Corporation Seeks Redetermination of Deficiency in Tax Court

Media Rights Technologies, Inc.,
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 of Internal Revenue in the Commissioner's notice of deficiency which is undated; it was received by Petitioner's counsel via U.S. mail on May 17, 2021, and as the basis for petitioner's case allege as follows:

1. Petitioner, MEDIA RIGHTS TECHNOLOGIES, INC. is a Corporation with California as its legal state of domicile its mailing address is P.O. Box 8447, Santa Cruz, California 95061-8447. The return for the period here involved was filed with the Internal Revenue Service office in Fresno, California.

2. The notice of deficiency, (a copy of which, including so much of the statement and schedules accompanying the notice as is material, is attached as Exhibit A) was mailed to petitioner in the month of May, 2021, and was issued by the Office of the Internal Revenue Service at Laguna Niguel, California.

3. The deficiency and penalties, as determined by the Commissioner, all of which are in dispute, are as follows:

Tax Year	Deficiency	Penalty
2017	$132,556	$19,883.40 IRC § 6651 (a)(1)
		$26,511.20 IRC § 6662(a)

4. The determinations of tax and penalty set forth in the notice of deficiency are based upon the following errors:

(a) The Commissioner erred in determining that Petitioner did not incur and pay rental expenses in the amount of $214,802;

(b) The Commissioner erred in determining that Petitioner did not incur and pay tax and license expenses in the amount of $44,418;

(c) The Commissioner erred in determining that Petitioner did not incur and pay interest expenses in the amount of $18,080;

(d) The Commissioner erred in determining that Petitioner did not have depreciation in the amount of $4,526;

(e) The Commissioner erred in determining that Petitioner did not incur and pay expenses ordinary and necessary to his business in the amount of $437,024;

(f) The Commissioner erred in determining that Petitioner incurred and paid compensation of officers in the amount of $1,200;

(g) The Commissioner erred in determining that Petitioner did not pay salaries and wages in the amount of $524,261;

(h) The Commissioner erred in determining that Petitioner had gross receipts in the amount of $371,436;

(i) The Commissioner erred in determining that Petitioner is not entitled to a net operating loss deduction of $30,373,348;

(j) The Commissioner erred in determining that Petitioner is not entitled to general business credits in the amount of $178,582;

(k) The Commissioner erred in determining that Petitioner is not entitled to a research credit in the amount of $9,499;

(l) The Commissioner erred in determining that penalties should apply under the provisions of IRC § 6651(a)(1) for the tax year 2017; and

(m) The Commissioner erred in determining that penalties should apply under the provisions of IRC § 6662(a).

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

(a) Petitioner has documentary and testimonial evidence which will establish that it incurred and paid rents in the course of its business in the amount of $214,802;

(b) Petitioner has documentary and testimonial evidence which will establish that it incurred and paid taxes and licenses in the course of its business in the amount of $44,418;

(c) Petitioner has documentary and testimonial evidence which will establish that it incurred and paid interest expenses in the course of its business in the amount of $18,080;

(d) Petitioner has documentary and testimonial evidence which will establish that it incurred and is entitled to a depreciation deduction in the course of its business in the amount of $4,526;

(e) Petitioner has documentary and testimonial evidence which will establish that it incurred and paid other expenses for which it is entitled to deductions in the course of its business in the amount of $437,024;

(f) Petitioner has documentary and testimonial evidence which will establish that it incurred and paid compensation of officers in the course of its business in the amount of $1,200;

(g) Petitioner has documentary and testimonial evidence which will establish that it incurred and paid salaries and wages in the course of its business in the amount of $524,261;

(h) Petitioner has documentary and testimonial evidence which will establish that it did not have gross receipts or sales in the course of its business in the amount of $371,436;

(i) Petitioner has documentary and testimonial evidence which will establish that it incurred a net operating loss deduction in the course of its business in the amount of $30,373,348;

(j) Petitioner has documentary and testimonial evidence which will establish that it qualifies for general business credits in the course of its business in the amount of $178,582;

(k) Petitioner has documentary and testimonial evidence which will establish that it qualifies for the research credit in the amount of $9,499;

(l) Petitioner is not liable for a penalty under the provisions of IRC § 6651(a)(1) for the 2017 tax year because there is no deficiency in tax for such year, and to the extent that any such deficiency is determined, the penalty does not apply due to reasonable cause; furthermore, there is no Civil Penalty Approval Form for application of a penalty under this section; and

(m) Petitioner is not liable for a penalty under the provisions of IRC § 6662(a) for the 2017 tax year because there is no deficiency in tax for such year, and to the extent that any such deficiency is determined, the penalty does not apply due to reasonable cause; furthermore there is no Civil Penalty Approval Form for application of a penalty under this section.

WHEREFORE, petitioner prays that the Court determine that there is no deficiency in income tax due from Petitioner for tax year 2017, that no penalties apply and that the Court grant such other relief as it deems fit and proper.

Dated: July 30, 2021

BETTY J. WILLIAMS
Counsel for Petitioner
Tax Court Bar Number: WB0250

LAW OFFICE OF WILLIAMS & ASSOCIATES, PC
3600 American River Drive,
Suite 135
Sacramento, CA 95864
Tel. (916) 488-8501
Betty@WilliamsTaxLaw.com

R. TODD LUOMAl
Counsel for Petitioner
Tax Court Bar Number: LR0321

LAW OFFICE OF WILLIAMS & ASSOCIATES, PC
3600 American River Drive
Suite 135,
Sacramento, CA 95864
Tel. (916) 488-8501
Todd@WilliamsTaxLaw.com