few more interesting elements in this case that are truly exciting, so please enjoy it for yourself.
So congrats to Precious Delores Jones! – And in your face Doug.*
*Douglas H. Shulman is the 47th Commissioner of Internal Revenue Service