T.C. Summary Opinion 2016-8
UNITED STATES TAX COURT
SOFIEN BELTIFA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23217-14S. Filed February 18, 2016.
Sofien Beltifa, pro se.
Gennady Zilberman, for respondent.
SUMMARY OPINION
JACOBS, Judge: This case was heard pursuant to the provisions of section
7463 of the Internal Revenue Code in effect when the petition was filed. 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.
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Respondent determined a deficiency of $6,139 in income tax and a section
6662(a) accuracy-related penalty of $1,228 for 2011. Petitioner timely filed a
petition for redetermination in this Court. The issues for decision are whether
petitioner is: (1) entitled to a claimed deduction for unreimbursed employee
business expenses of $30,738; (2) entitled to a claimed deduction for medical and
dental expenses of $11,400; (3) entitled to a claimed deduction for charitable
contributions of $7,330; and (4) liable for the section 6662(a) accuracy-related
penalty. Unless otherwise indicated, all section references are to the Internal
Revenue Code (Code) in effect for the year at issue. All Rule references are to the
Tax Court Rules of Practice and Procedure. All dollar amounts are rounded to the
nearest dollar.
Background
Some of the facts are stipulated and are so found. The stipulated facts and
the accompanying exhibits are incorporated herein by this reference. At the time
he filed his petition, petitioner resided in New York.
During 2011 petitioner was employed by a restaurant in New York City as a
bartender/bar manager. He received a Form W-2, Wage and Tax Statement, from
his employer for wages, tips, and other compensation totaling $71,072 ($14,120 in
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wages and $56,952 in tips). Petitioner also received a Form 1099-G, Certain
Government Payments, reflecting a State income tax refund of $1,940.
Petitioner timely filed a Form 1040, U.S. Individual Income Tax Return, for
2011 on which he claimed itemized deductions of $46,884 on Schedule A,
Itemized Deductions. Petitioner’s itemized deductions consisted of: (1) medical
and dental expenses of $11,400, which resulted in a net medical expense
deduction of $5,925 after applying the 7.5% adjusted gross income floor of section
213(a); (2) State and local taxes of $4,352; (3) charitable contributions of $7,330;
and (4) unreimbursed employee business expenses of $30,738, which resulted in a
net miscellaneous itemized deduction of $29,278 after applying the 2% adjusted
gross income floor of section 67(a). Respondent disallowed these deductions
except for the deduction with respect to State and local taxes.
I. Unreimbursed Employee Business Expenses
A. Tips Petitioner Paid to Barbacks
Petitioner’s duties as a bartender/manager included “calling in” liquor
orders, taking liquor deliveries, and ensuring that the bar was fully stocked.
Assisting petitioner were other employees, referred to as barbacks, who would
help him in transferring, as needed, the liquor from the storage basement to the
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bar. The restaurant had a policy of pooling tips paid by its patrons.1 Petitioner
claimed he gave his barbacks 20% of all the tips he received from the tip pools.
B. Clothing Expenses
The restaurant did not require its employees to wear a uniform, but the
restaurant requested employees to wear an all-black ensemble (black shirt, black
tie, and black pants) while working. Petitioner testified he believed it necessary to
look his best because he was one of the faces of the restaurant. “When you enter,
you just see me and then you walk through. You see the host, you see me. I’ve
got to look presentable.” As a result, petitioner wore high-quality clothes while
tending bar and spent a substantial amount for cleaning the clothes he wore.2 The
clothing petitioner wore for work could be worn outside of work.
1
There were two tip pools. One pool was from tips paid by patrons who ate
at the restaurant (restaurant tip pool); the second was from tips paid by patrons
seated at the bar (bar tip pool). The restaurant tip pool was split among the wait
staff, busboys, kitchen staff, bartenders and barbacks. The bar tip pool was split
between the bartenders and the barbacks. In reporting petitioner’s wages and tips
to the Internal Revenue Service, the restaurant reported the tips petitioner received
from both tip pools.
2
Petitioner kept a change of clothing at the restaurant for work he performed
when transferring liquor from the storage basement to the bar.
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C. Commuting Expenses
Petitioner often worked late. As a result, when petitioner returned home,
the commuter rail (Metro-North) for which he had a monthly pass generally had
closed for the night. Thus, petitioner asserts he was forced to use taxicabs when
working late. He estimated the cab fare for each nightly ride to be $60 and the
total amount for cab fare in 2011 to be $8,242.
II. Medical and Dental Expenses
Petitioner was a patient of the Sircolov brothers, who hailed from Russia.
One brother is a medical doctor; the other is a dentist. Petitioner alleges he
paid for their services in cash; he had no receipts to corroborate this allegation.
III. Charitable Contributions
Petitioner maintains he made substantial charitable contributions during
2011, including donations of money, children’s clothing, baby formula, and toys
to a needy neighborhood family. Petitioner provided no documentation regarding
these donations.
Discussion
Generally, deductions are allowed only as provided by statute. INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992). The Commissioner’s determination
set forth in the notice of deficiency is generally presumed correct, and the taxpayer
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bears the burden of showing that the Commissioner’s determination is in error.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).3
I. Unreimbursed Employee Business Expenses
A taxpayer may deduct expenses that are ordinary and necessary for his/her
employment, provided the taxpayer was an employee and could not have been
(and was not) reimbursed by his/her employer for such expenses. Rehman v.
