T.C. Memo. 2010-193

UNITED STATES TAX COURT

PATRICIA A. BROOKSHIRE, Petitioner v.

 COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 3474-09. Filed September 1, 2010.

Patricia A. Brookshire, pro se.

Olivia J. Hyatt, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

COHEN, Judge: Respondent determined deficiencies in

petitioner’s income tax and additions to tax for 2004 and 2006 as

follows:
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 Additions to Tax 

Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654(a)

2004 $12,356 $2,751.97 1$2,446.20 $350.08

2006 12,634 1,766.25 1628.00 346.29

1The addition to tax will continue to accrue from the due

date of the return at a rate of 0.5 percent for each month, or

fraction thereof, of nonpayment, not exceeding 25 percent.

The issues for decision are whether petitioner had unreported

income during the years in issue, whether she had deductions

beyond those conceded by respondent, and whether she is liable

for the additions to tax. All section references are to the

Internal Revenue Code in effect for the years in issue, and all

Rule references are to the Tax Court Rules of Practice and

Procedure.

FINDINGS OF FACT

Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference. 

Petitioner resided in Georgia at the time that she filed her

petition. Petitioner was a graphic designer and computer

technician during the years in issue.

During 2004, petitioner received wages of $12,196 from U.S.

Personnel. Petitioner received nonemployee compensation from

Columbia Theological Seminary, Inc., of $2,837 in 2004; from

Agnes Scott College of $18,510 in 2004 and $2,900 in 2006; and
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from the Westminster Schools of $17,554 in 2004 and $3,850 in

2006. During 2006, petitioner received wages of $10,858 from Pat

Cornelius & Associates, Inc., and $50,696 from DigiPrint Ink,

Ltd. 

Petitioner received interest income totaling $1,117 in 2006.

Petitioner failed to file Federal income tax returns for

2003, 2004, 2005, and 2006. Respondent prepared substitutes for

returns for petitioner for 2004 and 2006, using a filing status

of single. Notices of deficiency were sent to petitioner on

November 10, 2008, for 2004 and 2006. The notices were based on

third-party reporting of petitioner’s income as set forth above.

OPINION

The petition in this case had attached a form containing a

hodgepodge of frivolous, irrelevant, and spurious arguments

common to petitions following a program of tax defiance. See

Jensen v. Commissioner, T.C. Memo. 2010-143; Sullivan v.

Commissioner, T.C. Memo. 2010-138; Cook v. Commissioner, T.C.

Memo. 2010-137. The form sets out a general denial of tax

liability; a claim of various deductions and exemptions and a

filing status other than allowed in the statutory notice; an

assertion that the figures used “stem from illegal immigrants”

using the taxpayer’s Social Security number; an allegation that

penalties should be waived because “the Internal Revenue Code is

so complex and confusing”; a claim for credit “for the illegal
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telephone excise tax” for each year; a claim of deductible

expenses of tax preparation and advice on filing (even though no 

return was filed); and a claimed lack of records allegedly

justifying reconstruction and estimates, with a citation of and

quotation from Cohen v. Commissioner, 266 F.2d 5 (9th Cir. 1959),

remanding T.C. Memo. 1957-172. The petition and the attachment

referred to petitioner as “he” and used the possessive “his”

throughout, although petitioner is female. Petitioner requested

Columbia, South Carolina, as the place of trial.

Before, during, and after trial, petitioner presented an

“affidavit of expenses and deductions” that she insisted should

be accepted as proof of her business expenses for the years in

issue. When the case was called for trial, petitioner belatedly

presented some receipts substantiating expenses, and respondent

conceded some deductions. Petitioner stipulated the items of

income set forth above and the third-party records that were the

subject of information returns on which the substitutes for

returns and notices of deficiency were based. 

The Court ordered seriatim briefs, with respondent filing

the opening brief, so that the record could be clarified as to

what deductions were agreed and why others were denied. In her

brief, petitioner admitted that she received wages and other

income but that she maintained no records of amounts paid to her. 

She attempted to avoid the stipulation and renewed hearsay
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objections to the evidence of her income received with the

stipulation. She has shown neither error in the stipulation nor

any reason to relieve her from it. See Rule 91(e). Even if they

had not been stipulated, the business records of the payors of

income would have been received in evidence under Rules 803(6)

and 902(11) of the Federal Rules of Evidence. Petitioner has not

raised any reasonable dispute with respect to any item of income. 

See sec. 6201(d). We conclude that she had unreported income in

the amounts set forth in our findings.

