T .C. Su m m ary Op i n io n2 01 7 -2 9

UNITED STATES TAX COURT

EDGAR DAVID BROW N, Pet i t i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 0 9 70 -1 4 S. Fi l edM ay 8 , 2 0 1 7
.
Ed g ar Dav i d Bro wn , p ro s e. Pau l Is h erwo o d an dNi ch o l as R. Ro s ad o, fo r res p o n d en t .

SUM M ARY OPINION PANUTHOS, Ch i ef Sp eci al Tri al J u d g e: Th i s cas e was h eardp u rs u an tt o th e p ro v i s i o n s o f s ect i o n7 4 6 3 o f t h e In t ern al Rev en u e Co d e i neffect wh en th e p et i t i o nwas fi l ed
. 1 Pu rs u an t t o s ect i o n7 4 6 3(b ), th e d eci si on t o b e en t eredi s n o t

1 Un l es s o th erwi s e i nd i cat ed , s ub s equ en ts ect i on referen ces are t o t h e (co n ti n u ed ...)2

rev i ewab l e b y

an y o ther co u rt , an d t h i s o p i n i o ns h al l n o tb e t reat ed as p reced en t fo r an y o th er cas e. In a n o t ice o f d efi ci en cy d at edJ u n e 6 , 2 0 1 4 , res p o nd en t d et erm i n eda d efi ci en cy

o f $ 1 5 , 4 5 3 i np et i t i o n er’ s 2 0 1 1 Fed eral i n co m e t ax , a s ect io n 6 6 5 1 (a)(1 ) ad d i t i o nt o t ax o f $ 2,4 3 2 fo r fai l u re t o t im el y fi le a ret u rn , an da s ect i o n 6 6 6 2 (a) accu racy -rel at edp en al ty o f $ 3 ,0 91
. Aft er co n ces si o ns , 2 th e i s s u es fo r d eci si o nare: (1 ) wh et h er p et i t i o n er i s en t it l ed t o d edu ct ch ari t ab le co nt ri bu t i o n s fo r t h e y ear i ni s s u e; (2 ) wh et h er p et i t i o n er i s en t it l ed t o d edu ct m i s cel l an eo u s ex pen s es fo r t h e y ear i ni s s u e; (3 ) wh et h er p et i t i o n er i s en t it l ed t o d edu ct u nrei m b u rs ed em

p l o y ee b u s i n es s
ex p en s es fo r t h e y ear i n i s s u e;

1 (...co n t in u ed ) In t ern al Rev enu e Co d e (Co d e) i n effect fo r t h e y ear i ni s s u e, an d al l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an dPro cedu re.

2 Attri al p et i ti o n er co n ced edth e h o m e m ort g ag e i n teres td edu ct i o no f $ 9 ,1 5 1 an dth e m ort g ag e i n s uran ce p rem i u m d edu ct io no f $ 1,5 7 8 cl ai m edo nh i s 2 0 1 1 Fed eral i n co m e t ax retu rn an dth e t ax ab le St at e i n co m e t ax refu n do f $ 2 ,2 5 3 n o trep o rt edo nh is return . Pet it i o n er al s o co n ced edth ath i s i n co m e t ax wi th h el d fo r t h e y ear i n i s s ue was $ 5 , 8 9 7 an dn o t$ 13 ,4 9 1 as cl ai m edo nth e ret u rn .3

(4 ) wh et h er p et i t i o n er i s en t it l ed t o d edu ct jo b s earch ex p en s es fo r t h e y ear i ni ss u e; (5 ) wh et h er p et i t i o n er i s en t it l ed t o d edu ct h om e o ffi ce ex p en s es fo r th e y ear i ni ss u e; (6 ) wh et h er p et i t i o n er i s l i ab l e fo r t he s ect i o n6 65 1 (a)(1 ) ad d i t i o nt o t ax fo r fai l u re t o t im el y

fi l e h i s 2 0 1 1 Fed eral i n co m e t ax retu rn ; an d (7 ) wh et h er p et i t i o n er i s l i ab l e fo r t he accu racy -rel at ed p en al ty u n d er s ect i o n 6 6 6 2 (a) fo r t h e y ear i ni s s u e. Back gro u n d Pet i t i o ner res i dedi n Cal ifo rn i a wh en h i s p et i t io nwas t i m el y fi l ed
. I. Pro fes s i o n al Back g ro u n d Pet i t i o ner i s a fi n an ci al s erv i ces p ro fes s i o n al . Duri n g 2 0 11 h e was
em pl o y edb y M et ro p o li t an Tran s p ort at i on Co m m i s s i o n(M T C), a q u as ig o v ern m en t al ag en cy

th atad m in i s t ers the reg i o n al p l an n i n g an dth e d i s tri bu t i o n o f tran s itfu n d s i nth e San Fran ci sco area. Pet i t i o n er’ s p ri m ary res p o ns i b il i ty

atM TC
was th e o v ers i g h t o f t h e cl eari n g an d s et t l em en ts y s t em thats up po rt edtran s i tfare
co l l ect i o nfo r t h e San Fran ci s co area. Cl eari n g an ds et t lem en ti n v o l ves u si n g p aym en t m ech an i sm s s u ch as cred i t card s t o rep l en i sh am ou n t s o nfare card s , wh i ch are u s edt o p ay

fo r t ran s i ts erv i ces .4

M TC h ada wri t ten p ol i cy fo r rei m b u rs i n g em

p l o y ees fo r t h ei r wo rk -rel at ed
ex p en s es fo r t h e y ear i n i s s u e. 3 Pet i t i o ner wo rk edreg u l arl y atan o ffi ce p ro v i d edb y

M TC. So m et i m es p et i t i o n er wo rk ed ath o m e, ei th er t el eco m m u t i n g du ri n g reg u l ar b u si nes s h o u rs o r
wo rk i n g aft er h o u rs . Pet i t i o n er res i d edi na fo u r-b ed ro o m h o u s e o f ap p ro x i m at el y 2 ,0 00 s qu are feet . Pet i t io ner co n v ert edo n e o f t h e fo u r b ed ro o m s i n to a h o m e
o ffi ce o f ap p ro x i m at el y

2 20 s qu are feet
. Itco n t ai n edo ffi ce i t em s i n cl u d i n g a
co m p u t er, a s can ner, a m o d em , a ro u t er, a t el ep h o n e, a ty p ewri t er, an d p las t i c b i n s h o l d i n g fi l es k ep tfo r wo rkp ro ject s , t ax reco rd s , an d o th er i t em s . Du ri n g 2 0 1 1 p et i t i o n er s o u g h ta n ew p os i t i o ni nth e fi n an ci al s erv i ces fi el d
. Pet i t io n er trav el edfo r i n t erv i ews an dh adco n v ers at io n s wi th p eo pl e atv ari o u s p o t en t i al em

p l o y ers i ncl u d in g t h e Fed eral Res erv e Ban k i nPh i l ad el p h i a, Pen ns y lv an i a, t h e En v iro nm en t al Pro t ect i o nAg en cy , an dQu al co m m . Pet i t i o ner was al s o an i nd ep en den tb u s i n es s o wn er fo r ACN duri n g th e y ear i ni ss u e. ACN i s a m

u l t i l ev el m ark et i n g co m

p an y thatrep ack ag es an d res el l s
s erv i ces fro m

v ari o u s v en d o rs . Pet i t i o n er co u l dearn co m m i s s i on s fro m

ACN

3 M TC’ s wri t t en em

p l o y ee ex p en s e rei m

b u rs em en t p o l i cy

was n o t m ad e a p arto f t he reco rd
.5

b as edo na p ercen t ag e o f t h e am o u n ts o f s erv i ces h e s o l dt o cu s to m ers . Pet i t i o n er d i dn o t h av e an y

g ro s s recei p t s fro m

h i s act i v i ty wi th ACN. II. J u l i an Bro wnM em o ri al Fu n d In 2 0 0 5 p et i t i o n er es tab l i s h edth e J u l i an Bro wnM em o ri al Fu n d (M em o ri al Fu n d ). Du ri n g 2 0 1 1 th e M em o ri al Fu n dqu al i fi edas an ex em p t o rg an i zat io n
u n d er s ect i o n5 0 1 (c)(3 ). Th e M em o ri al Fu n d h o st ed an an n u al s o ccer t o u rn am en t i nCh arl o t t e, No rt h Caro l i n a. Pet i t i o n er o wn eda h o u s e i nNo rt h Caro l i n a an ds t ay edi nth i s h o u s e wh en h e v i s i t edCh arl o t t e fo r the t ou rn am en t . III. Reco rd s M ai nt en an ce an dCo m p u t er Fai l u re Pet i t i o ner m ai n t ai n edh i s b u s i n es s reco rd s an do th er reco rd s , i n cl u di n g
reco rd s h e u s edt o p rep are h i s Fed eral i nco m e t ax return s , o na p ers o n al co m p u t er. In 2 0 11 p et i t i o n er’ s p ers o n al co m p u t er “ cras h ed ”, res u l t i n g i na l o s s o f t ax reco rd s fo r 2 0 1 0 an d p arto f 2 0 1 1
. 4 Pet i t io n er t o o kth e co m p u t er t o Bes tBu y

fo r rep ai r i n J u l y 2 0 1 1 b u t w as i n fo rm edth ati twas n o ts al v ag eab l e. So m e o f p et it i on er’ s 2 0 1 1

4 Pet i t i on er as s ert s t h atth e co m p u t er cras h o ccu rredi n“ m id -y ear 2 0 1 1 ”. In p et i t i o n er’ s p ri o r cas e fo r h i s 2 0 1 0 t ax y ear, t he Co u rtfo u n d th atth e co m p u t er cras h h ado ccu rredi nFeb ru ary 2 0 11 . See Bro wnv . Co m m i s s i o ner, T.C. Su m

m ary Op i ni o n2 0 1 6 -8 9 . Pet i t i o ner d i dn o tp ro v i d e an ex p l an at i o nfo r t h i s d i s crep an cy .6

Fed eral i nco m e t ax reco rd s were u n av ai l ab l e b ecau s e o f t h i s co m p u t er fai l u re. Pet i t io n er u s edb an ks t at em en t s t o reco n s tru cts o m e o f h i s 2 0 1 1 ex p en ses . IV. 2 0 1 1 Tax Retu rn Pet i t i o ner fi l eda d el in qu en t2 0 1 1 Fo rm 1 0 4 0 , U.S. In di v i du al In co m e Tax Retu rn , o n Decem

b er 3 1 , 2 0 12
. 5 He rep o rt edh i s s al ary fro m M TC an d$ 7 ,7 6 5 o f t ax du e. Pet i t i o n er d idn o t fi l e a Sch edu l e C, Pro fi to r Lo s s Fro m Bu s i n es s , fo r h i s act i vi ty wi th ACN an dd i dn otrep o rtan y g ro s s recei p t s fro m

th i s act i v i ty . OnSch edu l e A, It em i zedDedu ct i o n s , p et i t i o n er cl ai m eda $ 9 ,2 0 0 d edu ct i o n fo r ch ari tab l e co n tri b u t i o ns b y cas h o r ch eck . He al s o cl ai m edth e fo l l owi n g
m i s cel l an eo u s i tem izedd edu ct io n s : (1 ) $ 4 ,0 3 9 i n u n rei m b u rs edem

p l o y ee b u s i n es s ex p en s es ; (2 ) $ 2 3 3 i nt ax retu rn p rep arat i o nfees ; an d(3 ) $ 7 ,8 4 9 i n at t o rn ey ’ s an d acco u n t an t ’ s fees . Pet i t i o n er at tach eda Fo rm 2 1 0 6 -EZ, Un rei m b u rs edEm

p l o y ee Bu s i n es s Ex p en s es , rep o rt i n g $ 4 , 0 3 9 i nu n rei m b u rs ed
em pl o y ee b u s i n es s ex p en s es . He d i dn o tp ro vi d e a d et ai l ed b reak ou to f t h es e
ex p en s es o nh i s retu rn .

