T.C. Memo. 1998-174

UNITED STATES TAX COURT

CHARLES E. SHEPHERD, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 4205-97. Filed May 12, 1998. 

Charles E. Shepherd, pro se.

David Choi, for respondent.

MEMORANDUM OPINION

FOLEY, Judge: Respondent determined a $20,066 deficiency

and a $4,013 accuracy-related penalty for 1993. All section

references are to the Internal Revenue Code in effect for 1993,

and all Rule references are to the Tax Court Rules of Practice

and Procedure. The issues for decision are:
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1. Whether petitioner is entitled to deductions for

business expenses. We hold that he is to the extent provided

below.

2. Whether petitioner is entitled to certain itemized

deductions. We hold that he is to the extent provided below.

3. Whether petitioner is entitled to a credit for Federal

tax paid on fuel. We hold that he is not.

4. Whether petitioner is liable for an accuracy-related

penalty. We hold that he is.

Petitioner resided in Evanston, Illinois, at the time he

filed his petition. During 1993, petitioner worked as a

traveling salesperson, driving to various sites and selling

peanuts, candy, soda, pastries, and other snacks out of his

automobiles. He also sold Bibles and secondhand clothing. 

Petitioner filed in a timely manner his 1993 Federal income

tax return. On Schedule C of the return, he reported $61,250 of

gross receipts, $11,975 of "other income" (i.e., relating to fuel

credits), and $37,100 of expenses. On Schedule A, he claimed

$27,018 of deductions. In the notice of deficiency, respondent

disallowed all of petitioner's Schedule C expenses and the

following Schedule A deductions: $4,100 of taxes, $3,300 of

charitable contributions, $13,850 of casualty losses, and $1,000

of miscellaneous deductions. In addition, respondent disallowed
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an $11,975 credit, and the $11,975 of "other income" on Schedule

C, that petitioner claimed for Federal tax paid on fuel. 

Petitioner, who has the burden of proof, Welch v. Helvering,

290 U.S. 111, 115 (1933), contends that respondent erred in

disallowing the expenses and deductions claimed on his return. 

In an attempt to substantiate his expenses and deductions,

petitioner submitted a disorganized assortment of receipts. The

vast majority of these receipts relate either to personal

expenses or to cost of goods sold, which respondent allowed in

full. Petitioner did, however, substantiate $255 of charitable

contributions and $1,842.58 of expenses relating to the business

use of his automobiles. Petitioner is not entitled to the other

expenses and deductions that he claimed.

Petitioner contends that he is entitled to a credit for fuel

excise taxes that he allegedly paid. Section 34(a) allows a

credit for excise tax paid with respect to gasoline used for

certain "qualifying purposes" such as farming, off-highway use,

and public transportation. On Form 4136, petitioner claimed a

fuel tax credit relating to 99,000 gallons of gasoline that he

allegedly purchased. Petitioner failed, however, to establish a

"qualifying purpose". Accordingly, petitioner is not entitled to

the section 34 credit. 

Petitioner contends that respondent should not have imposed

an accuracy-related penalty. Section 6662 imposes an accuracy-
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related penalty in an amount equal to 20 percent of the portion

of the underpayment of tax attributable to negligence or

disregard of rules or regulations. Sec. 6662(a) and (b). 

Section 1.6001-1(a), Income Tax Regs., requires taxpayers to keep

adequate records of their deductions and expenses. Petitioner

disregarded this regulation. In addition, petitioner failed to

exercise due care in claiming a tax credit for the alleged

purchase of 99,000 gallons of gasoline. Accordingly, petitioner

is liable for the accuracy-related penalty.

All other contentions raised by the parties are either moot

or without merit.

To reflect the foregoing,

 Decision will be entered

pursuant to Rule 155.