1All section references are to the Internal Revenue Code in

effect for the years at issue. All Rule references are to the

Tax Court Rules of Practice and Procedure.

T.C. Memo. 2003-314

UNITED STATES TAX COURT

HERBERT C. BUCK, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 12203-01. Filed November 12, 2003.

Herbert C. Buck, pro se.

John C. Schmittdiel, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

CHIECHI, Judge: Respondent determined the following deficiencies in, and accuracy-related penalties under section

6662(a)1 on, petitioner’s Federal income tax:
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2In addition to the issues remaining for decision listed

below, there are other questions relating to certain determinations in the notice of deficiency (notice) issued to petitioner

with respect to his taxable years 1997 and 1998 that are computational in that their resolution flows automatically from our

resolution of the remaining issues that we address herein and the

concessions of the parties.

Year Deficiency Accuracy-Related Penalty

1997 $32,989 $6,597.80

1998 29,274 5,854.80

The issues remaining for decision are:2

(1) Is petitioner entitled to deduct for each of the years

at issue claimed Schedule C expenses in excess of the amount

conceded by respondent? We hold that he is not.

(2) Is petitioner liable for each of the years at issue for

the accuracy-related penalty under section 6662(a)? We hold that

he is. 

FINDINGS OF FACT

Most of the facts have been deemed admitted pursuant to Rule

90(c). Certain other facts have been stipulated and are so

found.

Petitioner resided in Deer Park, Wisconsin, at the time he

filed the petition in this case.

During each of the years at issue, Minnesota Mining &

Manufacturing in St. Paul, Minnesota, employed petitioner. 

During each of those years, petitioner also operated a sole

proprietorship in Hudson, Wisconsin, under the name Buck Kennel,
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a dog-racing kennel. Buck Kennel was located between petitioner’s home and his place of employment at Minnesota Mining &

Manufacturing.

On July 15, 1998, petitioner filed Form 1040, U.S. Individual Income Tax Return (Form 1040), for his taxable year 1997

(1997 return). Petitioner included Schedule C, Profit or Loss

From Business (Schedule C), as part of his 1997 return (1997

Schedule C). Petitioner’s 1997 Schedule C claimed various

expenses totaling $66,432. 

On May 24, 1999, petitioner filed Form 1040 for his taxable

year 1998 (1998 return). Petitioner included Schedule C as part

of his 1998 return (1998 Schedule C). Petitioner’s 1998 Schedule

C claimed various expenses totaling $70,271.

Around August or September 2000, petitioner filed Form

1040X, Amended U.S. Individual Income Tax Return (Form 1040X),

with respect to his taxable year 1997 (1997 amended return).

Petitioner included Schedule C as part of his 1997 amended return

(1997 amended Schedule C). Petitioner’s 1997 amended Schedule C

claimed various expenses totaling $87,242.63.

Around August or September 2000, petitioner filed Form 1040X

with respect to his taxable year 1998 (1998 amended return). 

Petitioner included Schedule C as part of his 1998 amended return

(1998 amended Schedule C). Petitioner’s 1998 amended Schedule C
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3Petitioner made a computational error when he added the

total expenses claimed in petitioner’s 1998 amended Schedule C. 

The correct total of such expenses is $86,249.07.

claimed various expenses totaling $86,249.07.3

On June 29, 2001, respondent issued to petitioner the notice

with respect to his taxable years 1997 and 1998. In that notice,

respondent, inter alia, determined to disallow for each of the

years at issue the Schedule C deductions that petitioner claimed

in his 1997 Schedule C and in his 1998 Schedule C. Respondent

further determined in the notice that petitioner is liable for

each of the years at issue for the accuracy-related penalty under

section 6662(a).

OPINION

The parties do not address section 7491. Petitioner filed

his 1997 return on July 15, 1998, and his 1998 return on May 24,

1999. We presume that respondent’s examination of those returns

began after July 22, 1998, and that section 7491(a) is applicable

in the instant case. On the record before us, we find that

petitioner’s burden of proof relating to the deficiency determinations does not shift to respondent under section 7491(a). That

is because petitioner has not complied with the substantiation

and recordkeeping requirements of section 7491(a)(2)(A) and (B). 

Accordingly, we find that petitioner has the burden of proving

that respondent’s deficiency determinations are wrong. Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). With
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respect to any deductions that petitioner is claiming for each of

the years at issue, deductions are strictly a matter of legislative grace, and petitioner bears the burden of proving that he is

entitled to any deductions claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). 

In support of his position that he is entitled to deduct for

each of the years at issue claimed Schedule C expenses in excess

of the amount conceded by respondent, petitioner relies on his

testimony. We found petitioner’s testimony to be general,

conclusory, vague, self-serving, and uncorroborated in material

respects. We shall not rely on petitioner’s testimony to support

his position with respect to the claimed deductions at issue. On

the record before us, we find that petitioner has failed to carry

his burden of showing that he is entitled to deduct for each of

the years at issue claimed Schedule C expenses in excess of the

amount conceded by respondent.

We now turn to the determination in the notice that petitioner is liable for each of the years at issue for the accuracyrelated penalty under section 6662(a). According to respondent,

petitioner is liable for that penalty because of negligence or

disregard of rules or regulations under section 6662(b)(1). On

the record before us, we find that respondent has carried respondent’s burden of production under section 7491(c) with respect to

the accuracy-related penalty under section 6662(a) for each of
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4Petitioner did not maintain any records to substantiate

that he is entitled to deduct for each of the years at issue

claimed Schedule C expenses in excess of the amount conceded by

respondent. See sec. 1.6662-3(b)(1), Income Tax Regs.

5See supra note 4.

the years at issue. On that record, we further find that petitioner has failed to carry his burden of showing that he was not

negligent and did not disregard rules or regulations within the

meaning of section 6662(b)(1), or otherwise did what a reasonable

person would do, with respect to the underpayment for each of

those years.4 On the record before us, we also find that petitioner has failed to carry his burden of establishing that he

acted with reasonable care and in good faith with respect to the

underpayment for each of the years at issue.5 See sec.

6664(c)(1). On that record, we further find that petitioner has

failed to carry his burden of showing that he is not liable for

each of the years at issue for the accuracy-related penalty under

section 6662(a).

We have considered all of the contentions and arguments of

petitioner that are not discussed herein, and we find them to be

without merit and/or irrelevant.

To reflect the foregoing and the concessions of the parties, 

Decision will be entered

under Rule 155.