5 Pet i t i on er req u es t edan ex t en s i o no f t i m e t o fi l e h i s 2 0 1 1 Fo rm 1 0 4 0 , ex t en d i n g th e du e d at e t o Oct o ber 1 5 , 2 0 1 2
.7

Pet i t i o ner p rep aredh i s 2 0 1 1 Fo rm 1 0 4 0 u s i n g Tu rb o T ax s o ft ware. He p rep areda n u m

b er o f v ers i o n s o f h i s 2 0 1 1 Fo rm 1 04 0 wi th “ wh at i f” s cen ari o s , i n cl u d i n g o n e i nwh i ch h e h ad h adm o re i n co m e t ax wi th h el ddu ri n g th e y ear. Pet i t i o ner p ro v i d eda co p y o f a s creen s h o tfro m th e Tu rb o Tax p ro g ram

th at l i st edv ari o u s v ers i o n s o f t ax retu rn s creat ed , wi th t i t l es s u ch as “ 2 01 1 -Ed g ar Fi l i n g HOH-As Fi l ed ” an d“ 2 0 1 1 Ed g ar Fi l i n g HOH-As Sub m i t ted ”. So m e o f th es e d o cu m en t s were l as tm od i fi edi n 2 0 1 2 , an dth e res twere m o d i fi edi n2 0 1 5 o r 2 0 1 6
. 6 V. No t i ce o f Defi ci en cy an dTri al OnJ u ne 6 , 2 0 14 , res p o n d en ti s s u eda n o t i ce o f d efi ci en cy t o p et it i on er fo r t ax y ear 2 0 1 1 . Res po n d en tad j u s t edv ari ou s i t em s o np et i t i o ner’ s 2 0 1 1 Fo rm 1 0 4 0 , i n cl u d i n g ch ari t ab l e co n tri b u ti o n d edu ct i o n s an dm i scel l an eo u s i t em i zed d educt i o n s . Pet i t io n er t i m el y fi l eda p et it i on fo r red et erm i n at i o n . Pet i t i o ner wo u l dn o tag ree t o s t i pu l at e an y d o cu m en t s b efo re o r du ri n g tri al
. 7 Res p o n d en ti n tro du cedi n t o ev id en ce a co p y o f p et i t i o ner’ s 2 0 1 1 Fo rm

6 Th e p ri n t o uti t sel f d i d n o th av e a t i m e s t am p ; i n s t eadi t l i s tedth e d at es o n wh i ch th e d o cu m en t s h ad b een m o d i fi ed . On e d o cu m en tt i tl ed“ 2 0 1 1 -Ed gar Fi l i n g HOH-As Sub m i t t ed ” was m o d i fi edo nSep t em b er 1 2 , 2 0 1 6.
7 As p rev i o u s l y i n d i cat ed , p et i t i o n er h ada t ri al b efo re t h e Co urtwi th res p ect t o h i s 2 0 1 0 t ax y ear. See Bro wnv . Co m m i s s io n er, T.C. Su m

m ary Op i n i o n2 0 1 6
- (co n ti n u ed ...)8

1 0 4 0 as fi l ed , a co p y

o f t h e n o ti ce o f d efi ci en cy , a cert i fi edco p y o f p et i t i o ner’ s cert ifi edwag e an di n co m e t ran s cri p t fo r 2 0 11 , an da cert i fi edco p y o f p et i t i o n er’ s 2 0 1 1 Fo rm

4 3 40 , Cert i fi cat e o f As s es s m en t s , Paym en t s, an dOth er Sp eci fi ed M at ters . Pet i t i o ner p ro v i d edco pi es o f PDF fi l es h e cal l ed“ s u m m ary o f ex p en s es ” at tri al fo r p u rp os es o f s ubs t an t i at i n g m an y o f h i s ex p en s es . Each s u m m ary o f
ex p en s es d o cu m en tl is t ed a t ran s act i o nd es cri p t i o n , co p i ed fro m b an ks t at em en t s . Fo r ex am p le, t h e s umm ary

co nt ai n eda d es cri p t i o ns u ch as “ On l i n e b an k i n g tran s fer” o r t h e ch eckcardnu m b er u s edan dth e n am e o f th e v en d o r, a d at e, an
am ou n t , an dth e ex p en s e cat eg o ry th atp et i t i o ner h adas s i g ned
. A. Dedu ct i o n s Cl ai m edo nPet i t i o n er’ s Retu rn Aft er co n ces si o ns an dad d i t i o n al am o un t s cl ai m ed , 8 th e d edu ct i o n s i n d i s p u t e are as fo l l ows :

7 (...co n t in u ed ) 8 9 . Thu s , p et i t i o n er h as s o m e fam i l i ari ty wi th Co u rtp ro cedu re an d p ract i ce. Th e Co u rtrem i n d ed p et i t io n er o f t he Ru l es an dal so th e b en efi t s o f s t i p u l at i o n . Pet i t io n er n ev erth el es s refu s edt o s t i p u l at e d o cu m en t s , i n cl u d i ng h i s 2 0 1 1 Fo rm 1 0 4 0 as fi l ed , wh ich h e ack n owl ed g edwas th e ret u rn wh i ch h e fi l edfo r 2 0 1 1 .a

8 Pet i t i on er cl ai m eda $ 9 ,2 0 0 ch ari t ab l e co n tri b u t i o nd edu ct i o no nh i s return an d co n ced ed$ 9 01
. Pet i t i o n er cl ai m eda $ 4 ,0 3 9 d edu ct i o n fo r u n rei m bu rs ed em pl o y ee b u s i n es s ex p en s es o nh i s retu rn an dcl ai m eda $ 4 ,6 5 1 d edu ct i o nattri al
.9 Deduction Amount Charitable contributions $901 Tax return preparation fees 233 Attorney ’ s and accountant’s fees 7,849 Unreimbursed employee business ex penses Automobile 3 , 3 6 3 T olls 197 Parking 347 Publications 744 Total 4,651 Pet i t i o ner p res en t edco p i es o f s u m m ari es o f ex p en s es attri al rel at in g t o h i s ch ari t ab le ex p en s es an d s o m e o f h i s u n rei m b urs edem

p lo y ee b us i n es s ex p en s es (au t o m o b i l e, t o l l s , an dp ub l i cat i o n s ex p en s es ). Pet i t i o ner’ s s u m

m ary o f ch ari tab l e ex p en s es l i s t ed4 5 en tri es , refl ect i n g ch arg es o ncred i tcard s o r b an kcard s . Th e ex p en s es can b e b ro k en d own as fo l l o w s : (1 ) 1 4 en tri es t ot al i n g $ 4 9 2, p ai d t o res t au ran t s o r an i n d i s cern i b l e p ay ee (ei th er n o en try , i nad equ at e d es cri p t io n , o r m u lt i p l e en tri es fo r o n e ex pen se) an d (2 ) 3 1 en tri es t o t al i n g $ 4 0 9 , p ai d t o p u n ch b o wl .co m , h s t *ju li an bro wn m em o ri al , b i g s t o ck p h o to . co m , Faceb o o kt ab s i t e, an dGo o gl e* y o u tub e.10

Pet i t i o ner al s o p ro v i d eda p ri n t o u to f t h e Ch arl o t t e Un i t edSo ccer Cl ub cal en d ar fo r Ap ri l 2 0 1 1 th atl i st edJ u l i an Bro wn M em o ri al Cup ev en t s o nAp ri l 1 6
an d 1 7 , 2 0 1 1
. Pet i t i o ner d i dn o tp ro v i d e co p i es o f an y d o cu m en t s fo r p u rp o s es o f
s ub s t an t i at i n g ei th er h i s t ax retu rn p rep arat io nex p en s e o r h is at t o rn ey ’ s an d
acco u n t an t ’ s fees , each d edu ct edo nh i s Sch edu le A. Pet i t io n er al s o d idn o t p ro v id e t h e co p ies o f h i s b an ks t at em en t s wh i ch h e as s ert s h e u s edt o reco n s tru ct h i s 2 0 1 1 ex p en s es . Fu rt her, p et i t i o n er al so d i dn o tp ro v i d e und erl y in g recei p t s o r
o th er d o cu m en t at i o n , wi th t h e ex cep t i o no f h i s jo b s earch ex pen s es . B. Ad d it i on al Dedu ct i o n s Cl ai m edatTri al Pet i t i o ner as s ert s h e i s en t i t l edt o ad di t i o n al d edu ct i on s fo r t h e fo l l o wi n g
ex p en s es : (1 ) jo b s earch ex p en s es ; (2 ) Sch edul e C ex p en s es rel at i n g t o h i s ACN act i vi ty ; an d (3 ) h o m e o ffi ce ex p en s es . 9 Fi rs t , p et i ti o n er as s ert s h e i s en t i t l edt o d edu ct$ 2,4 7 6 fo r t rav el an d o th er
ex p en s es rel at edt o h is jo b s earch . Pet i t i o n er p ro v i d edco p i es o f recei p t s fo r t h e fo l l o w i n g jo b s earch ex p en ses : 1 0

9 Al th o ug h p et i t i o n er d i dn o trai s e t h e ad d i t i o nal ex p en ses i nh i s p et i t i o n , we co n si d er t h i s i s s ue t o h av e b een tri edb y co ns en t . See Ru le 4 1 (b ).

