T.C. Memo. 1997-215
UNITED STATES TAX COURT
JOE NATHAN BRYANT, JR., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12420-95. Filed May 7, 1997.
Joe Nathan Bryant, Jr., pro se.
Horace Crump, for respondent.
MEMORANDUM OPINION
KÖRNER, Judge: Respondent determined deficiencies in and
penalties on petitioner's Federal income taxes for the years and
in the amounts as follows:
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Penalty
Year Deficiency Sec. 6662(a)
1992 $8,376 $1,675
1993 8,137 1,627
All section references are to the Internal Revenue Code in
effect for the years in issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
At the time the petition herein was filed, petitioner was a
resident of Birmingham, Alabama. He filed his income tax returns
for the years 1992 and 1993 on the basis of married filing
separately. In the years in issue, petitioner was employed as a
policeman for the Fairfield Police Department. He also provided
private security service and was a member of the Coast Guard
Reserve during these years.
At trial herein, petitioner appeared on behalf of himself.
Although he testified, he produced no other witnesses, and no
documentary evidence of any sort was offered in support of his
position. He admitted at trial that he failed to substantiate
any of the business expenses claimed on Schedule C of his 1992
and 1993 tax returns, and he also admitted that he did not
substantiate any of the claimed deductions on Schedule A of his
1992 and 1993 tax returns.
The adjustments made by respondent to petitioner's taxable
returns were as follows:
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1. Respondent determined that petitioner had received State
income tax refunds in the amounts of $424 and $464 in 1992 and
1993, which petitioner failed to report.
2. Respondent disallowed $16,449 and $16,439, respectively,
for the years 1992 and 1993 on account of Schedule C business-
related deductions by petitioner.
3. With respect to petitioner's itemized deductions under
Schedule A on the returns in issue, respondent disallowed $28,985
for 1992 and $28,526 for 1993 on account of deductions other than
State income taxes paid by petitioner in those years, which
respondent allowed.
Where the Commissioner has made a determination of
deficiency in income tax against a taxpayer, such as here,
regarding his income for a given year, the burden of proof on
each issue determined by the Commissioner is on the taxpayer.
The Commissioner's determination of the deficiencies is
presumably correct. Rule 142(a); Welch v. Helvering, 290 U.S.
111 (1933).
Furthermore, deductions from income are strictly a matter of
legislative grace, and the taxpayer bears the burden of proving
entitlement to all deductions claimed. INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.
Helvering, 292 U.S. 435 (1934).
So far as respondent's determination of deficiencies is
concerned, based upon income and deductions as reported and/or
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claimed by petitioner, there is nothing in this record except
petitioner's naked testimony to dispute respondent's
determinations. Petitioner's testimony, standing alone, is not
to be taken as gospel, and it does not carry petitioner's burden
of proof. Halle v. Commissioner, 7 T.C. 245 (1946), affd. 175
F.2d 500 (2d Cir. 1949). Therefore, so far as respondent's
determinations are based upon income and deductions as reported
by petitioner, we must sustain respondent.
There remain, however, several discrepancies between
respondent's determinations herein and the record regarding
petitioner's reported deductions. Specifically:
1. For the year 1992, respondent's notice of deficiency
purported to disallow $16,449 of business-related deductions
under Schedule C, whereas petitioner actually reported $8,011 of
such deductions. Respondent's explanation for this discrepancy
is that this was an "error" that respondent had corrected; how or
at what time this correction was made we do not know, but it
apparently is not in accordance with the income and deductions as
reported by petitioner, and we do not see what statutory basis
respondent has for making a determination of deficiency based on
a "correction". Sec. 6212. Likewise for the year 1993,
respondent disallowed $16,439 of petitioner's business expenses
under Schedule C, whereas the record herein shows that petitioner
actually claimed only $16,119. We will take the figures as
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reported by petitioner's returns, which are stipulated in
evidence herein.
2. With respect to the itemized deductions (Schedule A) on
petitioner's return for the year 1992, respondent disallowed the
amount of $28,985 as deductions; petitioner, however, claimed
only $29,495 in itemized deductions on that return, of which
respondent has conceded $1,306. We know of no basis for
respondent's determination of a disallowed deduction in excess of
petitioner's claim, after allowing for respondent's concession.
3. With respect to the year 1993, respondent disallowed
$28,526 of itemized deductions; petitioner had claimed $29,870,
and after respondent's concession of $1,344, the net disallowance
by respondent of $28,526 appears correct in accordance with the
present record.
The above discrepancies with respect to the disallowances by
respondent as compared to the deductions as claimed by petitioner
in the 2 years in question will have to be reconciled in the
necessary computation herein under Rule 155.
With regard to the penalties in tax for the years 1992 and
1993, determined herein by respondent, section 6662(a) imposes a
penalty in the amount of 20 percent of the portion of the
underpayment attributable to negligence. Petitioner is liable
for an accuracy-related penalty for negligence in the preparation
and filing of his 1992 and 1993 tax returns. Petitioner failed
to substantiate any of the deductions taken on the 1992 and 1993
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tax returns except for the State income taxes previously
mentioned herein. Therefore, he is liable for the accuracy-
related penalty pursuant to section 6662(c), which defines
negligence as the failure to make a reasonable attempt to comply
with the tax law. Hamdi v. Commissioner, T.C. Memo. 1993-38,
affd. without published opinion 23 F.3d 407 (6th Cir. 1994);
Dillon v. Commissioner, T.C. Memo. 1993-11.
Decision will be entered
under Rule 155.