T.C. Memo. 1996-61

UNITED STATES TAX COURT

DIANA LYNN TAUB, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 14117-94. Filed February 15, 1996.

Diana Lynn Taub, pro se.

Reginald R. Corlew, for respondent.

MEMORANDUM OPINION

LARO, Judge: Diana Lynn Taub petitioned the Court to

redetermine respondent's determination of deficiencies in her

1989 and 1990 Federal income tax, additions thereto, and

penalties. For 1989, respondent determined that petitioner was

liable for a $5,538 deficiency, a $1,306 addition under section
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1 Unless otherwise stated, section references are to the

Internal Revenue Code in effect for the years in issue. Rule

references are to the Tax Court Rules of Practice and Procedure. 

Dollar amounts are rounded to the nearest dollar.

6651(a)(1), and a $1,108 penalty under section 6662.1 For 1990,

respondent determined that petitioner was liable for a $8,392

deficiency, a $1,673 addition under section 6651(a)(1), and a

$1,678 penalty under section 6662. 

The Court tried this case on December 4, 1995. The evidence

consists primarily of a stipulation of four facts, a stipulation

of three exhibits, and the scant testimony of petitioner. 

One stipulation concerns petitioner’s residence at the time of

the petition, which was Pembroke Pines, Florida. The other three

stipulations reference the stipulated exhibits; namely, the

subject notice of deficiency and petitioner's 1989 and 1990 Forms

1040, U.S. Individual Income Tax Return. Petitioner's testimony,

including direct examination and cross-examination, is 10 pages

in the transcript.

We must decide the issues set forth below. For purposes of

clarity and convenience, each issue states our findings of fact

and Opinion with respect thereto.

1. Issue One

We decide whether petitioner is entitled to certain amounts

for costs of goods sold and expenses, that respondent disallowed. 

Petitioner reported these amounts on her 1989 and 1990 Schedules

C, Profit or Loss From Business (Sole-Proprietorship). 
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Petitioner’s 1989 and 1990 Schedules C report that she has

an unincorporated business that provides acting, modeling, and

art/design services. The 1989 Schedule C reports income of $650

and cost of goods sold and deductions totaling $13,800; i.e., 

cost of goods sold ($6,700), advertising ($1,800), legal and

professional services ($1,500), office expense ($2,000), supplies

($1,200), and utilities ($600). Petitioner’s 1990 Schedule C

reports income of $750 and cost of goods sold and deductions

totaling $15,200; i.e., cost of goods sold ($4,000), advertising

($2,700), legal and professional services ($2,200), office

expense ($4,500), supplies ($1,200), and utilities ($600). 

Respondent disallowed all of the costs of goods sold and

deductions reported on petitioner’s 1989 and 1990 Schedules C. 

In part, respondent determined, petitioner did not prove that any

of these amounts were: (1) Paid or (2) ordinary and necessary

business expenses.

Petitioner must prove respondent's determination wrong. 

Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). 

Petitioner has not done so. She has produced no meaningful

evidence rebutting respondent's determination, and the record is

devoid of evidence otherwise disproving it. Petitioner claims

she had the documents necessary to disprove respondent’s

determination, but that the documents were either lost by her or

destroyed in a hurricane. We find this argument unpersuasive. 
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We sustain respondent in full with respect to this issue. See

Finesod v. Commissioner, T.C. Memo. 1994-66.

2. Issue Two

We decide whether petitioner may deduct certain itemized

deductions that respondent disallowed. Petitioner reported these

deductions on her 1989 and 1990 Schedules A, Itemized Deductions.

Petitioner’s 1989 Schedule A reports the following itemized

deductions: $600 in interest, $2,750 of contributions by cash or

check, $490 of contributions by other than cash or check, and

$5,760 of “miscellaneous deductions” (before the application of

the 2-percent floor). Petitioner claims a deduction for

miscellaneous deductions, net of the 2-percent floor. 

Petitioner’s 1990 Schedule A reports the following itemized

deductions: $3,616 of medical expenses (before application of

the 7.5-percent floor), $1,700 of interest, $2,700 of

contributions by cash or check, $490 of contributions by other

than cash or check, and $5,900 of “miscellaneous deductions”

(before the application of the 2-percent floor). Petitioner

claims deductions for medical expenses and miscellaneous

deductions, after reducing her reported amounts by the applicable

floors.