1 0 Th e s u m

m ary o f p et i t i o n er’ s jo b s earch ex p en s es i s a p o or co p y an d (co n ti n u ed ...)11

Travel dates Ex pense L ocation(s) Amount J an. 9 Hotel W ashing ton, D.C. $181 J an. 9-11 Hotel W ashing ton, D.C. 440 Mar. 3-8 F lig ht W ashing ton, D.C. to San F rancisco, Cal. 110 Mar. 27-31 Hotel Miami, F la. 974 Mar. 27-31 F lig ht San F rancisco, Cal. to Miami, F la. 1,224 J uly 3 F lig ht San F rancisco, Cal. to L os Ang eles, Cal. 83 J uly 6 Train W ashing ton, D.C. to Philadelphia, Pa. 48 Total 3 ,060 Seco n d , p et i t i o n er as sert s th ath e i s en t i t l edt o a d edu ct i o no f $ 1 , 7 5 4 fo r

“ n et wo rkm ark et i ng ex p en s es ” rel at edt o h is i n v o l vem en twi th ACN, wh i ch h e
as s ert s s h o u l db e d edu ct ed o nSch edu l e C. Pet i t i o n er p ro v i d eda s u m m ary o f
ex p en s es wi th n in e en tri es t o t al i n g $ 1 ,7 54 , p ai d t o ret ai l ers s u ch as Co s t co , Bev erag es & M o re, an dTarg et .

1 0 (...co n t i nu ed ) d i ffi cu l tt o read
. Th e ex p en s es t o t al $ 2 ,7 5 5 , an dp et i ti o n er s ub tract s $ 27 9 wh i ch h e s t at es i s at tri b u t ab l e t o m eal s an den t ert ai n m en t($ 2 ,7 5 5

! $ 2 7 9 = $ 2 ,4 7 6 ). Th e co p ies o f recei p ts at t ach edrefl ectex p en s es t o t al in g $ 3,0 6 0 . Iti s u n cl ear wh et h er th e en tri es o nth e s umm ary o f ex p en s es co rrel at e wi th t h e at t ach edrecei pt s , an di t i s al s o u n cl ear wh y

p et i t i o n er i s cl ai m i n g a d edu ct io n o f $ 2 ,4 7 6 fo r t ot al jo b s earch ex p en s es .12

Th i rd , p et i t i o n er as s ert s th ath e i s en t it l edt o a d edu ct i o no f $ 4 ,2 4 8 fo r h o m e
o ffi ce ex pen ses . Pet i t i o n er p ro v i d eda p ri n t ou t o f a Po w erp o i n ts l i d e wh i ch cal cu l at es h o m e o ffi ce ex p en se d edu ct io n s as fo l l o ws : 1 1

Ex pense ty

pe Total B usiness use

percentag e T otal

business use ACN Other Rental $14,337 11% $1,577 $ 1 , 0 2 5 $552 Computer 1,065 50% 533 346 186 Telephone and fax 4,275 50% 2,138 1,390 748 Total 4,248 2,761 1,486 Pet i t i o ner al s o p ro v i d edco p i es o f th ree recen t p h o to g rap h s o f h i s h om e
o ffi ce s h o wi ng th e fo l l o wi n g : (1 ) a t al l s t acko f p l as t i c b i n s o f v ari o u s co lo rs , s o m e o f wh i ch ap p ear t o co n tai np ap ers ; (2 ) a d es k wi th th ree co m p ut ers , a ty p ewri t er, an do th er m i s cel l an eo u s o ffi ce i t em s ; an d (3 ) a s h el f wi th a t el ep h o n e,
a ro u t er, a few t h ree-ri ng b in d ers , an do th er m i s cel lan eo u s o ffi ce i t em s . 1 2

1 1 Th e b us i n es s u s e p ercen t ag e fo r t h e h o m e o ffi ce i s b as edo n t h e 2 2 0 s qu are fo o t ag e o f t h e ro o m d i v i d edb y th e 2 ,0 0 0 t o t al s qu are fo o t ag e o f t he h o u s e (2 2 0 squ are feet ÷ 2 ,0 0 0 s quare feet = 1 1 %). Pet i t i o n er d i d n o t ex p l ai nth e b as i s fo r t h e 5 0 % es t i m at e fo r t he b u s i n es s u se o f h i s co m p u t er an dt el ep h o n e an dfax
. Pet i t io n er al s o d idn o tex pl ai nth e b as i s fo r h is al l ocat i o n o f t h e t o t al b us i n es s ex p en s es , res u l t i n g i nn et wo rkm ark et i n g ex p en s es o f $ 2 ,7 6 1 an do th er ex pen s es o f $ 1 , 4 8 7
.

1 2 Pet i t i o ner t o o kth e p h o t o g rap h s o f h i s h o m e o ffi ce o nSep t em b er 1 1 , 2 0 16
. Th e co m p o s i ti o no f i t em s i np et i t i o n er’ s h o m e o ffi ce h as ch an g eds o m ewh ats i n ce 2 0 1 1 . Fo r ex am

p le, i n2 0 11 p et i t i o n er h ado n ly o ne co m p ut er i nh i s h o m e o ffi ce,

(co n ti n u ed ...)13 Di s cu ss i o n I. Bu rd en o f Pro o f In g en eral , th e Co m

m i s s i o n er’ s d et erm i n at i o n s etfo rt h i n a n o t i ce o f d efi ci en cy

i s p res um edco rrect , an d t h e t ax p ay er b ears th e b u rd en o f p ro v i ng th at th e d et erm i n at i o ni s i nerro r. Ru l e 1 4 2 (a); W el ch v . Hel v eri n g, 2 9 0 U.S. 1 1 1 , 1 15 (1 9 3 3). Pu rs u an tt o s ect i o n7 4 9 1 (a), t h e b u rd eno f p ro o f as t o fact ual m at t ers
s h i ft s t o th e Co m

m is s i o n er u n d er cert ai nci rcu m s t an ces . Pet i t io n er d i dn o tal l eg e
o r o th erwi s e s ho w th ats ect i o n7 4 9 1 (a) ap p l i es . See s ec. 7 4 9 1 (a)(2 )(A) an d(B). Th erefo re, p et it i o n er b ears th e b u rd eno f p ro o f. See Ru l e 1 4 2 (a). II. Gen eral Pri n ci p l es Go v ern i n g Sub s t an ti at io n Dedu ct i o n s are a m at t er o f l eg i s l at i v e g race, an da t ax p ay er i s req u i redt o
m ai n t ai nreco rd s s u ffi ci en t t o s ub s t an t i at e ex pen s es u n d erl y i n g d edu ct i o n s cl ai m ed
o nh i s o r h er ret urn . Sec. 6 0 0 1 ; s ec. 1 .6 0 0 1 -1 (a), In co m e Tax Reg s . ; s ee New Co l on i al Ice Co
. v . Hel v eri ng , 2 9 2 U.S. 4 3 5 , 4 4 0 (1 9 3 4 ). If t h e t ax p ay er i s ab l e t o es t ab l i s h th ath e p ai do r i n cu rred a d edu ct i b l e
ex p en s e b u t i s u n ab l e t o s ub s t an t i at e t h e p reci s e am o un t , th e Co u rtg en eral l y m ay ap p ro x i m at e t h e d edu ct ib le am o u n t , b u to nl y i f th e t ax pay er p res en t s s u ffi ci en t

1 2 (...co n t i nu ed ) wh ereas h e cu rren t l y h as th ree. Res p o n d en td i dn o t o b jectt o th e ad m is s i o no f th es e co p i es o f co l o r p ho t o g rap h s i n t o ev i d en ce.14

ev i d en ce t o es t ab l i s h a rat io n al b as i s fo r m ak i n g th e es t i m at e. See Co h an v . Co m m i s s i o n er, 3 9 F.2 d5 4 0 , 5 4 3 -5 4 4 (2 d Ci r. 1 93 0 ); s ee al so Van i cek v . Co m m i s s i o n er, 8 5 T.C. 7 31 , 7 4 2 -7 4 3 (1 9 8 5 ). Bu s in es s ex p en s es s p eci fi edi n
s ect i on 2 7 4 are s ub

jectt o ru l es o f s ub s t an t i at i o nthats up ers ed e t h e Co h an t es t . San fo rd v. Co m

m is s i o n er, 5 0 T.C. 8 2 3 , 8 2 7 -8 2 8 (1 9 6 8), aff’ d, 4 1 2 F.2 d2 0 1 (2 d Ci r. 1 9 69 ); s ec. 1 .2 7 4-5 T(a), Tem p o raryIn co m e Tax Reg s ., 5 0 Fed
. Reg . 4 6 0 1 4 (No v. 6 , 1 9 8 5 ). III. Sect io n1 6 2 Ex p en s es Sect io n1 6 2 (a) g en eral l y

al lo ws d educt i o n s fo r al l o rd i n ary an d n eces s ary
ex p en s es p ai d o r i n cu rreddu ri n g the t ax ab l e y ear i ncarry in g o n an y trad e o r b u s i n es s . Ing en eral , n o d edu ct i o ni s p erm i t t edfo r p ers o n al , l i v i n g , o r fam i l y
ex p en s es . Sec. 2 6 2 (a). Th e t ax p ay er b ears th e b u rd en o f p ro vi n g thatex p en s es
were o f a b u s i n es s n atu re rat h er t h an p ers o n al an dth at they were o rd in ary

an d
n eces s ary . Ru l e 1 4 2 (a); W el ch v . Hel v eri n g , 2 9 0 U.S. at 1 1 5
. Pet i t i o ner s eek s t o d edu ct$ 4 ,6 5 1 i n u nrei m b u rs ed em

p l o y ee b u s in es s
ex p en s es rel at i n g t o h i s em p l o ym en twi th M TC an d$ 1 , 7 5 4 i nn et wo rkm ark et i n g
ex p en s es rel at i n g t o h i s act i v i ty wi th ACN.15

