Blanco v. Commissioner, 56 T. C. 512 (1971)

A revenue agent’s report is not admissible as evidence to prove the accuracy of its contents without specific agreement, especially regarding contributions to a dependent’s support.

Summary

In Blanco v. Commissioner, the U. S. Tax Court ruled that a revenue agent’s report, detailing support contributions by the petitioner’s former wife, was inadmissible as evidence. The petitioner, Victor Blanco, sought to claim a dependency deduction for his son Jon but failed to prove he provided over half of Jon’s support in 1965. The court emphasized the need for competent evidence to establish total support from all sources, which Blanco could not provide, relying solely on the agent’s report. Consequently, Blanco was denied the deduction, illustrating the evidentiary standards required for tax deductions related to dependency.

Facts

Victor Blanco, divorced from Ruth LacKamp Preston, sought a dependency deduction for their son Jon in 1965. Jon lived with his mother for part of the year and attended Green Bank School, a facility for mentally deficient children, for the remainder. Blanco and Preston were the sole contributors to Jon’s support. During an IRS audit, Revenue Agent Wormley obtained figures on Preston’s contributions from another agent, Madden, who had audited Preston’s return. Wormley’s report suggested Blanco did not contribute over half of Jon’s support, leading to the disallowance of the deduction.

Procedural History

The IRS determined a deficiency in Blanco’s 1965 income tax return, disallowing the dependency deduction for Jon. Blanco petitioned the U. S. Tax Court for review. The court examined the admissibility of the revenue agent’s report as evidence and the sufficiency of Blanco’s proof of support contributions.

Issue(s)

1. Whether a revenue agent’s report is admissible as evidence to prove the accuracy of its contents regarding support contributions without a specific agreement.
2. Whether Blanco proved he provided over half of Jon’s total support in 1965.

Holding

1. No, because a revenue agent’s report is not competent evidence to prove the truth of its contents without an agreement.
2. No, because Blanco failed to demonstrate the total amount of Jon’s support from all sources, relying solely on the inadmissible revenue agent’s report.

Court’s Reasoning

The court applied the evidentiary rule that a revenue agent’s report is not admissible to prove the facts it contains, as established in cases like James H. Fitzner and J. Paul Blundon. The court noted that Agent Madden, who gathered the data on Preston’s contributions, did not testify, and there was no evidence that the list of contributions was complete. The court emphasized the need for competent evidence to establish total support, which Blanco could not provide, as he only presented the agent’s report without additional substantiation of Preston’s contributions. The court also pointed out the absence of evidence for non-check contributions, such as food, which would have been significant during Jon’s time with Preston. The court concluded that Blanco failed to meet the burden of proof required for the dependency deduction.

Practical Implications

This decision underscores the importance of providing competent and comprehensive evidence when claiming tax deductions, particularly for dependency. Taxpayers must substantiate total support from all sources, not just their own contributions. The ruling affects how taxpayers and their legal representatives should approach similar cases, emphasizing the need for direct evidence and the inadmissibility of revenue agent reports without agreement. It also impacts tax practice by reinforcing the evidentiary standards in tax court, potentially affecting how IRS audits and subsequent litigation are conducted. Subsequent cases have followed this principle, requiring taxpayers to provide detailed and verifiable proof of support contributions.