T.C. Memo. 2011-15

UNITED STATES TAX COURT

MARTIN ALONZO CAMPBELL, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 14035-09. Filed January 20, 2011.

Martin Alonzo Campbell, pro se.

James P.A. Caligure, for respondent.

MEMORANDUM OPINION

HALPERN, Judge: Respondent determined a deficiency of

$22,644 and an accuracy-related penalty of $4,528.80 with respect

to petitioner’s 2007 Federal income tax. Principally,

respondent’s determination of a deficiency results from his
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disallowance of certain business expenses claimed by petitioner

on the ground that petitioner was unable to substantiate them.1

Unless otherwise stated, all section references are to the

Internal Revenue Code in effect for 2007, and all Rule references

are to the Tax Court Rules of Practice and Procedure.

Some facts have been stipulated and are so found. The

stipulation of facts, with accompanying exhibits, is incorporated

herein by this reference. We need find few facts in addition to

those stipulated and shall not separately set forth our findings

of fact.

Petitioner bears the burden of proof as to the deficiency.

See Rule 142(a).2

Background

Petitioner resided in New York at the time he filed the

petition.

Petitioner filed a Form 1040, U.S. Individual Income Tax

Return, for 2007, including a Schedule C, Profit or Loss From

Business, on which he reported income and expenses both from his

1Respondent also made an adjustment increasing the amount of

petitioner’s self-employment tax. The adjustment is

computational and presents no issue that we need further address.

2Petitioner has not raised the issue of sec. 7491(a), which

shifts the burden of proof to the Commissioner in certain

situations. We conclude that sec. 7491(a) does not apply here

because petitioner has not produced any evidence that he has

satisfied the preconditions for its application.
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business as a tax return preparer and from his real estate

investments.3 He reported $48,000 of rental income from his real

estate investments. For lack of substantiation, respondent

disallowed the following expenses shown on the Schedule C:

Utilities $5,678

Other expenses 67,403

Repairs and maintenance 6,215

Legal and professional services 7,902

The parties have stipulated in part, and respondent concedes

in part, that, of the $67,403 of other expenses, petitioner may

deduct $54,797 as interest and taxes paid in connection with his

real estate investments. They have further stipulated that

petitioner may deduct the $5,678 claimed for utilities, also

related to his real estate investments. Petitioner offered no

evidence at trial substantiating the remaining disallowed

expenses. At the conclusion of that trial, we held the record

open for respondent to redetermine whether, taking into account

the stipulated and conceded expenses, petitioner had made a

substantial understatement of income tax, on which an accuracyrelated penalty under section 6662(a) and (b)(2) could be

imposed. We accorded petitioner the opportunity to respond to

respondent’s computation.

3Respondent argues, and petitioner does not disagree, that

the income and expenses related to his real estate investments

should have been reported on a Schedule E, Supplemental Income

and Loss.
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Respondent has supplied us with his calculations showing a

reduced deficiency of $5,334 and a resulting accuracy-related

penalty of $1,067 for substantial understatement of income tax. 

Petitioner has responded, objecting to respondent’s calculations

only on the ground that a 2007 Form 1040X, Amended U.S.

Individual Income Tax Return, dated September 30, 2010, and

attached to his response, shows additional deductible amounts he

paid for insurance and taxes. The Form 1040X was not received

into evidence (indeed, it was not signed until more than 2 weeks

after the trial in this case concluded), nor is there any

evidence that it was submitted to respondent or accepted by him. 

Moreover, a tax return does not establish the truth of the facts

stated therein. E.g., Wilkinson v. Commissioner, 71 T.C. 633,

639 (1979).

Conclusion

Petitioner has failed to prove that the deficiency in his

2007 Federal income tax is any less than the $5,334 as calculated

by respondent. Nor has he shown reasonable cause for the

underpayment of tax resulting from his substantial understatement

of income tax, which would negate the resulting accuracy-related

penalty. See sec. 6664(c)(1).

Decision will be entered

for respondent.