A. Un rei m

b urs edEm

p l o y ee Bu s i n es s Ex pen s es Onh i s Sch edu l e A p et i t i o n er cl ai m eda d edu ct i o n o f $ 4 ,0 3 9 fo r
u n rei m b u rs edem

p l o y ee b us i nes s ex p en s es . He n o w cl ai m s u n rei m b urs ed
em pl o y ee b u s i n es s ex p en s es t o t al i n g $ 4 ,6 5 1 ($ 3 ,3 6 3 fo r au to m o b i l e ex p en s es , $ 1 9 7 fo r t o l l s ex p en s es , $ 3 4 7 fo r p ark i n g ex pen s es , an d$ 7 44 fo r p ub l i cat i on s
ex p en s es ). Pet i ti o n er p ro v i d eds u m m ari es creat edfro m

b an ks t at em en t s t o
s ub s t an t i at e h i s au t o m o b i le ex pen s es , t o l ls ex p en s es , an dp ub l i cat i o ns ex p en s es . Qu al i fy in g ex p en s es u n der s ect i o n 1 6 2 i n cl u d e ex p en ses p ai do r i n cu rredas
an em p l oy ee. Lu cas v . Co m

m is s i o n er, 7 9 T.C. 1 , 6 (1 9 8 2 ). Ex p en s es are n o t

“ n eces s ary ” wh en an em

p l o y ee fai l s t o cl ai m

rei m b u rs em en tfo r ex p en s es i n cu rred i nthe co u rs e o f h i s em

pl o ym en twh en en t i t l edt o d o s o . Orv i s v . Co m m i s s i o n er, 7 8 8 F.2 d1 4 06 , 1 4 0 8 (9 th Ci r. 1 9 8 6 ), aff’ g T.C. M em o . 1 9 8 4 -5 33 . Acco rd i n g l y , a t ax p ay er can n o t d edu ctem pl oy ee b u si n es s ex p en s es t o th e ex t en th e i s en t i t l edt o rei m b u rs em en tfro m

h is em p l o y er fo r t h o se ex p en s es . See Lu cas v . Co m m i s s i o n er, 7 9 T.C. at 7 . Dedu ct i o n s fo r t h o s e ex p en s es b el o n g t o th e
em pl o y er. See Ken n el l y

v . Co m m i s s i o n er, 5 6 T.C. 9 3 6 , 9 4 3 (1 9 7 1), aff’ d wi th o ut p ub l i s h edo p i n i o n, 4 5 6 F.2 d1 3 3 5 (2 dCi r. 1 9 7 2 ). Th e t ax p ay er b ears th e b u rd en o f p ro v in g th ath e i s n o ten t i t l edt o rei m b u rs em en tfro m

h is em p l o y er fo r s u ch ex pen se. See Fo u nt ai nv .16

Co m m i s s i o n er, 5 9 T.C. 6 96 , 7 0 8 (1 9 7 3 ). Th e t ax p ay er can p ro v e th ath e was n o t
en t i t l edt o rei m

b u rs em en tb y

s h o w i n g , fo r ex am

p le, t h ath e was ex p ect edt o b ear th es e co s t s . See i d
. ; s ee al s o Du n k el b erg er v . Co m m is s i o n er, T.C. M em o . 1 9 9 2
- 7 2 3 , 1 9 9 2 W L 3 7 9 2 8 2 , at* 1 (fi n d i n g th atm an ag em en t t eam ex pect edt ax p ay er t o b ear ex p en s e o f b u si n es s l u n ch es wi th v en d o rs ). Pet i t i o ner as s ert edth ath i s em p lo y er M TC h ada wri t t en rei m b u rs em en t p o l i cy fo r em p l o y ees , b u t M TC’ s u n o ffi ci al p o l i cy d i dn o tp ro vi d e fo r rei m b u rs em en to f s om e o f h i s em p l o y ee b u s i nes s ex p en s es . Pet i t i o n er as s ert ed th at“ l eg i t i m at e b u s i n es s ex p en s es * * * th at ex ceed eda p er d i em , fo r ex am p l e,
wo u l dn o tb e rei m

b urs ed ” an d th atM TC wo u l drejectrei m bu rs em en treq u es t s fo r
ex p en s es th atqu al i fi edu n d er t h e wri t t en rei m bu rs em en t p ol i cy . Pet i t i o n er al s o
as s ert ed th ath e d i dn o ts ub m i t rei m b u rs em en t req u es t s fo r s o m e qu al i fy in g
ex p en s es b ecau s e h e kn ew t h atth e req u es t s wo u l db e reject edu n der t h e u n o ffi ci al rei m b u rs em en tp o l i cy . Pet i t i o ner h as n oto ffered cred i bl e ev i d en ce t o co rro b orat e h i s t es t i m o n y ab o utM T C’ s “ u n o ffi ci al rei m bu rs em en tp o l i cy ” an dth ati td i ffered fro m M TC’ s wri t ten rei m

b u rs em en tp o l i cy . Becau s e p et i t io n er d i dn o tp ro v i d e a co p y o f M TC’ s wri t t en rei m

b u rs em en tp o l i cy

o r s u ffi ci en td et ai l edev i den ce o f M TC’ s
u n o ffi ci al rei m

b u rs em en tp ol i cy , we can n otm ak e a fi n d i n g as t o wh i ch o f t h e17

ex p en s es m i g h t h av e b een el i g i b l e fo r rei m b u rs em en tb y

M TC. Pet i t i o ner h as n o t
m eth i s b u rd en o f s h o wi n g th atM TC wo u l dn o th av e rei m b u rs edth e au to m o b i l e, t o l l s , p ark i n g , o r p ub l i cat i o n s ex p en s es . See Orv i s v . Co m m i s s i o n er, 7 88 F.2 dat 1 4 0 8 ; Lu cas v . Co m

m is s i o n er, 7 9 T.C. at7 ; Fo u n t ai nv . Co m m i s s i o ner, 5 9 T.C. at 7 0 8 ; Du n k el b erg er v . Co m m is s i o n er, 1 99 2 W L 3 7 9 2 82 , at* 1
. Th erefo re, p et i t i o n er i s n o ten t i t l edt o a d edu ct i o nfo r h i s u n rei m b u rs edem

p l o y ee b u si n es s
ex p en s es . B. Net wo rkM ark et i n g Ex p en s es Pet i t i o ner cl ai m s a d edu ct i o n o f $ 1 ,7 5 4 fo r n et wo rkm ark et in g ex p en s es , wh i ch h e as s ert s i s rel at edt o h i s act iv i ty as an i n d ep en d en tb us i n es s o wn er at ACN. Tax p ay ers are al l o w eda d edu ct i o nfo r o rd i n ary an dn eces saryex p en s es p ai d
o r i n cu rredi n carry in g o na t rad e o r b u s i nes s . Sec. 1 62 (a). Wh et h er an
ex p en d i tu re i s o rd i n ary an dn eces s ary i s u s u al l y

a qu es t i on o f fact
. Co m

m is s i o n er
v . Hei n in g er, 3 2 0 U.S. 4 6 7 , 4 7 5 (1 9 4 3 ). Gen eral l y , fo r an ex p en d i tu re t o b e an
o rd i n ary an dn eces s ary

b u s i n es s ex p en s e, t h e t ax p ay er m u s ts h ow a b o n a fi d e b u s i n es s p u rp o s e fo r t h e ex p en d i tu re; th ere m u s t b e a p ro x i m at e rel at i o n s h i p b et ween th e ex p en d i tu re an dth e b u s i n es s o f t he t ax p ay er. Ch al l en g e M fg . Co . v .18

Co m m i s s i o n er, 3 7 T.C. 6 50 , 6 5 9 -6 6 0 (1 9 6 2 ); Hen ry v . Co m m i ss i o n er, 3 6 T.C. 8 7 9 , 8 8 4 (1 9 6 1); s ec. 1 .1 6 2 -1 (a), In co m e Tax Reg s. Fo r t h e n et w o rk

m ark et i n g ex p en s es , p et i t i o ner m erel y p res en t eda s u m

m ary
o f p u rp o rt edex p en s es attri al , as s ert i n g th at th e s umm ary rep res en t edb u s in es s
ex p en s es . Pet i t i o n er d idn o tp ro v i d e t es t i m o n y o r o th er ev i den ce t o es tab l is h a b o n a fi d e b u s i n es s p u rp o s e fo r t h es e ex p en s es . Thu s, we are u n ab l e t o m ak e a fi nd i ng as t o wh et h er t he ex p en s es are o rd i n ary an dn eces s ary

o r wh ether t h ey

are
reas on ab l e i n am o u n t. See s ec. 1 6 2 (a); Co m m is s i o n er v . Hei n i ng er, 3 2 0 U.S. at 4 7 5 ; Ch al l en g e M fg . Co . v . Co m m i s s i o n er, 3 7 T.C. at6 59 -6 6 0 ; Hen ry v . Co m m i s s i o n er, 3 6 T.C. at 8 8 4
. Th erefo re, p et i t i o n er i s n o ten t i t l edt o a d edu ct i o n fo r t h e n et wo rkm ark et i n g ex p en s es rel at ed t o h i s ACN act i v it y . IV. Sect io n2 7 4 Ex p en s es Pet i t i o ner cl ai m s a d edu ct i o n o f $ 2 ,4 7 6 fo r h o t el , fl i g h t , an dtrai n ex p en s es i n cu rreddu ri n g h i s jo b s earch
. Sect io n1 6 2 (a) al l o ws a t ax p ay er t o d edu ctex p en s es i ncu rredi ns earch i n g fo r n ew em

p l o ym en twi th i nth e s am e t rad e o r b u s in es s . See Pri m u th v
. Co m m i s s i o n er, 5 4 T.C. 3 74 , 3 7 8 -3 7 9 (1 9 7 0 ). J o b s earch ex pen s es i n cl u d e trav el
an d tran s p o rt at i o nex p en s es . See M u rat a v . Co m m i s s io n er, T.C. M em o . 1 9 9 6 -3 2 1 , 1 9 9 6 W L 3 9 2 5 0 3 , at * 6 -* 7
.19