Respondent determined that petitioner’s 1990 medical

deduction was $52, instead of the larger amount claimed by

petitioner, because of the increase in her adjusted gross income

on account of the above-mentioned adjustments to her 1990
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Schedule C. Respondent determined that petitioner could not

deduct any of the amounts that she reported for contributions for

1989 and 1990 because she had not proven that these

“contributions” were: (1) Paid or (2) within the requirements of

section 170. Respondent determined that petitioner could not

deduct any of the amounts that she claimed for miscellaneous

deductions for 1989 and 1990, primarily because she had not

proven that these “deductions” were: (1) Paid or (2) otherwise

allowable as deductible expenses.

For the same reasons as above, we sustain respondent’s

determination with respect to this issue. See Finesod v.

Commissioner, supra.

3. Issue Three

We decide whether petitioner is entitled to a credit for

dependent child care expenses for the 1990 taxable year. On her

1990 Form 2441, Child and Dependent Care Expenses, petitioner

reported that she paid $8,400 to Morris W. Taub. As petitioner

wrote on her 1990 Form 2441, “Dependent brother (alcoholic)

became too depressed and ill to work and could not find a job. I

paid all expenses for food, clothing, storage of personal

belongings, moving expenses, car payment and housing. He

committed suicide in March of 1990. I also paid burial

expenses.”

Respondent determined that petitioner was not entitled to

her claimed credit because petitioner had not shown that the
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$8,400 listed on Form 2441 was: (1) Paid or (2) attributable to

dependent child expenses. For the same reasons as above, we

sustain respondent’s determination with respect to this issue. 

See Finesod v. Commissioner, supra.

4. Issue Four

We decide whether petitioner is liable for the additions to

her 1989 and 1990 taxes determined by respondent under section

6651(a)(1). Respondent determined that petitioner failed to file

timely 1989 and 1990 Federal income tax returns, and that

petitioner failed to show that her failure was due to reasonable

cause. Petitioner mailed her 1989 and 1990 Forms 1040 to

respondent on October 1, 1991, and respondent received both

returns on October 3, 1991. Petitioner did not receive an

extension to file her 1990 Form 1040. 

Section 6651(a)(1) imposes a monthly charge equal to

5 percent of the amount of tax that should have been shown on the

return, subject to a maximum charge of 25 percent. In order to

avoid this charge/addition to tax, petitioner must prove that her

failure to file was: (1) Due to reasonable cause and (2) not due

to willful neglect. Sec. 6651(a); United States v. Boyle,

469 U.S. 241, 245 (1985). A failure to file timely a Federal

income tax return is due to reasonable cause if the taxpayer

exercised ordinary business care and prudence, and, nevertheless,

was unable to file the return within the prescribed time. Sec.

301.6651-1(c)(1), Proced. & Admin. Regs. Willful neglect means a
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conscious, intentional failure or reckless indifference. United

States v. Boyle, supra at 245. 

When petitioner mailed her Forms 1040 to respondent on

October 1, 1991, petitioner attached a note stating that she had

given these returns to Morris W. Taub and her sister-in-law to

mail. The letter also states that petitioner had recently “felt”

that these returns had not actually been mailed. 

With respect to this letter, we find the assertions

contained therein to be unbelievable. Petitioner’s 1989

Form 1040 reflects that she signed it on April 10, 1990.

Petitioner’s 1990 Form 1040 reflects that she signed it on

June 10, 1991. Morris W. Taub, however, apparently died in March

1990. Because the record does not disprove respondent's

determination under section 6651(a)(1), we sustain it.

5. Issue Five

We decide whether petitioner is liable for the 1989 and 1990

accuracy-related penalties determined by respondent under section

6662. Respondent determined that petitioner was liable for these

penalties because her underpayments were due to negligence or

disregard of rules or regulations. See sec. 6662(a), (c). 

Section 6662(a) imposes an accuracy-related penalty equal to

20 percent of the portion of an underpayment that is due to

negligence. To avoid this penalty, petitioner must prove that

she made a reasonable attempt to comply with the provisions of

the Internal Revenue Code, or that she was not careless,
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reckless, or in intentional disregard of rules or regulations. 

See sec. 6662(c); see also Rule 142(a); Welch v. Helvering, supra

at 115. Petitioner has failed to do so; thus, we sustain

respondent.

For the foregoing reasons,

 Decision will be entered

for respondent.