T.C. Memo. 2005-159

UNITED STATES TAX COURT

KELVIN AND ARLENE JACKSON, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8446-04. Filed June 29, 2005.

Kelvin and Arlene Jackson, pro se.

Kelli H. Todd, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

COHEN, Judge: Respondent determined a deficiency of $808

and a section 6662(a) penalty of $161.60 with respect to

petitioners’ Federal income tax for 2002. After concessions, we

must decide whether petitioners are entitled to additional

itemized deductions or business deductions beyond those conceded

by respondent and whether petitioners are liable for the penalty
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under section 6662(a). Unless otherwise indicated, all section

references are to the Internal Revenue Code in effect for the

year in issue, and all Rule references are to the Tax Court Rules

of Practice and Procedure.

FINDINGS OF FACT

Petitioners resided in Austin, Texas, at the time that they

filed their petition. During 2002, petitioner Kelvin Jackson

(Mr. Jackson) was a driver for United Parcel Service (UPS), and

petitioner Arlene Jackson (Ms. Jackson) was a self-employed

writer. On their Form 1040, U.S. Individual Income Tax Return,

for 2002, among other things no longer in dispute, petitioners

claimed on Schedule A, Itemized Deductions, the following:

Medical and dental expenses $4,673

Home mortgage interest and points 14,466

Gifts to charity by cash or check 3,600

Noncash gifts to charity 500

Unreimbursed employee expenses

 (small tools) 350

On Schedule C, Profit or Loss From Business, for Ms. Jackson’s

business as a writer, petitioners claimed a total of $30,878 in

business expenses. In addition to other items not now in

dispute, petitioners claimed a $706 mortgage interest deduction

on this Schedule C.

Prior to trial, respondent conceded petitioners’ entitlement

to various items that had been claimed on their return and

disallowed in the notice of deficiency, including $4,673 of

medical and dental expenses, subject to the 7.5-percent floor
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limitation, an $8,937 itemized deduction for home mortgage

interest, and a $50 charitable contribution deduction for a

contribution to United Way deducted from Mr. Jackson’s pay from

UPS. Thereupon, petitioners claimed additional medical expense

deductions allegedly not included in the amount reported on their

tax return. During a meeting with respondent’s counsel and at

trial, with respect to the disallowed charitable contributions

deductions, petitioners presented documents generated by

themselves and alleged receipts that were illegible, incomplete,

and some of which had been altered.

The mortgage interest remaining in dispute consists of

$5,800 in points withheld by the lender from a refinanced

mortgage loan obtained by petitioners during 2002. After

conceding that such points should be amortized over the life of

the loan, see sec. 461(g), Ms. Jackson contended at trial that

$6,779.58 of the loan proceeds was used for business purposes and

was therefore deductible on Schedule C.

Mr. Jackson did not appear at trial. In support of the

claimed $350 “small tools” deduction on Schedule A of their 2002

return, Ms. Jackson claimed that the deduction was really for

Mr. Jackson’s steel-toed safety shoes required by UPS. She

presented copies of receipts on which an unidentified person had

written “work shoes”. One of the receipts, however, reflected

hiking boots. Another receipt was for “corporate oxford”. A
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third receipt did not describe the item purchased. None of the

amounts shown equaled the $350 claimed on the return. The shoes

reflected in the receipts and testimony would be adaptable to

personal use.

OPINION

The details of the claims made on the 2002 return, the

claims belatedly made as the case proceeded, and the quality of

evidence produced by petitioners are set forth in our findings of

fact because this case depends on the credibility of petitioners

and their documentation. Because petitioners did not retain

required records and did not introduce credible evidence with

respect to the disputed deductions, the burden of proof remains

with them. See sec. 7491(a). For the reasons set forth below,

we conclude that petitioners’ evidence is not reliable and that

they are not entitled to any deductions beyond those conceded by

respondent.

With respect to the medical expenses in issue, besides

introducing incomplete and illegible documents, Ms. Jackson

presented vague and uncertain testimony as to the date certain

medical expenses were paid, the nature of the treatment, and the

family member who received treatment. She belatedly attempted to

reconstruct mileage expenses for travel to medical providers, but

the reconstruction is unreliable because there are no reliable

records supporting the trips alleged. We cannot conclude on this
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record that petitioners’ allowable medical expenses exceed those

conceded by respondent.

With respect to the charitable contributions, Ms. Jackson

did not present any independent corroboration of her claims,

notwithstanding prior advice by respondent’s counsel and by the

Court that she do so at the time of trial. The documents

presented at trial included alleged records of noncash

contributions, but respondent had already conceded the amount

claimed on the return for those contributions. Original records

were not produced for any contributions, and it was unclear who

had supplied information on certain of the alleged receipts,

including Mr. Jackson’s name on some and the payee on others. 

Certain “receipts” had been altered to increase the dollar

amounts shown. Even so, amounts shown on the documentation

presented totaled far less than the $3,600 claimed by petitioners

on their tax return. The evidence did not satisfy the

substantiation requirements of section 1.170A-13(a)(1), Income

Tax Regs., and does not give us a reliable basis for estimating

petitioners’ deductible contributions.

With respect to petitioners’ belated claim that a portion of

the mortgage loan proceeds should be deductible as business

expenses, petitioners have not shown that the amount that they

now claim was not previously included and allowed on the

Schedule C that they filed. Moreover, as respondent argues,
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petitioners must amortize points deducted from the proceeds of

the refinanced mortgage loan over the life of the loan,

determined as of 2002, even if the loan was business-related. 

See sec. 461(g)(1); Rubnitz v. Commissioner, 67 T.C. 621, 626-628

(1977); see also Schubel v. Commissioner, 77 T.C. 701 (1981).

In their posttrial memorandum, petitioners make various

additional assertions that they are entitled to a deduction for a

particular type of safety-related shoes used by Mr. Jackson in

his job. Assertions in a brief and attachments to a brief are

not evidence. Rule 143(b). In any event, their contentions are

contradicted by the documents that they produced to respondent

and at trial. Accordingly, petitioners have not satisfied the

requirements for an employee expense deduction. See Pevsner v.

Commissioner, 628 F.2d 467, 470 (5th Cir. 1980), revg. T.C. Memo.

1979-311.

Petitioners attempt to blame the problems with their tax

return on their tax return preparer. Their failure to maintain

and produce the required documentation to support their

deductions, however, is negligence that is not attributable to

the preparer. Rather, the deficiency resulting from disallowance

of the items in dispute is attributable to petitioners’

negligence or to petitioners’ disregard of rules or regulations

relating to those deductions. The penalty under section 6662

will be sustained.
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To reflect respondent’s concessions,

Decision will be entered

under Rule 155.