T.C. Summary Opinion 2002-65
UNITED STATES TAX COURT
GEORGE A. & DELORES COOPER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23764-97S. Filed May 31, 2002.
George A. Cooper and Delores Cooper, pro sese.
Jack T. Anagnostis, for respondent.
DINAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
effect for the years in issue.
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Respondent determined deficiencies in petitioners’ Federal
income taxes of $4,819, $4,369, and $2,786 for the taxable years
1994, 1995, and 1996.
The issues for decision are: (1) Whether petitioners are
entitled to disallowed deductions for medical expenses,
charitable contributions, personal property taxes, and
miscellaneous itemized deduction expenses; and (2) whether
petitioners received unreported interest and dividend income.
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Willingboro, New Jersey, on the date the petition was filed in
this case.
The first issue for decision is whether petitioners are
entitled to various disallowed deductions. On their joint
Federal income tax returns, petitioners claimed deductions for
the following expenses for each respective year:
1994 1995 1996
Medical expenses $19,541 $19,647 $12,465
Charitable contributions 2,985 3,026 2,142
Misc. itemized deduction expenses 4,754 4,651 2,595
Personal property taxes 3,759 764 -0-
In the statutory notice of deficiency, respondent disallowed all
of these deductions. Respondent concedes that petitioners paid
employee business expenses of $705 in each year for purchases of
boots and safety glasses.
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A taxpayer generally must keep records sufficient to
establish the amounts of the items reported on his Federal income
tax return. Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.
However, in the event that a taxpayer establishes that a
deductible expense has been paid but that he is unable to
substantiate the precise amount, we generally may estimate the
amount of the deductible expense, bearing heavily against the
taxpayer whose inexactitude in substantiating the amount of the
expense is of his own making. Cohan v. Commissioner, 39 F.2d
540, 543-544 (2d Cir. 1930). We cannot estimate a deductible
expense, however, unless the taxpayer presents evidence
sufficient to provide some basis upon which an estimate may be
made. Vanicek v. Commissioner, 85 T.C. 731, 743 (1985).
Special substantiation rules exist for charitable
contributions: A deduction for charitable contributions
generally is not allowed in the absence of written records. Sec.
1.170A-13, Income Tax Regs; see also sec. 6001; sec. 1.6001-1(a),
(e), Income Tax Regs. Specific requirements, which vary
according to the type and amount of the contributions, do not
need to be set out in detail here.
Petitioners admit that they have no substantiating documents
for the various disallowed expense deductions. Petitioners also
were unable to provide at trial any reliable details concerning
the payment of the expenses, other than with respect to the
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purchases of the boots and safety glasses. Consequently, we
sustain respondent’s determination that petitioners are not
entitled to deductions for any of the other expenses.
Furthermore, petitioners are not entitled to deductions for the
employee business expenses conceded by respondent. Employee
business expenses generally are allowed as deductions under
section 162(a). However, such expenses are miscellaneous
itemized deductions and are allowed only to the extent that the
aggregate of all miscellaneous itemized deductions exceeds 2
percent of adjusted gross income. See secs. 62, 63, 67.
Petitioners’ adjusted gross income was $68,797 in 1994, $68,865
in 1995, and $76,314 in 1996. Petitioners were allowed no other
miscellaneous itemized deductions in any of the years in issue.
Thus, they are not entitled to any deduction for the yearly $705
expense because it does not exceed 2 percent of adjusted gross
income in any year.
The second issue for decision is whether petitioners
received unreported interest and dividend income. Respondent
determined that petitioners received unreported interest income
of $42 in 1994 and unreported dividend income of $80 in 1994 and
$91 in 1995.
Gross income generally includes income from whatever source
derived, including interest and dividend income. Sec. 61(a)(4),
(7). Petitioners admit that they received but did not report the
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income reflected in the notice of deficiency. Respondent’s
determination in this regard is sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
for respondent.