British Virgin Islands Company Disputes 20 Years of Deficiencies

ACCIPITOR TRADING, LTD.,
Petitioner,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent.

UNITED STATES TAX COURT

PETITION

Petitioner hereby petitions for a redetermination of the deficiencies set forth by the Commissioner in the Notices of Deficiency dated May 23, 2019, and as the basis for its case alleges as follows:

1. The petitioner is a British Virgin Islands corporation. Petitioner's primary place of business and address is Road Town, Tortola, British Virgin Islands. The Notices in this case were issued to Petitioner at 18570 Sobey Road, Saratoga, California 95070, which is a property owned by petitioner. The petitioner did not file tax returns for the periods here involved.

2. The Notices of Deficiency ("Notices") (copies of which, including so much of the statements and schedules accompanying the Notices as are material, are attached hereto and marked Exhibits A and B) were mailed to petitioner on May 23, 2019, and were issued by the Internal Revenue Service at San Jose, California. The Notice at Exhibit A pertains to the 1998 to 2009 years and the Notice at Exhibit B pertains to the 2010 to 2017 years.

3. The Commissioner determined deficiencies in income tax and additions to tax in the Notices, all of which are in dispute, as follows:

Year	Tax	6651(A)(1) PENALTY	6651(a)(2) PENALTY	6655 PENALTY
1998	$53,640	$12,069	$13,410	$2,471
1999	$55,260	$12,433	$13,815	$2,668
2000	$56,880	$12,798	$14,220	$3,072
2001	$59,220	$13,324	$14,805	$2,364
2002	$60,300	$13,567	$15,075	$2,053
2003	$61,560	$13,851	$15,390	$1,600
2004	$63,720	$14,337	$15,930	$1,820
2005	$65,880	$14,823	$16,470	$2,642
2006	$68,040	$15,309	$17,010	$3,230
2007	$70,200	$15,795	$17,550	$3,245
2008	$66,780	$15,025	$16,695	$2,179
2009	$65,880	$14,823	$16,470	$1,584
2010	$67,860	$15,795	$3,510	$1,955
2011	$65,880	$14,823	$16,470	$1,323
2012	$70,200	$15,795	$17,550	$1,264
2013	$70,200	$15,795	$17,550	$1,266
2014	$70,200	$15,795	$16,497	$1,266
2015	$74,880	$16,848	$13,104	$1,355
2016	$72,360	$16,281	$7,959	$1,983
2017	$70,200	$15,795	$3,510	$1,955

4. The determinations set forth in the Notices of Deficiency are based upon the following errors:

a. Respondent erred in determining that petitioner had rental income in the below listed years in the following amounts:

Year	Income
1998	$178,800
1999	$184,200
2000	$189,600
2001	$197,400
2002	$201,000
2003	$205,200
2004	$212,400
2005	$219,600
2006	$226,800
2007	$234,000
2008	$222,600
2009	$219,600
2010	$226,200
2011	$219,600
2012	$234,000
2013	$234,000
2014	$234,000
2015	$249,600
2016	$241,200
2017	$234,000

b. Respondent erred in determining the fair rental value of the properties at issue and the amount of rental income.

c. For the 2001 to 2009 tax years, respondent erred in determining in the alternative that petitioner had income related to "U.S. sourced unexplained deposits."

d. Respondent erred in determining that petitioner is subject to penalties under Section 6651(a)(1) and (a)(2) and 6655.

5. The facts upon which petitioner relies as the basis of its case are as follows:

a. Petitioner did not have rental income in the amounts shown in the Notices.

b. Rental income should only reflect the properties actually occupied in the years at issue.

c. The fair rental value of the properties at issue was lower than determined by respondent.

d. The failure to file returns and pay taxes and estimated taxes was due to reasonable cause.

e. Any "U.S. source unexplained deposits" were not income to petitioner.

WHEREFORE, it is prayed that:

1) The Court may hear the case and determine that the deficiencies in tax determined by respondent are erroneous;

2) The Court determine that petitioner is not liable for any penalties; and

3) The Court grant such other and further relief as may be appropriate.

DATED: October 17, 2019

Steven M. Katz
Tax Court No. KSO374
Attorneys for Petitioner
SIDEMAN & BANCROFT LLP
One Embarcadero Center, 22nd Floor
San Francisco, CA 94111
Telephone: 415-392-1960
Facsimile: 415-392-0827

DATED: October 17, 2019

Travis W. Thompson
Tax Court No. TT0226
Attorneys for Petitioner
SIDEMAN & BANCROFT LLP
One Embarcadero Center
22nd Floor
San Francisco, CA 94111
Telephone: 415-392-1960
Facsimile: 415-392-0827

DATED: October 17, 2019

Jay R. Weill
Tax Court No. WJ0279
Attorneys for Petitioner
SIDEMAN & BANCROFT LLP
One Embarcadero Center
22nd Floor
San Francisco, CA 94111
Telephone: 415-392-1960
Facsimile: 415-392-0827