T.C. Summary Opinion 2009-189
UNITED STATES TAX COURT
IRINA AGRONIN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 28745-07S, 2977-09S. Filed December 10, 2009.
Irina Agronin, pro se.
Theresa G. McQueeney, for respondent.
CHIECHI, Judge: Each of these consolidated cases was heard
pursuant to the provisions of section 7463 of the Internal
Revenue Code in effect when the petition was filed in each such
case.1 Pursuant to section 7463(b), the decisions to be entered
1
Hereinafter, all section references are to the Internal
Revenue Code (Code) in effect for the years at issue. All Rule
references are to the Tax Court Rules of Practice and Procedure.
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are not reviewable by any other court, and this opinion shall not
be treated as precedent for any other case.
Respondent determined the following deficiencies in, and
accuracy-related penalty under section 6662(a) on, petitioner’s
Federal income tax (tax) for her taxable years 2005 and 2006:
Year Deficiency Accuracy-Related Penalty
2005 $3,496 $699.20
2006 4,004 --
The issues for decision are:
(1) Is petitioner entitled to deductions for each of her
taxable years 2005 and 2006 in excess of those that respondent
allowed for each of those years? We hold that she is not.
(2) Is petitioner liable for her taxable year 2005 for the
accuracy-related penalty under section 6662(a)? We hold that she
is.
Background
Some of the facts have been stipulated and are so found.
Petitioner resided in New York at the time she filed the
respective petitions in these cases.
During 2003 and 2004, petitioner, whose maiden name is
Belman, lived in New York and sought employment as a medical
resident.
In 2005 and 2006, the taxable years at issue, petitioner was
living in and working as a medical resident in New York and was
in search of a full-time medical residency. As of the time of
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the trial in this case, petitioner had not completed her medical
board certification.
Around September 2005, when petitioner was living in and
working as a medical resident in New York, petitioner’s apartment
in Arkansas had a flood. Around the same time, petitioner moved
her belongings from Little Rock, Arkansas, to Rockaway Park, New
York.
In 2005, petitioner’s dependent son, Leonard Agronin (Mr.
Agronin), graduated from St. Mary’s University Law School in San
Antonio, Texas.2 Mr. Agronin did not take the bar exam.
During 2005 and 2006, Mr. Agronin attended Canisius College
in order to earn a degree in graduate sport administration.
During those years, payments for tuition and room and board
totaling $8,962.50 and $16,889, respectively, were made to
Canisius College with respect to Mr. Agronin’s attendance at that
college.
Petitioner timely filed Form 1040, U.S. Individual Income
Tax Return, for each of her taxable years 2005 (2005 return) and
2006 (2006 return). In the 2005 return, petitioner reported
total income and adjusted gross income of $47,649, claimed
itemized deductions of $35,012 from Schedule A--Itemized Deduc-
tions (Schedule A) included with that return (2005 Schedule A),
2
It appears that Mr. Agronin attended college in Little
Rock, Ark.
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and reported taxable income of $6,237. In the 2005 Schedule A,
petitioner claimed, inter alia, (1) total medical and dental
expenses of $14,800 before the application of the 7.5-percent
floor imposed by section 213(a), (2) total cash and noncash gifts
to charity of $5,900,3 and (3) total “Job Expenses and Certain
Miscellaneous Deductions” (job and other expenses) of $16,824
before the application of the two-percent floor imposed by
section 67(a).4
3
The total cash and noncash gifts to charity of $5,900 that
petitioner claimed in the 2005 Schedule A included $2,100 of
claimed noncash gifts to charity.