Trav el i n g ex p en s es are s ub jectt o the s tri cts ub s t an t i at io n req u irem en t s o f
s ect i on 2 7 4 (d ). To d edu cttrav el ex p en s es , th e t ax p ay er m u s ts ub s t an t i at e t h ro u g h ad equat e reco rd s o r o th er co rro b o rat i v e ev i den ce t h e fo l l o wi n g el em en t s : (1 ) t h e
am ou n to f t h e ex p en s e; (2 ) t h e t i m e an dp l ace o f t h e ex p en se; an d(3 ) t h e b u s i n es s p u rp os e o f t h e ex p en se. Sec. 2 7 4 (d ). A t ax p ay er s at is fi es th e “ ad equ at e reco rd s ” t es ti f h e o r s h e m ai n t ai n s an
acco u n t bo o k , a d i ary , a l og , a s t at em en to f ex p en s e, t ri p s h eet s , o r s im i l ar reco rd s p rep aredato r n ear t h e t i m e o f t h e ex p en d i tures , s uch as recei p t s o r b i l l s , th ats h o w each el em en to f each ex p en d i tu re o r u s e. See s ec. 1 .2 7 4 -5 T (c)(2 ), Tem p o rary In co m e Tax Reg s ., 5 0 Fed . Reg . 4 6 0 1 7 (No v . 6 , 1 9 8 5 ). Co n tem p o ran eo us l o g s are
n o treq u i red , b u tco rro bo rat i v e ev i d en ce t o s up po rta t ax p ay er’ s reco n s tru ct i o n o f th e el em en t s o f an ex p en d i tu re o r u s e m u s th av e “ a h ig h d eg ree o f p ro b at i v e v al u e t o el ev at e s u ch s t at em en t ” t o th e l ev el o f cred ib i l i ty o f a co n t em

p o ran eo us reco rd
. Id . s ub para. (1 ), 5 0 Fed . Reg . 4 6 0 16 -4 6 0 17
. Sect io n2 7 4 (d ) was i nt en d edt o p recl ud e u s e o f t h e t es ts etfo rt h i nCo h an fo r t h e ex p en s e cat eg o ri es i tco v ers . San fo rdv . Co m m i s si o n er, 5 0 T.C. at8 2 8 ; H.R. Rep t . No . 1 4 4 7 (1 9 6 2 ), 1 96 2 -3 C.B. (Part 3 ) 4 05 , 4 2 7 ; S. Rep t . No
. 1 8 8 1 (1 9 6 2), 1 9 62 -3 C.B. (Part 3 ) 7 07 , 7 4 1 . If a t ax p ay er’ s reco rd s h av e b een d es tro y ed
o r l o s t b ecau se o f ci rcu m s t an ces b ey o n dh i s co n tro l , h e m ay s ub s t an t i at e ex p en s es20

s ub jectt o s ect i o n 2 7 4(d ) b y

m ak i n g a reas o n ab l e reco n s tru ct i o no f t h e
ex p en d i tu res thro ug h o ther cred i b le ev i d en ce. Bo y d v
. Co m m i s s i o ner, 1 2 2 T.C. 3 0 5 , 3 2 0 (2 0 0 4); Fu rn is h v . Co m m i s s i o n er, T.C. M em o . 2 0 0 1-2 8 6 , 2 00 1 W L 1 3 2 5 9 5 6 , at* 4 ; s ec. 1
. 2 7 4 -5 T(c)(5 ), Tem p oraryIn co m e Tax Reg s ., 5 0 Fed . Reg
. 4 6 0 2 2 (No v . 6 , 1 9 8 5 ). Th e b u rd en i s o nth e t ax p ay er t o s h o wth at the d o cu m en t at i o nwas actu al l y l o s to r d es tro y edb ecau s e o f ci rcu m st an ces b ey o n dh i s
co n tro l . See Ru l e 1 4 2 (a)(1 ); Ad l er v . Co m m i s s i o n er, T.C. M em o . 2 0 1 0 -4 7 , 2 0 1 0 W L 9 3 4 2 6 7 , at* 9 , aff’ d , 4 4 3 F. Ap p ’ x 7 3 6 (3 dCi r. 2 0 1 1). A t ax p ay er i s req u i redt o reco n st ru ctp ert i n en treco rd s t o t h e fu l l es tex t en t p o s s i b l e. See, e.g ., Ch on g v . Co m m i s s i o n er, T.C. M em o . 2 0 0 7-1 2 , 2 0 0 7 W L 1 0 9 0 5 5 , at* 3 . If n o o th er d ocu m en t at i o ni s av ai l ab l e, t h e Co u rtm ay , b u t i s n o t
o b l i g edt o , accep t cred i b l e t es t i m o n y o f a t ax p ay er t o s ub s t an t i at e an ex p en s e
u n d erl y i n g a d edu ct i o n . See Bo y dv . Co m m i ss i o n er, 1 2 2 T.C. at3 2 0 (ci t i n g W at s o nv . Co m

m is s i o n er, T.C. M em o . 1 9 8 8 -2 9 ); Freem an v . Co m m i s s io n er, T.C. M em o. 2 0 0 9 -2 1 3 , 2 0 09 W L 2 9 5 8 6 6 3 , at* 6 . Th e t es ts etfo rt h i nCo h an co m es b ack in t o p l ay

i n t h es e ci rcu m s t an ces . See Scu l l y v . Co m m i ss i o n er, T.C. M em o . 2 0 1 3 -2 2 9 , at* 17 . Inth e ab s en ce o f ad equat e reco rd s t o es t ab l i s h each el em en to f
an ex pen s e u n d er s ect i o n2 7 4 (d ), a t ax pay er m ay al tern at i vel y

es t ab l i s h each el em en t : “ (A) By

h i s o wns t at em en t , wh eth er wri t t en o r o ral , co n t ai n in g s p eci fi c21

i n fo rm at i o ni nd et ai l as t o s u ch el em en t ; an d (B) By o th er co rro b o rat i v e ev i d en ce
s u ffi ci en tt o es t ab l i sh s u ch el em en t .” Sec. 1 .2 7 4 -5 T(c)(3 )(i ), Tem p o rary In co m e Tax Reg s ., 5 0 Fed . Reg . 4 6 0 2 0 (No v. 6 , 1 9 8 5); s ee al s o Lu s s y v . Co m m i s si o n er, T.C. M em o . 2 01 5 -3 5 , at* 1 2
. Pet i t i o ner s eek s t o d edu cttrav el ex p en s es i n cu rred du ri n g h i s jo b s earch . At tri al p et i t i o n er s tat edm erel y th ath e h ad“ s o ug h ti nt erv i ews an dex p l o rat o ry
co n vers at i on s wi th a ran g e o f fi n an ci al s erv i ces co m p an i es ” an d l i s tedo n l y

th ree p o t en t i al em

p l o y ers wi th wh i ch h e h ads o ug h ti n t erv i ews / co nv ers at i o n s . Al th o u g h p et i t i o n er p ro v i d edco p i es o f recei p t s t o s ub s t an ti at e t h es e ex p en s es , wh i ch p ro v id edth e d at es an dam o u n ts p ai d , h e d i dn o tp ro v i d e an y i n fo rm at i o n ab o u t th e b u s i n es s p u rp o s e o f t h e ex p en s es , s u ch as wh ere h e i n t erv iewedo r t h e i n d i v i du al (s ) co n du ct i n g i n t erv i ews . Pet i t i o ner’ s recei p t s , wi th o u t co rro b o rat i n g i n fo rm at i o ns u ch as l o cat i o n s o r
n am es o f i n d i v i du al s wh o i n t erv i ewedh i m t o es tab l is h a b u s i n es s p u rp o se, are b y th em s el v es i n s u ffi ci en tt o m eetth e s tri cts ub s t an t iat i o nreq u i rem en t s fo r t rav el
ex p en s es u n d er s ect i o n2 7 4 (d ). See s ecs . 1 6 2 (a), 2 7 4 (d ); Pri m u th v . Co m m i s s i o n er, 5 4 T.C. at 3 7 8 -3 7 9 ; s ec. 1 .2 7 4-5 T(c)(1 ), Tem p oraryIn co m e Tax Reg s., 5 0 Fed . Reg . 4 6 0 1 6 -4 6 01 7 (No v . 6 , 1 9 8 5 ).22

W e n o te t h atp et i t i o n er t es t i fi edab o u tth e co m p u t er fai l u re i n2 0 1 1 th at
cau s ed h i m

t o l o s e s o m e o f h i s reco rd s fo r t h e y ear. See Ru le 1 4 2 (a)(1 ); Ad l er v . Co m m i s s i o n er, 2 0 1 0 W L 9 3 42 6 7 , at* 9 . Bu twe are n o ts at i s fi edth atp et i ti o n er
m ad e a reas o n ab l e reco n s tru ct i o n o f each el em en to f h i s cl ai m edd educt i o ns th ro u g h o th er cred i b l e ev i d en ce. Pet it i on er m erel y p ro v i d eds u m

m ari es o f p u rp ort edex p en s es an dd i dn o treco n s tru ctreco rd s t o es t ab l i sh th e b u s i n es s p u rp os es fo r h i s cl ai m edex p en s es thro u g h t es t i m o n y o r o th er ev id en ce. See Lu s s y
v . Co m m i s s i o n er, at* 1 2 ; s ec. 1 .2 7 4 -5 T(c)(3 )(i ), Tem p o rary In co m e Tax Reg s ., s up ra. Th erefo re, b ecau s e p et it i o n er d i d n o tes t ab l i s h t h e b u s i n es s p u rp o se fo r t h e jo b s earch ex p en s es , h e i s n o t en t i t l edt o a cl ai m edd edu ct i o nfo r s am e. V. Ch ari t ab l e Co n tri b u t io n s Onh i s retu rn p et i ti o n er cl ai m eda ch ari t ab le co nt ri bu t i o nd educt i o no f $ 9 ,2 0 0 , b u tco n ced eds o m e o f t h i s am o u n t at tri al . Pet i t i o ner p ro v i d eda s u m m ary
o f ex p en s es t o t al i n g $ 9 0 1 wh i ch h e as s ert s were rel at edt o h i s wo rkfo r t h e M em ori al Fu n d
. No d edu ct i on i s al l o wedu n d er s ect io n 1 7 0 fo r a co n tri b u t i o no f s erv i ces . Ho wev er, “ u n rei m

b u rs ed ex p en d i tu res m ad e i n ci d en tt o th e ren d i t i o n o f s erv i ces t o an o rg an i zat i on co nt ri b u t i o n s t o wh i ch are d edu ct i b l e m ay co n s t i tu t e a23

d educt i b l e co n tri b u t i o n .” Sec. 1 .1 7 0 A-1 (g ), In co m e Tax Reg s . To b e d edu ct i b l e,
u n rei m b u rs edex p en s es m

