B. SURI, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee., UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT, No. 04-4968-ag, October 17, 2005

B. SURI, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

No. 04-4968-ag

October 17, 2005

Unpublished Opinion

SUMMARY ORDER

THIS SUMMARY ORDER WILL NOT BE PUBLISHED IN THE FEDERAL REPORTER AND MAY NOT BE CITED AS PRECEDENTIAL AUTHORITY TO THIS OR ANY OTHER COURT, BUT MAY BE CALLED TO THE ATTENTION OF THIS OR ANY OTHER COURT IN A SUBSEQUENT STAGE OF THIS CASE, IN A RELATED CASE, OR IN ANY CASE FOR PURPOSES OF COLLATERAL ESTOPPEL OR RES JUDICATA. ═

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, Foley Square, in the City of New York, on the 17th day of October, two thousand and five. ═

PRESENT: ═

Hon. John M. Walker, Jr., Chief Judge,

Hon. Richard C. Wesley,

Hon. Peter W. Hall, Circuit Judges. ═

APPEARING FOR APPELLANT: B. SURI, pro se , New York, New York

APPEARING FOR APPELLEE: On submission ═

Appeal from a decision of the United States Tax Court. ═

UPON DUE CONSIDERATION , IT IS HEREBY ORDERED that the appeal is DISMISSED and the decision of the tax court is AFFIRMED . ═

Petitioner-appellant B. Suri ("taxpayer") appeals from the June 17, 2004 order and decision of the United States Tax Court, entered in accordance with its March 17, 2004 memorandum opinion, which decided that (1) there is a $24,860 deficiency in the tax due by taxpayer for the taxable year 1999; (2) taxpayer owes a $6,215 addition to tax under 26 U.S.C. ╖ 6651(a)(1) for failure to file a federal income tax return; and (3) taxpayer must pay $1,000 to the United States as a penalty under 26 U.S.C. ╖ 6673. The tax court had jurisdiction pursuant to 26 U.S.C. ╖╖ 6213, 6214, and 7442. This court has jurisdiction under 26 U.S.C. ╖ 7482 because the taxpayer resides in New York. ═

We review "the legal conclusions of the tax court de novo and its factual findings under the clearly erroneous standard." Merrill Lynch & Co. v. Comm'r , 386 F.3d 464, 469 (2d Cir. 2004). "Mixed questions of law and fact, entailing the application of a legal standard to a given factual pattern, are [also] reviewed under the clearly erroneous standard." Bausch & Lomb Inc. v. Comm'r , 933 F.2d 1084, 1088 (2d Cir. 1991) (internal quotation marks and citation omitted). Familiarity with the facts and procedural history is assumed. ═

Taxpayer first contends that the tax court erred by finding that the amounts he advanced to certain companies were not deductible bad debts under 26 U.S.C. ╖ 166(a)(1). To establish this deduction, a taxpayer must first demonstrate that a bona fide debt was owed to it by a third party. United Dairy Farmers, Inc. v. United States , 267 F.3d 510, 519√20 (6th Cir. 2001). We find that ample evidence gathered at trial supports the tax court's determination, under correct legal standards, that the taxpayer's advancement of funds did not constitute a bona fide debt and that a bad-debt deduction was therefore unavailable. ═

Second, taxpayer argues that the tax court erroneously determined that an addition to tax was due under 26 U.S.C. ╖ 6651(a)(1) for the taxable year 1999 on account of the taxpayer's failure to file a federal income tax return. We find that the tax court correctly held that, at trial, taxpayer did not point to any "reasonable cause" for failing to timely file a 1999 tax return. ═

Taxpayer finally faults the tax court for imposing a $1,000 sanction on account of his litigation conduct. We review the tax court's assessment of sanctions under 26 U.S.C. ╖ 6673 for abuse of discretion. Burke v. Comm'r , 929 F.2d 110, 116 (2d Cir. 1991). The tax court sanctioned the taxpayer under 26 U.S.C. ╖ 6673(a)(1)(C) for "unreasonably fail[ing] to pursue available administrative remedies." The tax court found that the appellant repeatedly failed "to meet with the IRS or respondent's counsel." As distinguished from a "failure to meet with . . . respondent's [the Commissioner's] counsel," we understand the "failure to meet with the IRS" as referring to taxpayer's failure to meet with an IRS appeals officer and thereby pursue an administrative appeal of the IRS's liability determination. We find that the tax court acted within its discretion in finding this failure to be unreasonable and deserving of sanctions under ╖ 6673(a)(1)(C). The tax court also suggested that the taxpayer's failure to timely produce documents might be sanctionable under 26 U.S.C. ╖ 6673(a)(1)(A), which allows for penalties when "proceedings before [the tax court] have been instituted or maintained by the taxpayer primarily for delay," but we do not review that conclusion because the tax court's first finding is sufficient to support its imposition of sanctions under ╖ 6673. ═

For the foregoing reasons, the appeal is DISMISSED and the decision of the tax court is AFFIRMED . ═

FOR THE COURT:

Roseann B. MacKechnie, Clerk ═

By:

Lucille Carr, Deputy Clerk ═

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