4
Of the total $16,824 of job and other expenses that peti-
tioner claimed in the 2005 Schedule A, petitioner claimed $16,550
for “Unreimbursed employee expenses--job travel, union dues, job
education, etc.” (unreimbursed employee expenses) and $274 for
tax preparation fees. The total $16,550 of unreimbursed employee
expenses that petitioner claimed in that schedule was for the
following claimed expenses:
Type of Expense Claimed Amount of Expense Claimed
Job search expenses $8,000
Research conferences and seminars 4,000
Professional journals 3,000
Uniforms 200
Uniform maintenance 200
Shoes 100
Medical equipment 200
Union dues 720
Security locks 50
Conference presentations 80
Petitioner did not attach Form 2106, Employee Business Expenses
(Form 2106), or Form 2106-EZ, Unreimbursed Employee Business
Expenses (Form 2106-EZ), to the 2005 Schedule A as required by
that schedule.
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As required by section 213(a), petitioner reduced the total
medical and dental expenses (i.e., $14,800) that she claimed in
the 2005 Schedule A by 7.5 percent of her adjusted gross income
(i.e., by $3,574). As required by section 67(a), petitioner
reduced the total (i.e., $16,824) job and other expenses that she
claimed in the 2005 Schedule A by two percent of her adjusted
gross income (i.e., by $953). In determining the taxable income
reported in petitioner’s 2005 return, petitioner deducted the
respective balances of claimed medical and dental expenses and
claimed job and other expenses after the reductions just de-
scribed, as well as the other itemized deductions claimed in the
2005 Schedule A that were not subject to any floor.
In the 2006 return, petitioner reported $51,743 of total
income and $47,743 of adjusted gross income and claimed itemized
deductions of $70,099 from Schedule A included with that return
(2006 Schedule A).5 In the 2006 Schedule A, petitioner claimed,
inter alia, (1) total medical and dental expenses of $33,000
before the application of the 7.5-percent floor imposed by
section 213(a), (2) total cash gifts to charity of $6,500, and
5
The copy of the 2006 return in the record is not complete.
As a result, the record does not disclose, inter alia, the
taxable income that petitioner reported in that return.
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(3) total job and other expenses of $32,922 before the applica-
tion of the two-percent floor imposed by section 67(a).6
As required by section 213(a), petitioner reduced the total
medical and dental expenses (i.e., $33,000) that she claimed in
the 2006 Schedule A by 7.5 percent of her adjusted gross income
(i.e., by $3,581). As required by section 67(a), petitioner
reduced the total job and other expenses (i.e., $32,922) that she
claimed in the 2006 Schedule A by two percent of her adjusted
gross income (i.e., by $955). In determining the taxable income
reported in the 2006 return, petitioner deducted the respective
6
Of the total $32,922 of job and other expenses that peti-
tioner claimed in the 2006 Schedule A, petitioner claimed $32,640
for unreimbursed employee expenses and $282 for tax preparation
fees. The total $32,640 of unreimbursed employee expenses that
petitioner claimed in that schedule was for the following claimed
expenses:
Type of Expense Claimed Amount of Expense Claimed
Job search expenses $800
Research conferences and seminars 10,000
Fellowship program 15,000
Professional journals 3,000
Uniforms 600
Uniform maintenance 400
Shoes 300
Medical equipment 400
Union dues 840
Security locks 150
Conference presentations 150
Graduate exams and testing 1,000
Petitioner did not attach Form 2106 or Form 2106-EZ to the 2006
Schedule A as required by that schedule.
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balances of claimed medical and dental expenses and claimed job
and other expenses after the reductions just described, as well
as the other itemized deductions claimed in the 2006 Schedule A
that were not subject to any floor.
Respondent issued to petitioner a separate notice of defi-
ciency for each of her taxable years 2005 (2005 notice) and 2006
(2006 notice). In the 2005 notice, respondent disallowed the
total itemized deductions of $35,012 that petitioner claimed in
her 2005 return.7 In the 2005 notice, respondent also determined
to impose on petitioner for her taxable year 2005 an accuracy-
related penalty under section 6662(a). In the 2006 notice,
respondent disallowed the total itemized deductions of $70,099
that petitioner claimed in her 2006 return.8
Discussion
Petitioner bears the burden of proving error in the determi-
nations in the 2005 notice and the 2006 notice that remain at
issue.9 See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115
7
In the 2005 notice, respondent allowed petitioner a
standard deduction of $7,300.
