Guy v. Dept. of Rev.

DECISION TC-MD 260061N 1 of 4
IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Income Tax
HERMAN JOE GUY, )
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Plaintiff, TC-MD 260061N
v.
DEPARTMENT OF REVENUE,
State of Oregon,
DECISION	Defendant.
Plaintiff appealed Defendant’s assessment for the 2022 tax year. A trial was held by
remote means on September 24, 2026. Plaintiff appeared and testified on his own behalf. David
Fisher (Fisher), auditor, appeared and testified on behalf of Defendant. Plaintiff offered a 2022
amended return as an exhibit.1 Defendant objected to Plaintiff’s exhibit because it was not
timely filed: Defendant received a copy on September 23, 2024, and the exhibit was filed with
the court on September 24, 2026. The court excluded Plaintiff’s exhibit as untimely. Tax Court
Rule-Magistrate Division (TCR-MD) 12 C (stating exhibits must be exchanged no later than 10
days before trial).2 Defendant’s Exhibits A through I were received without objection.
Plaintiff asked to reset the trial so that Defendant would have time to review Plaintiff’s
amended return. Plaintiff explained that he had not been able to prepare the amended return until
the last four weeks. Defendant objected to Plaintiff’s request. At a case management conference
held on April 22, 2026, Plaintiff agreed to submit an amended return to Defendant by May 22,
2026, and Defendant agreed to review it. Plaintiff did not submit an amended return to
1 Plaintiff also offered an exhibit list referencing exhibits identified as A through G, but Plaintiff’s proposed
exhibits were not labeled so it is unclear what the list corresponds to.
2 The court set trial with the parties during a case management conference on June 9, 2026, and issued an
Order Setting Trial on that same day. The Order identified the applicable exhibit exchange deadlines in this case.

DECISION TC-MD 260061N 2 of 4
Defendant by May 22, and so the court and parties set trial during the June 9, 2026, case
management conference. Plaintiff has had ample time to prepare an amended return and offered
no good cause or exceptional circumstances for his delay. See TCR-MD B(3) (providing
standard for trial reset request). Plaintiff’s trial reset request is denied.
I. STATEMENT OF FACTS
Plaintiff was an electrical installation contractor in 2022. (Def’s Ex F at 2.) He reported
wages totaling $131,990. (Id. at 1.) Plaintiff filed a Schedule C reporting a loss of $73,315 from
his business, J & W Electrical & Mechanical LLC. (Id. at 7.) Fisher testified that Defendant
reviewed Plaintiff’s 2022 return, requesting substantiation for the items reported on Schedule C.
Plaintiff provided highlighted bank statements, which Defendant found to be insufficient. (See
Def’s Ex C at 3, Ex H.) As a result, Defendant disallowed most of Plaintiff’s Schedule C
expenses. (Def’s Ex C at 4.) Fisher testified that Defendant also performed a bank deposit
analysis and added unexplained deposits as additional income. (Id.) Defendant imposed a 20
percent penalty based on Plaintiff’s substantial understatement of tax and denied Plaintiff’s
request to waive that penalty. (Def’s Ex B at 5; Ex E.)
Plaintiff testified that he had significant losses from his business in 2018 through 2021,
and the carryforward of those losses would eliminate any tax liability for the 2022 tax year. The
proposed amended return is meant to reflect those losses. Plaintiff testified that he has not yet
filed the proposed amended return with the IRS but will likely do so.
II. ANALYSIS
The issue presented is Plaintiff’s Oregon tax liability for the 2022 tax year. Oregon
defines taxable income in the same manner as the federal Internal Revenue Code (IRC), subject

DECISION TC-MD 260061N 3 of 4
to certain modifications that are not relevant here.3 ORS 316.007; ORS 316.022(6).4 Under IRC
section 162(a), a taxpayer may deduct ordinary and necessary expenses incurred in carrying on a
trade or business. See Khalaf v. Dept. of Rev., 25 OTR 1, 8 (2020). Deductions are “a matter of
legislative grace” and taxpayers must be prepared to produce “any books, papers, records or
memoranda bearing upon [any] matter required to be included in the return[.]” INDOPCO, Inc.
v. Comm’r, 503 US 79, 84, 112 S Ct 1039, 117 L Ed 2d 226 (1992); ORS 314.425(1); see also
Gapikia v. Comm’r, 81 TCM (CCH) 1488 (2001), 2001 WL 332038 at *2 (US Tax Ct)
(requiring taxpayers “to maintain records sufficient to substantiate their claimed deductions”).
As the party seeking affirmative relief, Plaintiff bears the burden of proof by a
preponderance of the evidence. ORS 305.427. A preponderance of the evidence means the
greater weight of evidence, the more convincing evidence. Feves v. Dept. of Rev., 4 OTR 302,
312 (1971). Plaintiff failed to timely submit exhibits, and Plaintiff’s limited testimony
concerning business losses in prior tax years is insufficient to sustain the burden of proof.
III. CONCLUSION
Upon careful consideration, the court concludes that Plaintiff has failed to meet his
burden of proof. Defendant’s adjustments for the 2022 tax year are sustained. Now, therefore,
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3 The court’s references to the IRC are to the Internal Revenue Code of 1986, as amended and in effect for
the tax year at issue.
4 The court’s references to the Oregon Revised Statutes (ORS) are to the 2021 edition.

DECISION TC-MD 260061N 4 of 4
IT IS THE DECISION OF THIS COURT that Plaintiff’s appeal is denied.
To appeal this Decision, file a complaint in the Regular Division of the Oregon
Tax Court. Appeals are accepted by electronic filing; by mail at 1163 State
Street, Salem, OR 97301-2563; and by hand delivery to 1241 State Street, Salem,
OR, Floor 4R.
Your complaint must be submitted within 60 days after the date of this Decision
or this Decision cannot be changed. TCR-MD 19 B.
This Decision was signed by Presiding Magistrate Allison R. Boomer and
entered on September 30, 2026.