u stb e d i rect l y

co n n ect ed wi th an ds o l el y at tri bu t ab l e t o th e ren d i t i o no f s erv i ces t o a ch ari t ab l e o rg an i zat i o n. Van Du s en v . Co m m i s s i o n er, 1 3 6 T.C. 5 1 5 , 5 2 5 (2 0 1 1); Sal t zm an v . Co m m i s s i on er, 5 4 T.C. 7 2 2 , 7 2 4 (1 9 7 0). “ In ap p ly i n g th i s s t an d ard , co u rt s h av e co n s i d eredwh et h er t h e ch ari t ab le wo rk cau s edo r n eces s i t at edth e t ax p ay er’ s ex p en s es .” Van Du s en v . Co m m i s s i o n er, 1 3 6 T.C. at5 2 5. A. M eal s an d Oth er Ex p en s es Pet i t i o ner as s ert s th ath e i s en t i t l ed t o d edu ct u n rei m b u rs edex p en s es fo r
m eal s an do th er t rav el ex p en s es t o t al i n g $ 4 92 th at h e i ncu rredi nco n n ect i o nwi th a No rt h Caro l i na s o ccer t o u rn am en t s po n s oredb y th e M em ori al Fu n d
. A t ax p ay er m ay

d edu ct“ o u t -o f-p o ck et tran s po rt at i o nex pen s es n eces s ari l y i n cu rredi np erfo rm i n g d o n at eds erv i ces ” an d “ [r] eas o n ab l e ex p en d i tu res fo r m eal s
an d l o dg i n g n eces s ari l y

i n cu rred* * * i np erfo rm i ng d o n at eds erv i ces ”. Sec. 1 .1 70 A-1 (g ), In co m e Tax Reg s. Sect io n1 7 0(j) p ro v i d es th atn o d edu ct i o ni s al l o wed “ fo r t rav el i n g ex p en ses (i n cl u d in g am o u n t s ex p en d edfo r m eal s an d l o d g i n g ) wh i l e away fro m h o m e, wh et her p ai d d i rect l y o r b y rei m b u rs em en t , u n l es s th ere i s n o s ig n i fi can tel em en to f p ers on al p l eas ure, recreat i o n , o r v acat i o n i ns u ch trav el .” As th i s Co urth as s t at ed : “ [T] rav el ex p en d i tu res wh ich i n cl u d e a24

s ub s t an t i al , d i rect , p ers o n al b en efi t* * * are n o td edu ct ib l e.” Tafral i an v . Co m m i s s i o n er, T.C. M em o . 1 9 9 1 -3 3 ; s ee al s o Bab i l o ni a v . Co m m i s si on er, 6 8 1 F.2 d6 7 8 , 6 7 9 (9 th Ci r. 1 9 8 2 ), aff’ g T.C. M em o . 1 98 0 -2 07 . Th e b urd en o f p ro vi n g th ats u ch ex p en di tu res qu al i fy as ch ari tab l e co n tri b u t i o n s res ts wi th the t ax p ay er. Tafral i an v . Co m

m i s s i o n er, T.C. M em o . 1 9 9 1 -3 3
. Pet i t i o ner fai l edt o es t ab l i s h th ath i s trav el t o No rt h Caro l in a an dth e
ex p en s es fo r m eal s wh o s e co s ts h e s eek s t o d edu cti n v o lv ed“ n o s i g ni fi can t el em en to f p ers o n al p l eas ure, recreat i on , o r v acat i o ni n s uch trav el .” See s ec. 1 7 0 (j). Wh i l e h e cred i b l y t es t i fi edth ath e es t ab l i s h edth e M em ori al Fu n d an di t s
s o ccer t o u rn am en t , p et it i o n er d i dn o ts p eci fy wh ath e d i dfo r th e 2 01 1 t ou rn am en t
o r h o wm u ch t i m e h e d ev o t edt o i t . W i th o u tth is i n fo rm at i o n , we can n o tco n cl u d e th atp et i t i o n er’ s tri p t o No rt h Caro l i n a, wh ere h e o wn s a h o m e, was d i rect l y
co n nect edwi th an ds o l el y at tri b u t ab l e t o s erv i ces p erfo rm edatth e t o u rn am en t . See Bab i lo n ia v
. Co m

m i s si o ner, 6 8 1 F.2 dat6 7 9 ; Tafral i an v . Co m m i s s i on er, T.C. M em o. 1 9 9 1 -3 3 . Th erefo re, p et i t i o n er i s n o t en ti t ledt o a d edu ct io nfo r ch ari t ab l e
m eal s an do th er ex pen s es .25

B. W eb s i t e Co s ts Pet i t i o ner al s o as s ert s th ath e i s en ti tl edt o d eductex p en ses t o t al i n g $ 4 0 9 th ath e i ncu rredt o m ai n tai nth e M em o ri al Fu n d ’ s web s i t e. No n e o f t h e i n di v i dual
ex p en s es was g reat er t han $ 2 5 0
. Co n tri bu t i o n s t h ro u g h the p aym en to f u nrei m b u rs edv o l u nt eer ex pen s es o f l es s th an$ 2 5 0 are s ub

j ect t o th e req ui rem en ts fo r co n tri bu t i o ns o f m o n ey s etfo rt h i ns ect io n1 .1 7 0A-1 3 (a), In co m e Tax Reg s . VanDu s en v . Co m m i s s i o ner, 1 3 6 T.C. at5 3 1 . A t ax p ay er i s req u i redt o m ai n t ai na can cel edch eck o r a recei p tfro m th e d o nee o rg an izat i o n . Sec. 1 .1 7 0A-1 3 (a)(1 ), In co m e Tax Reg s . In th e ab s en ce
o f a can cel edch ecko r a recei p tfro m th e d o nee o rg an izat i o n , th e t ax p ay er m u s t
m ai n t ai no th er rel i ab le wri t t en reco rd s s h o w i n g “ th e n am e o f t h e p ay ee, t h e d at e o f th e p aym en t , an d th e am o u n to f t h e p aym en t .” Van Du s en v . Co m m i s si on er, 1 3 6 T.C. at5 3 4 ; s ee al s o s ec. 1 .1 7 0 A-1 3 (a)(1 ), In co m e Tax Reg s. Pet i t i o ner cred i b l y

t es t i fi ed th ath e v o l un t eered fo r t he M em o ri al Fu nd , th at h e p ai dfo r web s i t e ex p en s es t o m ai n t ai nth e M em o ri al Fu n d ’ s web s i t e, an dth ath e
was n otrei m

b u rs edfo r t h es e web s i t e ex p en s es . Pet i ti o n er p ro v i d eda wri tt en
reco rdi nth e fo rm

o f h i s s u m

m ary o f ex p en s es . W e fi n dth es e rep o rt ed
ex p en d i tu res t o b e “ d i rect l y co nn ect ed wi th an ds o l el y at tri b u tab l e t o t h e ren d i t i o n
o f s erv i ces t o a ch ari t ab l e o rg an i zat i o n ” b ecau s e p et i t i o ner i n cu rredth em t o26

p ro m o t e th e M em o ri al Fu n d . Si n ce th e en tri es i nth e s u m m ary s h o w th e d at e an d
am ou n to f t h e co n tri b u t i o n an dth e n am e o f t h e p ay ee, we co n cl u d e t h atp et i t i o n er i s en t i t l edt o d edu ctth es e p aym en t s . See Van Du s en v . Co m m i s s i o n er, 1 3 6 T.C. at 5 3 4 ; s ec. 1 .1 7 0 A-1 3(a)(1 ), In co m e Tax Reg s . Acco rd i ng l y , p et i ti o n er i s en t i t l edt o a t o t al d edu ct i o n o f $ 4 0 9 fo r ch ari t ab l e
co n tri b u t i o n s. VI. Ho m e Offi ce Ex p en s es Pet i t i o ner s eek s t o d edu cth o m e o ffi ce ex p en s es t ot al i n g $ 4,2 4 8 ($ 1 , 4 8 7 fo r

“ o ther”, i n cl u d i n g wo rk i n g fro m h o m e fo r M TC, an d $ 2 ,7 6 1 fo r h i s ACN act i v i ty ). A t ax pay er g en eral l y

i s n ot en ti t l edt o d edu ct an y ex pen s es rel at edt o a dwel l i n g
u n i tu s edas a res i d en ce du ri n g th e t ax ab le y ear. Sec. 2 8 0 A(a). A t ax p ay er m ay d eductex p en s es al lo cab l e t o a p o rt io no f t h e d wel l i n g u n i twh i ch i s ex cl u si v el y
u s ed on a reg u l ar b as i s as th e p ri n ci p al p l ace o f b u s in es s fo r an y trad e o r b u s i n es s
o f t h e t ax p ay er o r a p l ace o f b u s i n es s wh i ch i s u sedb y p at i en t s , cl i en ts , o r
cu s t o m ers i nm eet i ng o r d eal i n g wi th the t ax p ay er i nth e n orm al co urs e o f t h e trad e o r b u si n es s . Id
. s ub s ec. (c)(1 )(A) an d(B). Th e “ ex cl us i v e u s e” req u i rem en t i s an “ al l -o r-n o th in g s t an d ard ”. Ham ach er v . Co m m i s s i o n er, 9 4 T.C. 3 4 8 , 3 5 7 (1 9 9 0). Fu rt h er, i tm

u s tb e u s edex cl u s i v el y

fo r t h e em

p l o y er’ s wo rkan dn o tfo r27

p ers o n al u s e. Sec. 2 8 0 A(c)(1 ); Cad wal l ad er v . Co m m i s s io n er, 9 1 9 F.2 d1 2 7 3 , 1 2 7 5 (7 th Ci r. 1 99 0 ), aff’ g T.C. M em o . 1 98 9 -3 5 6
. A. Ho m e Offi ce Us e as an Em p lo y ee o f M TC In th e cas e o f a t ax p ay er wh o i s an em p l o y ee, t h e h o m e o ffi ce m u s t b e
m ai n t ai n edfo r t h e co n v en i en ce o f t h e em p l o y er; i t can no tju s tb e a p l ace i nwh i ch th e em p lo y ee ch o o ses t o d o s o m e o f h i s wo rk . Sec. 2 8 0 A(c)(1 ) (fl u s h l an g u ag e); Fran k el v . Co m

m i s s i on er, 8 2 T.C. 3 1 8 , 3 2 3 , 3 2 6 (1 98 4 ). Su ch u s e h as b een fo u n d wh ere t h e h o m e o ffi ce was n eces s ary fo r t h e fu n ct io n i n g o f t h e em p l o y er’ s b u s i n es s o r n eces s ary

t o al l o w th e em

p l o y ee t o p erfo rm h i s du ti es p ro p erl y . Fran k el v . Co m

m i s s i on er, 8 2 T.C. at3 2 5 -3 26 . A h o m e o ffi ce i s n o t fo r t h e
co n ven i en ce o f th e em

