Couple Didn't Receive Dividend Payments, Tax Court Holds

Robert W. Mopsick, for respondent.

Computershare Investor Services (Computershare) was the registered agent for BNSF in 2009. Petitioner husband has no recollection of receiving the disputed dividend payments in 2009 or a Form 1099-DIV, Dividends and Distributions, reporting those payments. BNSF was acquired by Berkshire Hathaway early in 2010. Wells Fargo replaced Computershare as the registered agent for BNSF in 2010.

Petitioner husband has made numerous unsuccessful attempts in recent years to contact Computershare and Wells Fargo regarding various matters relating to his BNSF stockholdings, including payment of the disputed dividends.

Computershare sent a letter dated February 28, 2014, to respondent's counsel's office stating that a Form 1099-DIV had been issued to petitioner-husband for 2009 reporting the payment of the disputed dividends from BNSF and [*3] attaching a copy of a Form 1099-DIV properly addressed to petitioners' home address. Respondent sent a copy of the February 28, 2014, letter to petitioners on April 16, 2014. Promptly thereafter, petitioner husband called the phone number provided in the February 28, 2014, letter and discovered there was only a recorded message and no opportunity to inquire further about the statements in the letter.

Petitioners filed a joint Form 1040, U.S. Individual Income Tax Return, for tax year 2009. On Schedule B, Interest and Ordinary Dividends, attached to their 2009 tax return, petitioners reported $470 of dividend income (the equivalent of one quarterly dividend payment) from BNSF.

Respondent relies on the February 28, 2014, letter from Computerserve, which states that the disputed dividend payments had been made and which [*5] includes a copy of a Form 1099-DIV apparently sent to petitioners' home address reporting those payments.

Petitioner husband testified that petitioners did not receive the disputed dividend payments in 2009 or a Form 1099-DIV reporting those payments and that he does not recall having negotiated any checks.⁴ His testimony included details regarding the acquisition of BNSF by Berkshire Hathaway and his persistent but unsuccessful attempts to make inquires with Computerserve and Wells Fargo about the disputed dividend payments. He called the phone number provided in the February 28, 2014, letter, but was unable to speak to anyone regarding that letter.

We decide whether a witness's testimony is credible based on objective facts, the reasonableness of the testimony, the consistency of statements made by the witness, and the demeanor of the witness. See Quock Ting v. United States, 140 U.S. 417, 420-421 (1891); Wood v. Commissioner, 338 F.2d 602, 605 (9th Cir. 1964), aff'g 41 T.C. 593 (1964); Pinder v. United States, 330 F.2d 119, 124-125 [*6] (5th Cir. 1964); Concord Consumers Hous. Coop. v. Commissioner, 89 T.C. 105, 124 n.21 (1987). We may discount testimony which we find to be unworthy of belief, see Tokarski v. Commissioner, 87 T.C. 74, 77 (1986), but we may not arbitrarily disregard testimony that is competent, relevant, and uncontradicted, see Conti v. Commissioner, 39 F.3d 658, 664 (6th Cir. 1994), aff'g and remanding 99 T.C. 370 (1992) and T.C. Memo. 1992-616. Petitioner husband has devoted a substantial amount of time to contest the relatively small amount of tax liability at issue here, and he testified consistently, clearly, and with considerable conviction in explaining the negative -- that he did not receive the disputed dividend payments. He has persuaded us that he did not receive the disputed dividend payments in 2009.

Decision will be entered under Rule 155.

² Unless otherwise indicated, section references are to the Internal Revenue Code in effect for the year in issue and Rule references are to the Tax Court Rules of Practice and Procedure.

³ Petitioners do not dispute that they owned 1,176 shares of BNSF stock in 2009 or that BNSF issued quarterly dividends of $470 each, but dispute that they received more than one of those payments.

⁴ Attached to petitioners' answering brief are several documents that petitioners contend establish that they never negotiated the BNSF dividend checks. These documents were not offered into evidence. Documents attached to a party's brief are not evidence. Rule 143(c). Therefore, we will not consider them. See Perkins v. Commissioner, 40 T.C. 330, 340 (1963); Godwin v. Commissioner, T.C. Memo. 2003-289.