Jose M. Dulanto; Ana M. Dulanto v. Commissioner of Internal Revenue

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOSE M. DULANTO; ANA M.
DULANTO,
Petitioners-Appellants,
v.
COMMISSIONER OF INTERNAL
REVENUE,
Respondent-Appellee.
No. 16-72867
Tax Ct. No. 19123-12
MEMORANDUM*
Appeal from a Decision of the
United States Tax Court
Submitted November 15, 2017**
Before: CANBY, TROTT, and GRABER, Circuit Judges.
Jose M. Dulanto and Ana M. Dulanto appeal pro se from the Tax Court’s
judgment concluding that a payment that Ana M. Dulanto received in a settlement
agreement was not excludable from their gross income and assessing penalties.
We have jurisdiction under 26 U.S.C. § 7482(a)(1). We review de novo the Tax
* 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).
FILED
NOV 20 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Court’s conclusions of law and for clear error its findings of fact. Rivera v. Baker
West, Inc., 430 F.3d 1253, 1256 (9th Cir. 2005). We affirm.
The Tax Court properly concluded that the settlement was not excludable
from the Dulantos’ gross income because neither the settlement agreement nor the
facts and circumstances of the case demonstrate that the settlement was based on
Ana M. Dulanto’s physical injury or physical sickness, or her loss of consortium
arising from Jose M. Dulanto’s physical injury or physical sickness. See 26 U.S.C.
§ 104(a)(2) (exempting from taxation a settlement payment based on personal
physical injuries or physical sickness); Rivera, 430 F.3d at 1257 (to determine
whether a settlement is based on physical injury or physical sickness, courts
consider the settlement agreement and the facts and circumstances of the case).
The Tax Court did not clearly err in concluding that the Dulantos failed to
produce sufficient evidence that they acted with reasonable cause and in good
faith, and thus properly found that the accuracy-related penalty was appropriate for
the Dulantos’ understated taxes. See 26 U.S.C. § 6662(a), (d)(1) (authorizing
penalty for substantial understatement of taxes when understatement exceeds the
greater of ten percent of the tax required to be shown on the tax return or $5,000);
DJB Holding Corp. v. Comm’r, 803 F.3d 1014, 1022, 1028-31 (9th Cir. 2015)
(setting forth standards of review and discussing penalties under § 6662 based on
substantial underpayment and circumstances for applying exception under

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§ 6664(c)(1) regarding whether taxpayer had reasonable cause for his position and
acted in good faith).
The Tax Court did not abuse its discretion in denying the Dulantos’ motion
to continue because it was filed within 30 days of the trial date and the Dulantos
were aware of Ana M. Dulanto’s disability before that period. See Tax Ct. R. 133
(a motion for a continuance is granted “only in exceptional circumstances,” and if
filed within 30 days of hearing, it “ordinarily will be deemed dilatory and will be
denied unless the ground therefor arose during that period or there was good reason
for not making the motion sooner”); see also Woods v. Saturn Distribution
Corp., 78 F.3d 424, 427 (9th Cir. 1996) (standard of review).
We do not consider matters not specifically and distinctly raised and argued
in the opening brief, or arguments and allegations raised for the first time on
appeal. See Padgett v. Wright, 587 F.3d 983, 985 n.2 (9th Cir. 2009).
AFFIRMED.

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