T.C. Summary Opinion 2003-132
UNITED STATES TAX COURT
JOSEPH F. LISI, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13503-01S. Filed September 25, 2003.
James J. Lombardi III, for petitioner.
Michael J. Proto, for respondent.
GOLDBERG, 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 year in issue.
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Respondent determined a deficiency in petitioner’s Federal
income tax of $770 for the taxable year 1999.
The issues for decision are: (1) Whether petitioner is
entitled to a dependency exemption deduction, and (2) whether
petitioner is entitled to itemized deductions not claimed on his
return.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Coventry, Rhode Island, on the date the petition was filed in
this case.
Petitioner and his former wife, Karen A. Lisi (Ms. Lisi),
were divorced in 1980. During the year in issue, their son,
Joseph Edward Lisi, resided in Massachusetts with Ms. Lisi.
During that year, petitioner paid child support for Joseph in the
amount of $1,633. Joseph, who turned 21 years of age on July 26,
1999, was enrolled as a full-time student. Joseph earned wages
of approximately $10,000 to $11,000 during 1999, which he used
for his support.
Petitioner filed a Federal income tax return for 1999. As
is relevant here, on this return petitioner claimed a dependency
exemption deduction for Joseph; he reported income from gambling
of $1,800; and he claimed the standard deduction of $4,300 in
lieu of any itemized deductions. In the statutory notice of
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deficiency, respondent disallowed the dependency exemption
deduction for Joseph.
The first issue for decision is whether petitioner is
entitled to a dependency exemption deduction. A deduction
generally is allowed under section 151(a) for each dependent of a
taxpayer. Sec. 151(a), (c)(1). Subject to exceptions and
limitations not relevant here, a child of a taxpayer is a
dependent of the taxpayer only if the taxpayer provides over half
of the child’s support for the taxable year. Sec. 152(a).
It is clear in this case that petitioner did not provide
over half of Joseph’s support during 1999: Petitioner paid only
$1,633 in child support during that year. In addition to any
other sources of support, Joseph received at least $10,000 per
year from his employment, which he used for his own support.
Petitioner therefore is not entitled to a dependency exemption
deduction for Joseph in 1999. Id.
Petitioner argues that a separation agreement he entered
into with Ms. Lisi prior to their divorce entitles petitioner to
the dependency exemption deduction. There is a special rule
which applies if a child receives over half of his support during
the year from his parents, where (a) the parents are divorced,
separated, or live apart from their spouses for at least the last
6 months of the calendar year, and (b) the child is in the
custody of one or both parents for more than half of the year.
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Sec. 152(e)(1). Under this rule, the parent with custody of the
child for the greater portion of the year (the “custodial
parent”) generally is treated as having provided over half of the
child’s support, regardless of which parent actually provided the
support. Id. One exception to this special rule exists which
provides that the noncustodial parent is treated as having
provided over half of the child’s support. Sec. 152(e)(2). For
the exception to apply, the custodial parent must sign a written
declaration releasing his or her claim to the deduction, and the
noncustodial parent must attach the declaration to his or her tax
return. Id. Assuming that petitioner and Ms. Lisi together
provided over half of Joseph’s support, petitioner is not treated
as having provided over half of Joseph’s support during 1999
because no signed written declaration was attached to
petitioner’s return. Id. Furthermore, we note that the special
rules of section 152(e) do not apply where a child is emancipated
from his parents and is no longer considered to be in the
“custody” of either one. Sec. 152(e)(1)(B); Kaechele v.
Commissioner, T.C. Memo. 1992-457.
The second issue for decision is whether petitioner is
entitled to itemized deductions not claimed on his return.
Petitioner argues that he (1) paid deductible State income taxes
of $2,242, (2) paid deductible automobile taxes of approximately
$200, (3) had gambling losses of approximately $2,200, deductible
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to the extent of his winnings1 of $1,800, and (4) made deductible
cash charitable contributions of $600. Expenses of these types
are deductible, if at all, as itemized deductions. Secs. 62(a),
63(d), 165(a), 165(d), 164(a)(1) and (2), 170(a)(1).
A taxpayer must keep records sufficient to establish the
amounts of the items required to be shown on his Federal income
tax return. Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.
In the event that a taxpayer establishes that a deductible
expense has been paid but 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).
Deductions for charitable contribution are subject to
further substantiation requirements. Sec. 170(a)(1). Generally,
a deduction for charitable contributions must be substantiated
with written records. Sec. 1.170A-13, Income Tax Regs.
Deductions for contributions of $250 or more are disallowed in
1
Under sec. 165(d), a taxpayer’s losses from gambling are
deductible only to the extent of the taxpayer’s gains from
gambling.
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the absence of a contemporaneous written acknowledgment of the
contribution by the donee. Sec. 170(f)(8); sec. 1.170A-13(f),
Income Tax Regs.
Petitioner provided substantiation for his payment of State
income taxes by the Form W-2, Wage and Tax Statement, which was
attached to his 1999 return and which reflects State income tax
withholding in the relevant amount. Petitioner, however, failed
to provide substantiating documents for any of the other itemized
deductions, including the claimed cash charitable contributions.
Although petitioner’s testimony at trial provided little detail
concerning these contributions, he did state that he paid
approximately $300 to each of two charities--his church and the
Salvation Army. These contributions are allowable only in the
presence of the required written records. Sec. 170(a)(1),
(f)(8); sec. 1.170A-13, Income Tax Regs. Because petitioner has
provided no such records, we conclude that he has not met the
substantiation requirements for the claimed charitable
contributions and that he is not entitled to any deduction
therefor. The amount of the remaining claimed deductions for
gambling losses and automobile taxes, together with the
substantiated State income tax payment, totals $4,242. Because
the standard deduction of $4,300 exceeds this amount, even if the
remaining claimed deductions were substantiated, the itemized
deductions would be of no benefit to petitioner.
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Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.