T.C. Memo. 1998-174
UNITED STATES TAX COURT
CHARLES E. SHEPHERD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4205-97. Filed May 12, 1998.
Charles E. Shepherd, pro se.
David Choi, for respondent.
MEMORANDUM OPINION
FOLEY, Judge: Respondent determined a $20,066 deficiency
and a $4,013 accuracy-related penalty for 1993. All section
references are to the Internal Revenue Code in effect for 1993,
and all Rule references are to the Tax Court Rules of Practice
and Procedure. The issues for decision are:
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1. Whether petitioner is entitled to deductions for
business expenses. We hold that he is to the extent provided
below.
2. Whether petitioner is entitled to certain itemized
deductions. We hold that he is to the extent provided below.
3. Whether petitioner is entitled to a credit for Federal
tax paid on fuel. We hold that he is not.
4. Whether petitioner is liable for an accuracy-related
penalty. We hold that he is.
Petitioner resided in Evanston, Illinois, at the time he
filed his petition. During 1993, petitioner worked as a
traveling salesperson, driving to various sites and selling
peanuts, candy, soda, pastries, and other snacks out of his
automobiles. He also sold Bibles and secondhand clothing.
Petitioner filed in a timely manner his 1993 Federal income
tax return. On Schedule C of the return, he reported $61,250 of
gross receipts, $11,975 of "other income" (i.e., relating to fuel
credits), and $37,100 of expenses. On Schedule A, he claimed
$27,018 of deductions. In the notice of deficiency, respondent
disallowed all of petitioner's Schedule C expenses and the
following Schedule A deductions: $4,100 of taxes, $3,300 of
charitable contributions, $13,850 of casualty losses, and $1,000
of miscellaneous deductions. In addition, respondent disallowed
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an $11,975 credit, and the $11,975 of "other income" on Schedule
C, that petitioner claimed for Federal tax paid on fuel.
Petitioner, who has the burden of proof, Welch v. Helvering,
290 U.S. 111, 115 (1933), contends that respondent erred in
disallowing the expenses and deductions claimed on his return.
In an attempt to substantiate his expenses and deductions,
petitioner submitted a disorganized assortment of receipts. The
vast majority of these receipts relate either to personal
expenses or to cost of goods sold, which respondent allowed in
full. Petitioner did, however, substantiate $255 of charitable
contributions and $1,842.58 of expenses relating to the business
use of his automobiles. Petitioner is not entitled to the other
expenses and deductions that he claimed.
Petitioner contends that he is entitled to a credit for fuel
excise taxes that he allegedly paid. Section 34(a) allows a
credit for excise tax paid with respect to gasoline used for
certain "qualifying purposes" such as farming, off-highway use,
and public transportation. On Form 4136, petitioner claimed a
fuel tax credit relating to 99,000 gallons of gasoline that he
allegedly purchased. Petitioner failed, however, to establish a
"qualifying purpose". Accordingly, petitioner is not entitled to
the section 34 credit.
Petitioner contends that respondent should not have imposed
an accuracy-related penalty. Section 6662 imposes an accuracy-
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related penalty in an amount equal to 20 percent of the portion
of the underpayment of tax attributable to negligence or
disregard of rules or regulations. Sec. 6662(a) and (b).
Section 1.6001-1(a), Income Tax Regs., requires taxpayers to keep
adequate records of their deductions and expenses. Petitioner
disregarded this regulation. In addition, petitioner failed to
exercise due care in claiming a tax credit for the alleged
purchase of 99,000 gallons of gasoline. Accordingly, petitioner
is liable for the accuracy-related penalty.
All other contentions raised by the parties are either moot
or without merit.
To reflect the foregoing,
Decision will be entered
pursuant to Rule 155.