T.C. Memo. 1996-61
UNITED STATES TAX COURT
DIANA LYNN TAUB, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14117-94. Filed February 15, 1996.
Diana Lynn Taub, pro se.
Reginald R. Corlew, for respondent.
MEMORANDUM OPINION
LARO, Judge: Diana Lynn Taub petitioned the Court to
redetermine respondent's determination of deficiencies in her
1989 and 1990 Federal income tax, additions thereto, and
penalties. For 1989, respondent determined that petitioner was
liable for a $5,538 deficiency, a $1,306 addition under section
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6651(a)(1), and a $1,108 penalty under section 6662.1 For 1990,
respondent determined that petitioner was liable for a $8,392
deficiency, a $1,673 addition under section 6651(a)(1), and a
$1,678 penalty under section 6662.
The Court tried this case on December 4, 1995. The evidence
consists primarily of a stipulation of four facts, a stipulation
of three exhibits, and the scant testimony of petitioner.
One stipulation concerns petitioner’s residence at the time of
the petition, which was Pembroke Pines, Florida. The other three
stipulations reference the stipulated exhibits; namely, the
subject notice of deficiency and petitioner's 1989 and 1990 Forms
1040, U.S. Individual Income Tax Return. Petitioner's testimony,
including direct examination and cross-examination, is 10 pages
in the transcript.
We must decide the issues set forth below. For purposes of
clarity and convenience, each issue states our findings of fact
and Opinion with respect thereto.
1. Issue One
We decide whether petitioner is entitled to certain amounts
for costs of goods sold and expenses, that respondent disallowed.
Petitioner reported these amounts on her 1989 and 1990 Schedules
C, Profit or Loss From Business (Sole-Proprietorship).
1
Unless otherwise stated, section references are to the
Internal Revenue Code in effect for the years in issue. Rule
references are to the Tax Court Rules of Practice and Procedure.
Dollar amounts are rounded to the nearest dollar.
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Petitioner’s 1989 and 1990 Schedules C report that she has
an unincorporated business that provides acting, modeling, and
art/design services. The 1989 Schedule C reports income of $650
and cost of goods sold and deductions totaling $13,800; i.e.,
cost of goods sold ($6,700), advertising ($1,800), legal and
professional services ($1,500), office expense ($2,000), supplies
($1,200), and utilities ($600). Petitioner’s 1990 Schedule C
reports income of $750 and cost of goods sold and deductions
totaling $15,200; i.e., cost of goods sold ($4,000), advertising
($2,700), legal and professional services ($2,200), office
expense ($4,500), supplies ($1,200), and utilities ($600).
Respondent disallowed all of the costs of goods sold and
deductions reported on petitioner’s 1989 and 1990 Schedules C.
In part, respondent determined, petitioner did not prove that any
of these amounts were: (1) Paid or (2) ordinary and necessary
business expenses.
Petitioner must prove respondent's determination wrong.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
Petitioner has not done so. She has produced no meaningful
evidence rebutting respondent's determination, and the record is
devoid of evidence otherwise disproving it. Petitioner claims
she had the documents necessary to disprove respondent’s
determination, but that the documents were either lost by her or
destroyed in a hurricane. We find this argument unpersuasive.
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We sustain respondent in full with respect to this issue. See
Finesod v. Commissioner, T.C. Memo. 1994-66.
2. Issue Two
We decide whether petitioner may deduct certain itemized
deductions that respondent disallowed. Petitioner reported these
deductions on her 1989 and 1990 Schedules A, Itemized Deductions.
Petitioner’s 1989 Schedule A reports the following itemized
deductions: $600 in interest, $2,750 of contributions by cash or
check, $490 of contributions by other than cash or check, and
$5,760 of “miscellaneous deductions” (before the application of
the 2-percent floor). Petitioner claims a deduction for
miscellaneous deductions, net of the 2-percent floor.
Petitioner’s 1990 Schedule A reports the following itemized
deductions: $3,616 of medical expenses (before application of
the 7.5-percent floor), $1,700 of interest, $2,700 of
contributions by cash or check, $490 of contributions by other
than cash or check, and $5,900 of “miscellaneous deductions”
(before the application of the 2-percent floor). Petitioner
claims deductions for medical expenses and miscellaneous
deductions, after reducing her reported amounts by the applicable
floors.