Many of the expenses petitioner claimed were disallowed for

lack of substantiation of amount, time, place, and business

purpose under section 274(d). Petitioner presented a mileage log

that was inconsistent with her testimony and, as she admitted,

was not correct; she has now conceded that she is not entitled to

deduct mileage for 2006. Some of the transportation expenses and

entertainment expenses claimed were nondeductible personal

expenses, such as those for commuting, social entertainment, and

gifts. See sec. 262. Her claimed medical expenses, even if

accepted without substantiation, would not be deductible because

they do not exceed 7.5 percent of her adjusted gross income. See

sec. 213(a). Petitioner presented no evidence verifying

charitable contributions as required by section 170 and section

1.170A-13(a)(1), Income Tax Regs.
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Respondent conceded that petitioner was entitled to deduct a

portion of the expenses of an office in her home during 2004,

when most of petitioner’s income was nonemployee compensation. 

Petitioner attempts to recharacterize her wage income in both

years as nonemployee compensation in order to claim expenses,

including her office in the home, as business expenses deductible

in full rather than employee expenses limited by section 67(a) to

the extent that the aggregate of miscellaneous deductions exceeds

2 percent of adjusted gross income. She admitted during her

testimony that some items were reimbursable by her employer, but

she failed to seek reimbursement. She has not persuaded us that

she was other than an employee, and her theory is implausible. 

To the extent that respondent has conceded some employee

expenses, the limitation of section 67(a) will apply. 

Petitioner claims deductions for computers and other

equipment purchased in 2004. If petitioner had filed a tax

return for 2004, she might have elected under section 179 to

deduct, rather than depreciate, the cost of equipment purchased

and placed in service that year. Her failure to file a return or

to meet the other applicable requirements now precludes that

opportunity. See Visin v. Commissioner, T.C. Memo. 2003-246,

affd. 122 Fed. Appx. 363 (9th Cir. 2005); Verma v. Commissioner,

T.C. Memo. 2001-132; Fors v. Commissioner, T.C. Memo. 1998-158;

Starr v. Commissioner, T.C. Memo. 1995-190, affd. without
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published opinion 99 F.3d 1146 (9th Cir. 1996). She has neither

claimed depreciation nor presented evidence adequate to determine

an allowance for depreciation in either year.

As to almost all of the expenses that she claimed,

petitioner lacked corroborative receipts, canceled checks or

other records of expenditures. Some of the documents she

presented were illegible, patently unreliable, or contradicted

her claims. (The receipts that she produced included Diet Coke

purchased at WalMart because she was thirsty). Petitioner

asserts that she did the best that she could considering the

passage of time and seeks to rely on Cohan v. Commissioner, 39

F.2d 540, 543-544 (2d Cir. 1930). In cases in which the Cohan

principle is applied and estimates are accepted, we bear heavily

against “the taxpayer whose inexactitude is of * * * [her] own

making.” Id. at 544. We can estimate the amount of the

deductible expense only when the taxpayer provides evidence

sufficient to establish a rational basis upon which the estimate

can be made. See Vanicek v. Commissioner, 85 T.C. 731, 742-743

(1985).

Certainly the necessity of reconstructing in 2010 expenses

allegedly incurred in 2004 and 2006 and the unreliability of

recollection and estimates are problems of petitioner’s own

making. She failed to file tax returns for at least 4 years,

when contemporaneous schedules of deductions would have, or
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should have, been based on contemporaneous records. She failed

to keep records of her income and expenses. She refused to

cooperate when contacted by respondent, and she complied only

belatedly and incompletely with the Court’s orders and Rules

requiring that records be turned over and that facts and

documents be stipulated. She obstructed the determination of her

tax liabilities by pursuing frivolous positions promoted by

unreliable sources and did not seek competent tax advice. We are

not persuaded that she is entitled to any deductions not conceded

by respondent. 

Respondent has satisfied the burden of going forward under

section 7491(c) with respect to the additions to tax for failure

to file returns or to pay tax under section 6651(a) and the

failure to pay estimated taxes under section 6654(a). See Higbee

v. Commissioner, 116 T.C. 438, 446 (2001). Petitioner’s only

excuse is that for 2004 and 2006 she believed that her business

expenses “counter-balanced” the wages she earned and that she did

not owe taxes. A single individual must file a return on receipt

of gross income, such as wages, exceeding $7,950 in 2004 or

$8,450 for 2006, regardless of whether or not taxes are owed. 

See sec. 6012(a). We do not believe that petitioner

misunderstood the requirements of law or that she believed that
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she did not have taxable income. She has not shown reasonable

cause under section 6651(a) or an exception to the addition to

tax under section 6654. The additions to tax on the recomputed

deficiencies will be sustained.

To reflect respondent’s concessions,

Decision will be entered

under Rule 155.