T.C. Summary Opinion 2009-74
UNITED STATES TAX COURT
KEVIN STOCKTON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 20912-07S. Filed May 12, 2009.
Kevin Stockton, pro se.
Kim-Khanh Thi Nguyen, for respondent.
LARO, Judge: This case was heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect
when the petition was filed.1 Pursuant to section 7463(b), the
decision to be entered is not reviewable by any other court, and
this opinion shall not be treated as precedent for any other
case.
1
Unless otherwise indicated, section references are to the
applicable versions of the Internal Revenue Code (Code), and Rule
references are to the Tax Court Rules of Practice and Procedure.
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Petitioner petitioned the Court to redetermine respondent’s
determination of a $12,173 deficiency in petitioner’s 2004
Federal income tax and a $2,434.60 accuracy-related penalty under
section 6662(a) and (b)(1). Following concessions, we decide the
following issues:
1. Whether petitioner may deduct $24,885 as an itemized
deduction for unreimbursed employee business expenses. We hold
he may not.
2. Whether petitioner may deduct $2,250 as an itemized
deduction for charitable contributions. We hold he may not.
3. Whether petitioner is liable for the accuracy-related
penalty. We hold he is.
Background
I. Preliminaries
The parties have submitted to the Court a stipulation of
facts with accompanying exhibits. The stipulated facts and
accompanying exhibits are incorporated herein by this reference.
Petitioner resided in California when his petition to this Court
was filed.
II. Petitioner’s Employment
Petitioner is employed as a consultant on the automobile
industry. In that capacity, he traveled from his home in
California to various Ford dealerships in the western United
States. His employer reimbursed him up to $170 a day for his
traveling expenses.
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Petitioner used his personal vehicle on 100 days during 2004
to drive to some of the Ford dealerships in his region (local
dealerships). Petitioner’s employer reimbursed him for all of
those automobile expenses. Petitioner traveled on 133 days
during 2004 to Ford dealerships that were not local dealerships.
Petitioner’s employer reimbursed him for all of his business
expenses related to that travel.
III. 2004 Tax Return
Petitioner filed a Form 1040, U.S. Individual Income Tax
Return, for 2004 using the filing status of “Single”. Petitioner
claimed on his return a $24,885 itemized deduction for
unreimbursed employee business expenses. Petitioner also claimed
a $3,250 itemized deduction for charitable contributions.
Respondent disallowed both deductions in full but has since
conceded that petitioner may deduct $1,000 in charitable
contributions.
Discussion
I. Deductions
A. Burden of Proof
Petitioner bears the burden of proving that respondent’s
determinations set forth in the notice of deficiency are
incorrect. See Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111,
115 (1933). Deductions are strictly a matter of legislative
grace, and petitioner must show that his claimed deductions are
allowed by the Code. See Rule 142(a)(1); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). Petitioner also must keep
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sufficient records to substantiate any deduction that would
otherwise be allowed by the Code. See sec. 6001; sec. 1.6001-
1(a), Income Tax Regs. While section 7491(a) sometimes shifts
the burden of proof to the Commissioner, that section is not
applicable where, as here, petitioner has failed to meet the
recordkeeping and substantiation requirements of the Code. See
sec. 7491(a)(2)(A) and (B).
B. Unreimbursed Employee Business Expenses
Section 162(a) allows a taxpayer to deduct the unreimbursed
ordinary and necessary expenses incurred during the taxable year
in carrying on any trade or business, including expenses incurred
while away from home in the pursuit of a trade or business. See
Lucas v. Commissioner, 79 T.C. 1, 6 (1982); see also Commissioner
v. Flowers, 326 U.S. 465, 470 (1946). During 2004, petitioner’s
employer reimbursed him for all of the business expenses that he
paid as to his employment. We hold he is not entitled to any
additional deduction related to his employment, and we sustain
respondent’s disallowance of petitioner’s claim to a deduction of
$24,885 in unreimbursed employee business expenses.
C. Charitable Contributions
Petitioner seeks to deduct $2,250 as a charitable
contribution for 2004 in addition to the $1,000 allowed by
respondent. In support of that deduction, petitioner testified
that he contributed $1,200 to his church, $600 to various other
charities, and 24 bags of clothing which he valued at $450.
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Petitioner provided no independent evidence to substantiate his
claim to any part of the $2,250 deduction.
Section 1.170A-13(a)(1), Income Tax Regs., requires that
monetary charitable contributions of less than $250 be
substantiated by a canceled check; a receipt from the recipient
organization that lists the recipient’s name, the date of the
contribution, and the amount thereof; or “other reliable written
records” that show the recipient’s name, the date of the
contribution, and the amount thereof. See also sec.
170(f)(8)(A). Section 1.170A-13(b)(1), Income Tax Regs.,
generally requires as to noncash contributions that taxpayers
maintain documentation for each contribution showing information
such as the recipient’s name, the contribution’s date and
location, and the contributed property’s description.
Petitioner has failed to maintain the requisite
documentation for any part of his claimed total of $2,250 in
charitable contributions. We decline to accept his
uncorroborated, self-serving testimony as to this matter. See
Tokarski v. Commissioner, 87 T.C. 74, 77 (1986). We sustain
respondent’s determination that petitioner is not entitled to
deduct any of the claimed $2,250.
II. Accuracy-Related Penalty
Respondent determined that petitioner is liable for an
accuracy-related penalty under section 6662(a) and (b)(1).
Section 6662(a) and (b)(1) imposes a penalty equal to 20 percent
of the portion of an underpayment of tax attributable to a
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taxpayer’s negligence or disregard of rules or regulations.
Negligence connotes a lack of due care or failure to do what a
reasonable and prudent person would do under the circumstances.
See Allen v. Commissioner, 92 T.C. 1, 12 (1989), affd. 925 F.2d
348 (9th Cir. 1991). An accuracy-related penalty is not
applicable to any portion of an underpayment to the extent that
the taxpayer had reasonable cause for that portion and acted in
good faith with respect thereto. See sec. 6664(c)(1).
Respondent bears the burden of production with respect to
the applicability of the accuracy-related penalty. See sec.
7491(c). That burden requires that respondent produce sufficient
evidence that it is appropriate to impose the accuracy-related
penalty. See Higbee v. Commissioner, 116 T.C. 438, 446 (2001).
Once respondent meets this burden, the burden of proof falls upon
petitioner. See id. at 447. Petitioner may carry his burden by
proving that he was not negligent; i.e., he made a reasonable
attempt to comply with the provisions of the Code and was not
careless, reckless, or in intentional disregard of rules or
regulations. See sec. 6662(c). Alternatively, petitioner may
establish that his underpayment was attributable to reasonable
cause and his acting in good faith. See sec. 6664(c)(1).
We conclude that respondent has met his burden of production
and that petitioner has failed to carry his burden of proof. The
record establishes that petitioner claimed substantial deductions
to which he neither was entitled nor had a reasonable claim. The
record does not establish that petitioner made a reasonable
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attempt to comply with the provisions of the Code, that
petitioner’s underpayment was attributable to reasonable cause,
or that petitioner acted in good faith as to the underpayment.
We sustain respondent’s determination with respect to the
accuracy-related penalty.
III. Conclusion
We have considered all of petitioner’s contentions and
allegations, and we conclude that those contentions and
allegations not discussed herein are without merit or irrelevant.
To reflect the foregoing,
Decision will be entered
under Rule 155.