Commissioner, T.C. Memo. 2013-71. Section 6001 requires taxpayers to maintain
records sufficient to substantiate any amount claimed.
Petitioner provided no documentation regarding his entitlement to the
deduction he claimed for unreimbursed employee business expenses. Moreover,
with respect to the deduction petitioner claimed for his clothing expenses, we are
mindful that he was not required by his employer to wear any particular type of
clothing, and the clothing which he did wear was of a kind adaptable generally to
wear away from work as well as at work. Petitioner’s clothing costs were thus
personal expenses and not deductible even though petitioner felt it was necessary
to wear high-quality clothes in order to look his best as one of the faces of the
3
In certain circumstances the burden of proof with respect to factual matters
may shift to the Commissioner. Sec. 7491(a). Petitioner did not argue that sec.
7491(a) applies herein, nor did he show that he met its requirements for shifting
the burden of proof. Consequently, the burden of proof remains with petitioner.
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restaurant. See Donnelly v. Commissioner, 28 T.C. 1278, 1280 (1957), aff’d, 262
F.2d 411 (2d Cir. 1959).
For the aforesaid reasons, we sustain respondent’s determination with
respect to petitioner’s claimed deduction for unreimbursed employee business
expenses.
II. Medical and Dental Expenses
Section 213(a) allows a deduction for medical care not compensated for by
insurance or otherwise. The amount of the deduction for medical care is limited to
the excess over 7.5% of the amount of the taxpayer’s adjusted gross income.
Petitioner provided no documentary evidence regarding his claimed
deduction for medical and dental expenses. Because petitioner failed to meet his
burden to show error in respondent’s determination, we sustain respondent’s
disallowance of petitioner’s claimed deduction for medical and dental expenses.
III. Charitable Contributions
In general, section 170(a) allows a deduction for charitable contributions,
but charitable contributions are deductible only if verified as set forth in
regulations prescribed by the Secretary. Sec. 170(a)(1); Hewitt v. Commissioner,
109 T.C. 258, 261 (1997), aff’d without published opinion, 166 F.3d 332 (4th Cir.
1998). Section 170(f)(17) also provides that no deduction shall be allowed for any
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contribution in cash or by check unless the donor maintains bank records or a
written communication from the donee showing the name of the donee
organization and the date and amount of the contribution. Section 1.170A-13(a),
Income Tax Regs., provides that if a taxpayer makes a charitable contribution in
cash or by check, he/she must maintain for each contribution one of the following:
(i) canceled check; (ii) receipt from the donee; or (iii) other reliable written
records showing the name of the donee, the date of the contribution, and the
amount of the contribution. For a charitable contribution of $250 or more, the
taxpayer must obtain a contemporaneous written acknowledgment from the donee
that includes the amount of any cash contribution and a description (but not value)
of any property other than cash contributed and states whether any goods or
services were provided in exchange for the property contributed. Sec. 170(f)(8).
Petitioner provided no documentation to substantiate his charitable giving in
2011. Because petitioner bears the burden of proof in this matter, we sustain
respondent’s disallowance of petitioner’s claimed charitable contribution
deduction.
IV. Accuracy-Related Penalty
Respondent argues that petitioner is liable for an accuracy-related penalty
pursuant to section 6662(a) and (b)(1), which provides for a 20% penalty for an
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underpayment of tax attributable to negligence or disregard of rules or regulations.
Negligence as used in section 6662(b)(1) is defined as any failure to make a
reasonable attempt to comply with the Code and any failure to keep adequate
books and records or to substantiate items properly. Sec. 6662(c); sec. 1.6662-
3(b)(1), Income Tax Regs. Negligence has also been defined as the failure to
exercise due care or the failure to do what a reasonable person would do under the
circumstances. See Allen v. Commissioner, 92 T.C. 1, 12 (1989), aff’d, 925 F.2d
348, 353 (9th Cir. 1991); Neely v. Commissioner, 85 T.C. 934, 947 (1985).
“Disregard” includes any careless, reckless, or intentional disregard. Sec. 6662(c).
The Commissioner has the burden of production with respect to the
accuracy-related penalty. Sec. 7491(c). To meet this burden, the Commissioner
must produce sufficient evidence indicating that it is appropriate to impose the
penalty. See Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Upon the
Commissioner’s meeting his burden, the taxpayer must come forward with
evidence sufficient to persuade the Court that the Commissioner’s determination is
incorrect. Rule 142(a); see Higbee v. Commissioner, 116 T.C. at 447. The
taxpayer may meet his/her burden by proving that he/she acted with reasonable
cause and in good faith with respect to the underpayment. See sec. 6664(c)(1); see
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also Higbee v. Commissioner, 116 T.C. at 447; sec. 1.6664-4(b)(1), Income Tax
Regs.
Respondent satisfied his burden of production with respect to negligence.
Petitioner failed to maintain records with respect to his claimed deductions as
required by section 6001 and failed to provide documentation to support his
position. Petitioner has not demonstrated reasonable cause for his underpayment
of tax. Consequently, we hold that petitioner is liable for the section 6662(a)
accuracy-related penalty for 2011.
To reflect the foregoing,
Decision will be entered
for respondent.