pl o y er i f i ti s m ai n t ai nedm erel y fo r t h e em

p l o y ee’ s o wn
co n ven i en ce, co m fo rt , o r eco n o m y ; fo r ex am

p le, wh ere t h e em

p l o y ee fi n d s i tm o re
co n ven i en t t o wo rk fro m

h o m e i n s teado f s t ay i ng l at e atth e o ffi ce o r wh ere t h e
em pl o y ee p refers t o p erfo rm cert ai nact i v i t i es at h o m e. See Sh aro nv . Co m m i s s i o n er, 5 9 1 F.2 d1 2 7 3 , 1 2 7 4 (9 th Ci r. 1 9 7 8 ), aff’ g 6 6 T.C. 5 1 5 (1 9 7 6 ); Ham ach er v . Co m

m is s io n er, 9 4 T.C. at3 5 8. Pet i t i o ner, as an em

p lo y ee o f M TC, h adan o ffi ce t hatM T C p ro v i d edwh ere h e wo rk edreg ul arl y

duri n g 2 0 11 . Pet i ti o n er as sert s t h ath e wo rk edi nh i s h o m e
o ffi ce wh en h e t el eco m

m u t edan daft er n o rm al b us i n es s h o urs . Pet i t i o ner d i dn o t28

as s ertn o r p ro vi de ev id en ce t h atM TC req u i redh i m t o m ai n t ai nth e h om e o ffi ce o r t o wo rk fro m h o m e o r t h ati twas n eces s ary fo r h i m t o m ai n t ai n th e h o m e o ffi ce t o p erfo rm h i s du ti es p ro p erl y . See Fran k el v . Co m m i s s i o n er, 8 2 T.C. at 3 2 5 -3 2 6
. In s t ead , i tap p ears th at o no ccas i o np et i t i on er p referred t o wo rk fro m h i s h o m e
o ffi ce i n st eado f atM TC’ s o ffi ce. On the b as i s o f th is reco rd , we co n cl u d e t h at p et i t i o n er ch o s e t o m ai n t ai nth e h o m e o ffi ce an dwo rk fro m h o m e fo r h is o wn
co n ven i en ce, co m fo rt , an deco n o m y . See s ec. 2 80 A(c)(1 ) (fl u s h l an g u ag e); Sh aro nv . Co m

m i s s i on er, 5 91 F.2 dat1 27 4 , Ham ach er v . Co m m i s s i o ner, 9 4 T.C. at3 5 8 -3 5 9 ; Fran k el v . Co m m i s s i o ner, 8 2 T.C. at3 2 6. Th erefo re, p et i t io n er’ s cl ai m edh o m e o ffi ce ex p en se d educt i o n s rel at i ng t o h i s em p l o ym en tfo r M TC are
n o td edu ct i b l e. B. Ho m e Offi ce Us e fo r ACN Act i v i ty A t ax p ay er m ay

h av e o n l y

o n e p ri n ci p al p lace o f b u si n es s fo r each b u s i n es s i nwh ich h e i s en g ag ed . See Cu rp h ey v . Co m m i s s i o ner, 7 3 T.C. 7 6 6, 7 7 6 (1 9 8 0 ). To d et erm i n e t h e p ri n ci p al p l ace o f b u s i n es s fo r t h e p u rp o s e o f a h om e o ffi ce
ex p en s e t h e Co u rtm

u s tal s o as cert ai nth e “ fo cal p o in t ” o f a t ax p ay er’ s b u s i n es s act i vi t i es . J ack s o nv . Co m m i s si o n er, 7 6 T.C. 6 96 , 7 0 0 (1 9 81 ); Bai e v . Co m m i s s i o n er, 7 4 T.C. 1 05 , 1 0 9 (1 9 8 0 ). Th e t ax p ay er m u s tb e ab l e t o d em o n s trat e h o w m

u ch t i m e i s s p en t i nth e h o m e o ffi ce co m pared wi th h o w m

u ch29

t i m e i s s p en tato ther l o cat i on s t o d em o n s trat e t hatth e h o m e o ffi ce i s th e “ fo cal p o i n t ” o f h i s b u s i n es s act iv it i es an dth us h i s p ri n ci p al p l ace o f b us i n es s . Ch ri s t i n e
v . Co m m i s s i o n er, T.C. M em o . 2 0 1 0 -1 4 4 , 2 0 1 0 W L 2 6 4 0 1 2 5 , at* 1 1, aff’ dwi th o u t p ub l i s h edo p i n i o n, 4 7 5 F. Ap p ’ x 2 5 9 (9 th Ci r. 2 01 2 ). Pet i t i o ner d i dn o tp ro v i d e t es ti m o ny o r o th er ev i d en ce ab o u th i s act iv i ty wi th ACN, i n cl u d i n g h o w m u ch t i m e h e s p en to nth e act i v it y i nh i s h o m e o ffi ce
co m p aredwi th h o w m

u ch t i m e h e s p en t ato th er l o cat i o n s . Th erefo re, p et i t i o n er d i dn o t d em o n st rat e t h atthe h o m e o ffi ce was th e “ fo cal p o i nt ” o f h i s act i vi ty fo r ACN. See Ch ri s t in e v . Co m m i s s i o n er, 2 0 1 0 W L 2 6 4 0 1 2 5 , at * 1 1 . Fu rt h er, p et i t i o n er d i dn o tp ro v i de t es t i m o n y n o r o th er ev i d en ce th atth e h o m e o ffi ce was
u s ed ex cl u s i v el y

fo r b us i n es s p u rp o ses an dn o tfo r p ers on al u s e. See s ec. 2 8 0 A(c)(1 ); Cad wal l ad er v . Co m m i s s i on er, 9 1 9 F.2 dat1 2 7 5
. Th erefo re, p et i t i o n er’ s cl ai m edh o m e o ffi ce ex p en s es d edu ct i o n s rel at i ng t o h is act iv it y wi th ACN are n o t d edu ct i b l e. VII. Oth er M i s cel l an eo u s Ex p en s es Onh i s Sch edu l e A p et i t i o n er cl ai m edd edu ct io n s o f $ 23 3 fo r t ax retu rn p rep arat i o nfees an d $ 7 ,8 4 9 fo r “ at t o rn ey an dacco un t i n g fees ”. Pet i t i o n er d i dn o t ad dres s th es e d edu ct i o n s at tri al an dd i dn o tp ro vi d e t es t i m o n y o r o th er ev i d en ce30

t o s ub s t an t i at e t h es e d edu ct i o n s . Onth e b as is o f t h is reco rd , we co n cl u d e t h ath e i s n o ten t i t l edt o d edu ct i o n s fo r t h es e ex pen s es . VIII. Sect io n6 6 5 1 (a)(1 ) Ad d i t i o nt o Tax Sect io n6 6 5 1 (a)(1 ) i m

p o s es an ad d i t io nt o t ax fo r fai lu re t o fi l e a ret u rn o n th e d at e p res cri b ed(i n cl ud i n g ex t en s i o n s ) u n l es s the t ax p ay er can es t ab l i s h th at th e fai lu re i s due t o reas on ab l e cau s e an dn otdu e t o wi l l fu l n eg l ect . Sect i o n 7 4 9 1 (c) p ro v i d es th atth e Co m m i s s i o n er h as the b u rd en o f p ro duct i on i nan y Co u rt p ro ceed in g wi th res p ectt o l i ab i l i ty fo r an ad d i ti o nt o t ax . Th e Co m m is s i o n er
s at i s fi es th i s b u rd en o f p ro du ct i o nb y co m i n g fo rward wi th s u ffi ci en tev id en ce t h at th e t ax p ay er d idn o t fi l e h i s retu rn b y the du e d at e o f th e retu rn . See Wh eel er v . Co m m i s s i o n er, 1 2 7 T.C. 2 0 0 , 2 0 7 -2 0 8 (2 0 0 6), aff’ d , 5 21 F.3 d 1 28 9 (1 0t h Ci r. 2 0 0 8 ); Hi g b ee v . Co m

m i s s i o n er, 1 1 6 T.C. 4 3 8 , 4 4 6 (2 0 0 1 ). Res p on d en th as
s at i s fi edh i s b u rd en o f p ro du ct i o n b y i n tro du ci n g a cert i fi edco p y o f p et i t i o n er’ s
acco u n t tran scri p t th at refl ect s th atp et i t i o n er’ s 2 01 1 Fo rm 1 0 4 0 was n otfi l edu n t i l Decem b er 3 1 , 2 0 12 , o v er t wo m o n th s p as t th e ex t en d eddu e d at e o f Oct o b er 1 5 , 2 0 1 2 . See s ec. 7 4 9 1 (c); Wh eel er v . Co m m i s s io n er, 1 2 7 T.C. at2 0 7 -2 0 8; Hi g b ee
v . Co m m i s s i o n er, 1 1 6 T.C. at4 4 6
. Reas o n ab l e cau se an dth e ab s en ce o f “ wi ll fu l n eg l ect ” are d efen s es t o th e
s ect i on 6 6 5 1 (a)(1 ) ad d it i o nt o t ax . Sec. 6 6 5 1 (a)(1 ). “ [W ] il l fu l n eg l ect ” m ean s a31

