Popovich v. Indiana Department of State Revenue
2016 Ind. Tax LEXIS 11
| Ind. T.C. | 2016Background
- Petitioner Nick Popovich reported gambling as his trade and claimed deductions; Indiana Department of State Revenue issued AGIT proposed assessments for 2003–2005 rejecting that he was a professional gambler.
- Department issued Proposed Assessments on January 28, 2008; Popovich protested and then filed this original tax appeal on October 4, 2010.
- Department moved for summary judgment, designating its Proposed Assessments as prima facie evidence of tax owed; Popovich designated an affidavit and other evidence in response.
- Court previously ruled (Popovich IV) that a certified-mail envelope the Department relied on belonged to Popovich’s former wife and that Popovich signed and mailed his 2003 return on January 10, 2005.
- The parties dispute whether (1) the Department’s 2003 assessment was timely under Indiana’s three-year rule, and (2) Popovich was engaged in the trade or business of gambling (i.e., a professional gambler) for 2004 deductions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of 2003 proposed assessment | Popovich: return was filed (mailed) Jan 10, 2005; assessment issued within three years is untimely | Dept.: certified-mail envelope shows mailing Feb 1, 2005; or late return equals no return so no statute of limitations | Court: Popovich’s filing date is Jan 10, 2005; assessment (Jan 28, 2008) is untimely and void; summary judgment for Popovich on timeliness |
| Admissibility of Popovich’s affidavit | Affidavit is proper evidence to create factual disputes | Dept.: affidavit contradicts discovery, is inconsistent or conclusory | Court: affidavit admissible; Dept. failed to show specific contradictions |
| Admissibility of expert report (Boskett) | Boskett’s casino experience supports expertise on professional gambling | Dept.: Boskett lacks proper foundation to opine on gambling/pro gamblers | Court: Boskett’s report excluded for lack of foundation; not considered on summary judgment |
| Whether Popovich was engaged in trade/business of gambling (2004) | Popovich: his records, time spent, and purpose support profit objective (professional gambler) | Dept.: evidence shows recreational play, losses, lack of card-counting/strategy, and other factors rebut professional status | Court: genuine issues of material fact exist under Treas. Reg. §1.183-2 factors; summary judgment denied to both parties |
Key Cases Cited
- Rent-A-Center E., Inc. v. Indiana Dep’t of State Revenue, 963 N.E.2d 463 (Ind. 2012) (designated assessments can create prima facie case on summary judgment)
- Miller Pipeline Corp. v. Indiana Dep’t of State Revenue, 995 N.E.2d 733 (Ind. Tax Ct. 2013) (summary-judgment evidence must be admissible at trial)
- Popovich v. Indiana Dep’t of State Revenue (Popovich IV), 17 N.E.3d 405 (Ind. Tax Ct. 2014) (prior ruling about ownership of certified-mail envelope and mailing date)
- Elmer v. Indiana Dep’t of State Revenue, 42 N.E.3d 185 (Ind. Tax Ct. 2015) (summary judgment inappropriate where credibility and factual weighing are required)
- Golanty v. Commissioner, 72 T.C. 411 (Tax Ct. 1979) (hobby-loss factors and profit objective analysis)
- Commissioner v. Groetzinger, 480 U.S. 23 (1987) (test for trade-or-business: continuity, regularity, and primary purpose of income or profit)