Sivatharan Natkunanathan v. Commissioner of Internal Revenue

This disposition is not appropriate for publication and is not precedent*
except as provided by Ninth Circuit Rule 36-3.
The panel unanimously concludes this case is suitable for decision**
without oral argument. See Fed. R. App. P. 34(a)(2).
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SIVATHARAN NATKUNANATHAN,
Petitioner - Appellant,
v.
COMMISSIONER OF INTERNAL
REVENUE,
Respondent - Appellee.
No. 10-72151
Tax Ct. No. 17291-07
MEMORANDUM*
Appeal from a Decision of the
United States Tax Court
Submitted June 26, 2012**
Before: SCHROEDER, HAWKINS, and GOULD, Circuit Judges.
Sivatharan Natkunanathan appeals pro se from the Tax Court’s decision,
after a bench trial, upholding the Commissioner of Internal Revenue’s
determination of an income tax deficiency and a late-filing addition to tax for tax
FILED
JUL 12 2012
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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year 2003. We have jurisdiction under 26 U.S.C. § 7482(a)(1). We review de
novo the Tax Court’s legal conclusions and for clear error its factual
determinations. Kelley v. Comm’r, 45 F.3d 348, 350 (9th Cir. 1995). We affirm.
The Tax Court properly determined that Natkunanathan failed to establish
his entitlement to a partial exclusion of the gains he received from selling Intel
Corporation stock. See 26 U.S.C. § 1202(a)(1) (permitting exclusion of 50% of
gains from sale of qualified small business stock, provided that taxpayer held the
stock for more than five years).
The Tax Court did not clearly err in determining that Natkunanathan was not
entitled to claimed deductions for payments for software development that he
never received. See Sparkman v. Comm’r, 509 F.3d 1149, 1159 (9th Cir. 2007)
(taxpayer bears burden of showing right to claimed deduction, and Tax Court’s
factual determination that taxpayer has failed to produce sufficient evidence to
substantiate deduction must be upheld unless it constitutes clear error); United
States v. Pacheco, 912 F.2d 297, 304 (9th Cir. 1990) (taxpayer cannot deduct bad
debt under 26 U.S.C. § 166 if it arises from unpaid wages, fees, and similar items
of taxable income not reported as income on a return); Marks v. Comm’r, 390 F.2d
598, 599 (9th Cir. 1968) (deductible business losses under 26 U.S.C.§ 165 require
loss of existing capital and do not include the failure to realize anticipated income).

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The Tax Court did not clearly err in determining that Natkunanathan failed
to produce sufficient evidence to demonstrate his entitlement to claimed business
deductions for meals and entertainment, advertising, and home office expenses.
See 26 U.S.C. § 162(a) (permitting deduction of certain “ordinary and necessary”
business expenses); id. at § 274(d) (setting forth substantiation requirements for
claimed deductions for entertainment expenses); id. at § 280A(c)(1) (setting forth
limited business use exceptions to general prohibition on deductions with respect
to taxpayer’s residence); Sparkman, 509 F.3d at 1159; Meridian Wood Prods. Co.
v. United States, 725 F.2d 1183, 1188 (9th Cir. 1984) (absent substantiation of
date, place, amount, business purpose, and business relationship, entertainment
expense deductions are disallowed).
Natkunanathan’s remaining contentions are unpersuasive.
Natkunanathan’s “ex parte application for order sealing for privacy
protection,” filed on July 8, 2011, is denied.
AFFIRMED.

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