8
In the 2006 notice, respondent allowed petitioner a
standard deduction of $7,550.
9
Petitioner does not claim that the burden of proof shifts
to respondent under sec. 7491(a) with respect to the deficiency
that respondent determined for each of the years at issue and
that is attributable to the determinations in the 2005 notice and
the 2006 notice that remain at issue. In any event, petitioner
has failed to carry her burden of establishing that she satisfies
(continued...)
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(1933). She also bears the burden of proving her entitlement to
any deductions that she is claiming here, which she did not claim
in her 2005 return and her 2006 return. See Rule 142(a).
Moreover, deductions are a matter of legislative grace, and
petitioner bears the burden of proving entitlement to any deduc-
tion claimed.10 See INDOPCO, Inc. v. Commissioner, 503 U.S. 79,
84 (1992).
We turn first to the deductions that petitioner is claiming
for each of the years at issue in excess of the amounts that
respondent allowed for each of those years. It is petitioner’s
position that she is entitled to the respective deductions
claimed in her 2005 return and her 2006 return that respondent
disallowed in the 2005 notice and the 2006 notice and does not
concede here. In addition, petitioner argues that she is enti-
tled to deductions not claimed in her 2005 return and her 2006
return,11 including, for example, (1) a claimed casualty loss
9
(...continued)
the requirements of sec. 7491(a)(2). On the record before us, we
find that the burden of proof does not shift to respondent under
sec. 7491(a).
10
The Code and the regulations thereunder require petitioner
to maintain records sufficient to establish the amount of any
deduction claimed. See sec. 6001; sec. 1.6001-1(a), Income Tax
Regs.
11
At trial, petitioner was not sure which of the deductions
that she is claiming here for the respective years at issue were
claimed in her 2005 return and her 2006 return and which were
not. Nor was she sure of the respective amounts of all of the
(continued...)
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deduction for her taxable year 2005 relating to a flood in that
year in her apartment in Arkansas, (2) deductions for each of the
years at issue for various types of expenses that she claims she
paid during each of those years for Mr. Agronin, her son, such as
expenses for lodging, food, tuition, books, transportation, and
medical and dental care, and (3) a deduction for her taxable year
2006 for expenses that she claims she paid during that year to
restore the grave sites of her husband and her grandmother, who
are buried in Russia.
Petitioner relies principally on the testimony of Alla
Agronin (Ms. Agronin) and her own testimony in order to satisfy
her burden of proving that she is entitled to the deductions that
she is claiming for each of the years at issue. We found the
testimony of Ms. Agronin to be in material respects general,
vague, conclusory, uncorroborated, and serving the interest of
petitioner, who is her mother. We found the testimony of peti-
tioner to be in material respects general, vague, conclusory,
uncorroborated, and self-serving. We shall not rely on the
respective testimonies of Ms. Agronin and petitioner to establish
petitioner’s position that she is entitled to the deductions that
she is claiming for each of the years at issue. See, e.g.,
Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).
11
(...continued)
various deductions that she is claiming here.
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Based upon our examination of the entire record before us,
we find that petitioner has failed to carry her burden of estab-
lishing her entitlement to the deductions that she is claiming
for each of the years at issue in excess of the amounts that
respondent allowed for each of those years.
We turn now to the accuracy-related penalty under section
6662(a) for which respondent determined petitioner is liable for
her taxable year 2005. Section 6662(a) imposes an accuracy-
related penalty equal to 20 percent of the underpayment to which
section 6662 applies. Section 6662 applies to the portion of any
underpayment which is attributable to, inter alia, (1) negligence
or disregard of rules or regulations, sec. 6662(b)(1), or (2) a
substantial understatement of tax, sec. 6662(b)(2).
The term “negligence” in section 6662(b)(1) includes any
failure to make a reasonable attempt to comply with the Code.