Respondent determined that petitioner’s 1990 medical
deduction was $52, instead of the larger amount claimed by
petitioner, because of the increase in her adjusted gross income
on account of the above-mentioned adjustments to her 1990
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Schedule C. Respondent determined that petitioner could not
deduct any of the amounts that she reported for contributions for
1989 and 1990 because she had not proven that these
“contributions” were: (1) Paid or (2) within the requirements of
section 170. Respondent determined that petitioner could not
deduct any of the amounts that she claimed for miscellaneous
deductions for 1989 and 1990, primarily because she had not
proven that these “deductions” were: (1) Paid or (2) otherwise
allowable as deductible expenses.
For the same reasons as above, we sustain respondent’s
determination with respect to this issue. See Finesod v.
Commissioner, supra.
3. Issue Three
We decide whether petitioner is entitled to a credit for
dependent child care expenses for the 1990 taxable year. On her
1990 Form 2441, Child and Dependent Care Expenses, petitioner
reported that she paid $8,400 to Morris W. Taub. As petitioner
wrote on her 1990 Form 2441, “Dependent brother (alcoholic)
became too depressed and ill to work and could not find a job. I
paid all expenses for food, clothing, storage of personal
belongings, moving expenses, car payment and housing. He
committed suicide in March of 1990. I also paid burial
expenses.”
Respondent determined that petitioner was not entitled to
her claimed credit because petitioner had not shown that the
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$8,400 listed on Form 2441 was: (1) Paid or (2) attributable to
dependent child expenses. For the same reasons as above, we
sustain respondent’s determination with respect to this issue.
See Finesod v. Commissioner, supra.
4. Issue Four
We decide whether petitioner is liable for the additions to
her 1989 and 1990 taxes determined by respondent under section
6651(a)(1). Respondent determined that petitioner failed to file
timely 1989 and 1990 Federal income tax returns, and that
petitioner failed to show that her failure was due to reasonable
cause. Petitioner mailed her 1989 and 1990 Forms 1040 to
respondent on October 1, 1991, and respondent received both
returns on October 3, 1991. Petitioner did not receive an
extension to file her 1990 Form 1040.
Section 6651(a)(1) imposes a monthly charge equal to
5 percent of the amount of tax that should have been shown on the
return, subject to a maximum charge of 25 percent. In order to
avoid this charge/addition to tax, petitioner must prove that her
failure to file was: (1) Due to reasonable cause and (2) not due
to willful neglect. Sec. 6651(a); United States v. Boyle,
469 U.S. 241, 245 (1985). A failure to file timely a Federal
income tax return is due to reasonable cause if the taxpayer
exercised ordinary business care and prudence, and, nevertheless,
was unable to file the return within the prescribed time. Sec.
301.6651-1(c)(1), Proced. & Admin. Regs. Willful neglect means a
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conscious, intentional failure or reckless indifference. United
States v. Boyle, supra at 245.
When petitioner mailed her Forms 1040 to respondent on
October 1, 1991, petitioner attached a note stating that she had
given these returns to Morris W. Taub and her sister-in-law to
mail. The letter also states that petitioner had recently “felt”
that these returns had not actually been mailed.
With respect to this letter, we find the assertions
contained therein to be unbelievable. Petitioner’s 1989
Form 1040 reflects that she signed it on April 10, 1990.
Petitioner’s 1990 Form 1040 reflects that she signed it on
June 10, 1991. Morris W. Taub, however, apparently died in March
1990. Because the record does not disprove respondent's
determination under section 6651(a)(1), we sustain it.
5. Issue Five
We decide whether petitioner is liable for the 1989 and 1990
accuracy-related penalties determined by respondent under section
6662. Respondent determined that petitioner was liable for these
penalties because her underpayments were due to negligence or
disregard of rules or regulations. See sec. 6662(a), (c).
Section 6662(a) imposes an accuracy-related penalty equal to
20 percent of the portion of an underpayment that is due to
negligence. To avoid this penalty, petitioner must prove that
she made a reasonable attempt to comply with the provisions of
the Internal Revenue Code, or that she was not careless,
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reckless, or in intentional disregard of rules or regulations.
See sec. 6662(c); see also Rule 142(a); Welch v. Helvering, supra
at 115. Petitioner has failed to do so; thus, we sustain
respondent.
For the foregoing reasons,
Decision will be entered
for respondent.