T.C. Memo. 2019-78 UNITED STATES TAX COURT HECTOR BACA AND MAGDALENA BACA, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 11459-15. Filed June 26, 2019. Joel Cruz-Esparza, for petitioners. Maria Cerina De Ramos, Brock E. Whalen, and Melinda K. Fisher, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION HOLMES, Judge: Hector Baca is always on the lookout for new ways to make money for his family. If he hears about a new piece of equipment he can learn to use, he’ll buy it and build a business around it; if he learns that someone -2- [*2] needs something done, he’ll extend his business to grab the opportunity; if he can qualify for high-paying temporary work, he’ll take the job. But his bookkeeping for all this work did not always meet the standard of meticulousness the IRS prefers. The Commissioner has disallowed for lack of substantiation a large number of deductions the Bacas claimed on their 2012 and 2013 returns, and he also says they owe a section 6651(a)(1)1 late-filing addition to tax and section 6662(a) penalties. FINDINGS OF FACT The Bacas are immigrants from Mexico who have grown roots in El Paso, Texas. In 1997 Hector Baca started working as a dispatcher for a small local company and went on to buy it just a few years later. What began as a delivery company sprouted multiple other businesses, all of which Baca ran from the El Paso home he owned with his wife Magdalena. She herself had risen to become a vice president of WestStar Bank. Her income was mostly wages from the bank, though she helped her husband with a multilevel marketing business. It was Hector Baca’s tangle of businesses that drew the Commissioner’s attention, and we start by describing them. 1 All section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless we say otherwise. -3- [*3] I. Hector Baca’s Businesses and Employment Dependable Transportation Services (DTS). DTS is a limited liability company (LLC) through which Baca sold delivery services. Baca referred to DTS’s services as “hot shots” or “urgent deliveries,” but business cooled by 2012 and DTS was down to one client before it ceased business by the year’s end. Chile Relabeling Business. This was perhaps the most unusual and short- term of Baca’s businesses--it lasted for only ten months in 2012. It came to life when one of DTS’s clients, Farzin Tabatabai, bought a large number of chile bags that he wanted to relabel with the name of his own company. He hired Baca to do the job, and Baca simply tacked the relabeling onto the delivery services he was already performing for Tabatabai. And so a chile-bag relabeling business became a part of DTS. Baca would relabel the chile bags and then fax invoices to Tabatabai for payment, which earned him a total of $9,196 in 2012. Baca claims, however, that he hired Jay ...
Original document
Source: All recent Immigration Decisions In All the U.S. Courts of Appeals