Sec. 6662(c). Negligence has also been defined as a failure to
do what a reasonable person would do under the circumstances.
Leuhsler v. Commissioner, 963 F.2d 907, 910 (6th Cir. 1992),
affg. T.C. Memo. 1991-179; Antonides v. Commissioner, 91 T.C.
686, 699 (1988), affd. 893 F.2d 656 (4th Cir. 1990). The term
“negligence” also includes any failure by the taxpayer to keep
adequate books and records or to substantiate items properly.
Sec. 1.6662-3(b)(1), Income Tax Regs. The term “disregard”
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includes any careless, reckless, or intentional disregard. Sec.
6662(c).
For purposes of section 6662(b)(2), an understatement is
equal to the excess of the amount of tax required to be shown in
the tax return over the amount of tax shown in such return. Sec.
6662(d)(2)(A). An understatement is substantial in the case of
an individual if the amount of the understatement for the taxable
year exceeds the greater of ten percent of the tax required to be
shown in the tax return for that year or $5,000. Sec.
6662(d)(1)(A).
The accuracy-related penalty under section 6662(a) does not
apply to any portion of an underpayment if it is shown that there
was reasonable cause for, and that the taxpayer acted in good
faith with respect to, such portion. Sec. 6664(c)(1). The
determination of whether the taxpayer acted with reasonable cause
and in good faith depends on the pertinent facts and circum-
stances, including the taxpayer’s efforts to assess such tax-
payer’s proper tax liability, the knowledge and experience of the
taxpayer, and the reliance on the advice of a professional, such
as an accountant. Sec. 1.6664-4(b)(1), Income Tax Regs.
Respondent has the burden of production under section
7491(c) with respect to the accuracy-related penalty under
section 6662(a) that respondent determined for petitioner’s
taxable year 2005. To meet that burden, respondent must come
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forward with sufficient evidence showing that it is appropriate
to impose the accuracy-related penalty. See Higbee v. Commis-
sioner, 116 T.C. 438, 446 (2001). Although respondent bears the
burden of production with respect to the accuracy-related penalty
that respondent determined for petitioner’s taxable year 2005,
respondent “need not introduce evidence regarding reasonable
cause, substantial authority, or similar provisions. * * * the
taxpayer bears the burden of proof with regard to those issues.”
Id.
On the record before us, we find that petitioner failed to
maintain adequate books and records and failed to substantiate
virtually all of the deductions that she claimed in her 2005
return. See sec. 1.6662-3(b)(1), Income Tax Regs. Moreover,
except for the relatively minimal amount of deductions that
respondent concedes for petitioner’s taxable year 2005, we have
sustained respondent’s determinations to disallow the itemized
deductions that petitioner claimed in the 2005 Schedule A in-
cluded with her 2005 return. On the record before us, we find
that petitioner failed (1) to keep adequate books and records and
(2) to substantiate properly the deductions that she claimed in
the 2005 Schedule A that are at issue. See sec. 1.6662-3(b)(1),
Income Tax Regs. On that record, we find that respondent has
carried respondent’s burden of production with respect to the
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accuracy-related penalty under section 6662(a) that respondent
determined for petitioner’s taxable year 2005.
On the record before us, we find that petitioner has failed
to carry her burden of showing that she was not negligent and did
not disregard rules or regulations, or otherwise did what a
reasonable person would do, with respect to the underpayment for
her taxable year 2005.
On the record before us, we further find that petitioner has
failed to carry her burden of showing that there was reasonable
cause for, and that she acted in good faith with respect to, the
underpayment for her taxable year 2005.
Based upon our examination of the entire record before us,
we find that petitioner has failed to carry her burden of estab-
lishing that she is not liable for her taxable year 2005 for the
accuracy-related penalty under section 6662(a).
We have considered all of petitioner’s contentions and
arguments that are not discussed herein, and we find them to be
without merit, irrelevant, and/or moot.
To reflect the foregoing and the concessions of respondent,
Decisions will be entered
under Rule 155.