Denise McMillan v. Cir ( 2017 )

FILED
NOT FOR PUBLICATION
MAY 15 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
DENISE CELESTE MCMILLAN, No. 13-73139
Petitioner-Appellant, Tax Ct. No. 4590-11
v.
MEMORANDUM*
COMMISSIONER OF INTERNAL
REVENUE,
Respondent-Appellee.
Appeal from a Decision of the
United States Tax Court
Submitted May 11, 2017**
Before: GOODWIN, LEAVY, and SILVERMAN, Circuit Judges.
Denise Celeste McMillan appeals pro se the Tax Court’s denial, after a
bench trial, of her petition for redetermination of federal income tax deficiencies
for tax years 2007 and 2008. We review the Tax Court’s conclusions of law de
novo and its factual findings for clear error. MK Hillside Partners v. Comm’r, 826
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
F.3d 1200, 1203 (9th Cir. 2016). A taxpayer claiming a deduction bears the
burden of proof, and this court reviews for clear error the Tax Court’s factual
determination “that a taxpayer has failed to produce sufficient evidence to
substantiate a deduction.” Sparkman v. Comm’r, 509 F.3d 1149, 1159 (9th Cir.
2007). We have jurisdiction under 26 U.S.C. § 7482(a)(1), and we affirm the Tax
Court’s judgment.
The Tax Court properly considered the factors set forth in 26 C.F.R. § 1.183-
2(b)(1)-(9) and did not clearly err in finding that McMillan did not engage in horse
activity for profit in 2007 and 2008, and therefore was not entitled to take income
tax deductions for expenses arising from that activity. See 26 U.S.C. § 183(b)(2);
Hill v. Comm’r, 204 F.3d 1214, 1218 (9th Cir. 2000); Wolf v. Comm’r, 4 F.3d 709,
713 (9th Cir. 1993). The Commissioner was not bound to allow deductions
permitted in prior tax years. See Little v. Comm’r, 106 F.3d 1445, 1453 (9th Cir.
1997).
The Tax Court did not err in disallowing a casualty loss deduction on the
basis of the death of McMillan’s horse from disease. See 26 U.S.C. § 165(c)(3);
United States v. Flynn, 481 F.2d 11, 13 (1st Cir. 1973) (casualty losses to horses,
largely due to illness or disease, were “clearly not allowable”).
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The Tax Court did not clearly err in finding that the expenses of a lawsuit
were not directly connected with McMillan’s information technology business, and
therefore were not deductible as ordinary and necessary business expenses under
26 U.S.C. §§ 162(a) and 212. See 26 C.F.R. § 1.162-1(a); Inland Asphalt Co. v.
Comm’r, 756 F.2d 1425, 1427 (9th Cir. 1985).
The Tax Court did not abuse its discretion in denying McMillan’s post-trial
motion to reopen the record. See Devore v. Comm’r, 963 F.2d 280, 282 (9th Cir.
1992) (per curiam).
AFFIRMED.
3