“ co n s ci o u s , i n t en ti o n al fai l ure o r reck l es s i n d ifferen ce.” Un it ed St at es v . Bo y l e, 4 6 9 U.S. 2 4 1 , 2 4 5 (1 9 8 5 ). “ T h e d et erm i n at i o no f wh et h er reas o n ab l e cau se ex i s t s i s b as edo nal l the fact s an dci rcu m s t an ces .” Ru g g eri v . Co m m i s s i o n er, T.C. M em o. 2 0 0 8 -3 0 0 , 2 0 08 W L 5 4 1 1 9 1 9 , at* 2 . A t ax p ay er m eet s th e reas o n ab l e
cau s e ex cep t i o ni f h e d em o n s trat es th at h e “ ex erci s edo rd in ary b u s i n es s care an d p ru d en ce” i ntry i n g t o fi l e h i s retu rn . Sec. 3 0 1.6 6 5 1 -1 (c)(1 ), Pro ced . & Adm i n . Reg s. Th i s d et erm in at i o ni s fact u al , an dth e b u rd en o f p ro of i s o nth e t ax pay er. M erri am v . Co m m i s s i on er, T.C. M em o . 1 9 9 5 -4 3 2 , 1 9 9 5 W L 5 2 2 81 3 , at* 1 1 , aff’ d wi th o u tp ub l i s hedo p i n i o n , 1 0 7 F.3 d 8 77 (9 th Ci r. 1 9 9 7 ). Pet i t i o ner d i dn o tp ro v i d e ev i d en ce t h ath i s fai lu re t o t i m el y fi l e was du e t o
reas on ab l e cau s e. Al th o u g h p et i t i o n er d i s cu s sedh i s co m p u t er fai l u re t h at
o ccu rreds o m et i m e b efo re J u l y 2 0 1 1 , i t o ccu rredo v er a y ear b efo re h i s 2 0 11 t ax retu rn was du e. Th us , we fi n d th atp et it i on er i s l i ab l e fo r t h e s ect io n 6 65 1 (a)(1 ) ad d it i o nt o t ax . See s ec. 6 6 5 1(a)(1 ); Ru g g eri v . Co m m is s i o n er, 2 00 8 W L 5 4 1 1 9 1 9 , at* 2 ; M erri am v . Co m m i ss i o n er, 1 9 95 W L 5 2 2 8 1 3, at * 11 ; s ec. 3 0 1 .6 6 5 1 -1 (c)(1 ), Pro ced . & Adm i n . Reg s . IX. Accu racy -Rel at edPen al ty Sect io n6 6 6 2 (a) an d(b )(1 ) an d(2 ) i m p o s es an accu racy -rel at edp en al ty o n
an y p o rt i on o f an u n derp aym en to f Fed eral i n co m e t ax th at i s at tri b u t ab l e t o th e32

t ax p ay er’ s “ n eg l i gen ce o r d i s reg ardo f ru l es o r reg u l at io ns ” o r “ s ub s tan t ial
u n d ers t at em en to f i n co m e t ax . ” Anu n d ers t at em en t o f Fed eral i n co m e t ax i s s ub s t an t ial i f t h e am ou n to f t h e
u n d ers t at em en tfo r t h e t ax ab l e y ear ex ceed s th e g reat er o f 1 0 % o f t h e t ax req u i red t o b e s h own o n th e ret u rn fo r t he t ax ab l e y ear o r $ 5 ,0 0 0. Sec. 6 66 2 (d )(1 )(A). If th e u n ders t at em en to f i n co m e t ax fo r t h e y ear i n i s s ue i s s ub st an t i al , th e Co m m i s s i o n er h as s at i s fi ed th e b u rd en o f p ro duci n g ev id en ce t h atth e p en al ty i s ju s t ifi ed . Res p o n den tm etth is b u rd en b ecau s e t h e am o u n to f p et i t i o n er’ s
u n d ers t at em en tfo r 2 01 1 i s s ubs t an t i al
. 1 3 On ce t h e Co m

m i s s io n er h as m eth i s b u rd en , th e t ax p ay er m ay reb u t th e
ev i d en ce t h ata s ect i o n6 6 62 (a) accu racy -rel at ed p en al ty i s ap p ro p ri at e i f h e can d em o n s trat e (1 ) reas on ab l e cau s e fo r t h e u n d erp aym en tan d(2 ) t h ath e act edi n g o o dfai th wi th res p ectt o the am o un tp ai d. Sec. 6 6 6 4 (c)(1 ). A d et erm i n at i o no f
reas on ab l e cau s e an dg o o d fai th “ i s m ad e o n a cas e-b y -cas e b as i s , t ak i n g i n t o
acco u n t al l p ert i nen tfact s an dci rcu m s t an ces .” Sec. 1 .6 66 4 -4 (b )(1 ), In co m e Tax

1 3 Pet i t i o ner’ s n o t i ce o f d efi ci en cy refl ect ed an i n creas e i n t ax o f $ 1 5 ,4 5 3
. Becau s e p et i t i o n er i s en t i t l edt o a d edu ct i o no f o n l y $ 4 0 9 fo r ch ari tab l e co n tri b u t i o n ex p en s es , th e redu ct i o no f t h is i n creas e i nt ax wi l l b e m i n i m al . Thu s , th e am o un to f t ax req u i redt o b e s h o wno n p et i t io n er’ s 2 0 1 1 retu rn i s ap p ro x i m at el y $ 2 3 , 0 0 0 ($ 7,7 6 5 rep o rt edo n ret u rn % $ 1 5 ,4 5 3 i ncreas e i n t ax ' $ 2 3 ,2 1 8 ). Th i s $ 1 5,4 5 3 i n creas e i n t ax i s g reat er t h an $ 5 ,0 0 0 , wh i ch i s g reat er th an $ 2,3 2 2 , wh i ch i s 1 0 % o f $ 2 3 ,2 1 8 . See s ec. 6 6 6 2 (d )(1 )(A).33

Reg s. Gen eral l y , th e m o s t i m p o rt an t fact o r i s th e ex t en t o f t h e t ax p ay er’ s effo rt t o
as s es s h i s o r h er p ro p er t ax l iab i l i ty . Id .; s ee al so Hu m p hrey , Farri n g to n& M cCl ai n , P.C. v
. Co m

m i s s i o n er, T.C. M em o . 2 0 1 3-2 3 , at* 3 3 -* 3 4. Th e t erm “ n eg l i gen ce” i ns ect i o n6 6 6 2(b )(1 ) i n cl u d es an y fai l ure t o m ak e a
reas on ab l e at t em

p tt o co m p l y wi th th e Co d e an dan y

fai l u re t o k eep ad equ at e b o o k s an dreco rd s o r t o s ub s t an t i at e i t em s p ro p erl y . Sec. 6 6 6 2(c); s ec. 1 .6 6 6 2
- 3 (b )(1 ), In co m e Tax Reg s . Neg l i g en ce h as al s o b een d efi nedas th e fai lu re t o
ex erci s e du e care o r th e fai l u re t o d o wh ata reas o nab l e p ers o n wo u ldd o u n d er t h e ci rcu m s t an ces . See Al l en v . Co m m i s s i on er, 9 2 T.C. 1 , 1 2 (1 9 8 9 ), aff’ d , 9 2 5 F.2 d 3 4 8 , 3 5 3 (9 th Ci r. 1 9 9 1 ); s ee al s o Neel y v . Co m m i s s io n er, 8 5 T.C. 9 3 4, 9 4 7 (1 9 8 5). Th e t erm

“ d i s reg ard ” i n cl u d es an y carel es s, reck l es s, o r i n ten t io n al d i s reg ard . Sec. 6 6 6 2 (c). No th i n g i n th e reco rds u g g es t s th atp et i t i o n er co n s u lt edwi th a p ro fes s i o nal ad v is er o r co n du ct edres earch b efo re p rep ari n g h i s 2 0 1 1 i n co m e t ax retu rn . Pet i t io n er as s ert s th atwh en p rep ari n g h i s 2 0 1 1 Fo rm 1 0 40 u s i n g Tu rb o Tax h e
m i s t ak en l y

fi l ed o n e o f t h es e “ wh ati f” v ers i o n s i n s t eado f th e co rrect ly p rep ared
v ers i on an dthatthi s m i s t ak e ex p l ai n s s o m e o f th e erro rs i ncl ai m edd edu ct i o n s
an d wi th h o l di n g . Pet i ti o n er as s ert s th at h i s fi l i n g o f a 2 0 1 1 Fo rm 1 0 4 0 th atwas
n o ti n t en d edt o b e co m

p l et e res u l t edi ns o m e o f th e erro rs co n ced ed
.34

W e fo u n d p et i ti o n er’ s t es t i m o n y an dth e s creen s h o th e p ro v i d ed cred i b l e,
an d we b el i ev e th ath e m i st ak en l y s ub m i t t edan i n co rrect v ers i o n o f h i s 2 0 1 1 Fo rm 1 0 4 0 . Ho wev er, p et i t i on er’ s ex p l an at i o nab o u tth i s erro r d o es n otd em o n s trat e th ath e ex erci s ed du e care i n th e p rep arat i o n o f h i s t ax return . Iti s u n cl ear wh y p et i t i o n er wo u ldh av e creat edv ers i o n s o f h is retu rn wi th i n co rrect i n fo rm at i o n . Fu rt h er, t h is ex pl an at i o nd o es n o tacco u n tfo r al l o f t h e d edu ct io n s d i s al l o wed ; fo r
ex am p l e, t h i s d o es n o tex p l ai n p et i t i o n er’ s fai l ure t o s ub st an t i at e h i s ch ari t ab l e
ex p en s e d educt i o ns . Thu s , we are n o t co n v i ncedth atp et i t i o n er m ad e a reas o n ab l e at t em p tt o co m p l y wi th th e Co d e. See s ec. 6 6 6 2 (c); Al l en v . Co m m i s s io n er, 9 2 T.C. at1 2 ; Neel y

v . Co m m is s i o n er, 8 5 T.C. at9 4 7 ; s ec. 1 .6 6 6 2-3 (b )(1 ), In co m e Tax Reg s . Pet i t i o ner’ s reco rd k eep i ng was d is o rg an i zed , an d t h e d o cu m en t s t h ath e p ro v id edwere d i ffi cu l t t o read . Ad d i t i o n al ly , s o m e ap p eared t o b e i n accu rat e. Pet i t io n er’ s co m

p u ter fai l u re d o es n o tacco u n tfo r h i s fai lu re t o k eep p ro p er
reco rd s fo r t h e rem ai n d er o f 2 0 1 1 , n o r d o es i t acco u n tfo r h i s fai lu re t o p ro v i d e t h e b an k s tat em en t s h e u s edt o reco n s tru cth i s ex p en s es . Thu s , we are n o tco n v i n ced th atp et i t i o n er m ad e a reas o n ab l e at t em p tt o k eep ad equat e b o o k s an dreco rd s o r t o
s ub s t an t i at e i t em s p ro p erl y . See s ec. 6 6 6 2 (c); Al len v . Co m m i ss i o n er, 9 2 T.C. at 1 2 ; Neel y v . Co m m i ss io n er, 8 5 T.C. at9 4 7 ; s ec. 1 .6 6 6 2 -3 (b )(1 ), In co m e Tax Reg s .35

Acco rd i ng l y , we s u s t ai nth e accu racy -rel at edp en al ty . W e h av e co n s id eredal l o f t h e p art i es ’ arg u m en t s , an d , t o th e ex t en tn o t ad dres s edh erei n , we co ncl u d e t h atth ey are m o o t, i rrel ev an t , o r wi tho u tm eri t . To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t ered
u n der Ru l e 1 5 5
.