1All 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.

 T.C. Summary Opinion 2009-9

UNITED STATES TAX COURT

PATRICIA A. AND JERRY FRAZIER, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 15737-05S. Filed January 12, 2009. 

 

Patricia A. and Jerry Frazier, pro se.

John P. Bampfield and Nancy W. Hale, for respondent.

WELLS, Judge: This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

at the time the petition was filed.1 Pursuant to section

7463(b), the decision to be entered is not reviewable by any 
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other court, and this opinion should not be treated as precedent

for any other case. 

Respondent determined a deficiency of $12,164 in

petitioners’ Federal income tax for 2002. The issues we must

decide are: (1) Whether petitioners are entitled to deductions

claimed on Schedule A, Itemized Deductions, in excess of $41,213;

(2) whether the petitioners are entitled to deductions claimed on

Schedule C, Profit or Loss From Business; and (3) whether a

Notice CP21A respondent sent to petitioners notifying them that

an error in their account had been corrected and that due to the

change they now owed $24.98 estops respondent from assessing any

additional tax for taxable year 2002. 

Background

At the time they filed their petition, petitioners resided

in Tennessee.

Some of the facts and certain exhibits have been stipulated. 

We incorporate the parties’ stipulations of fact in this Summary

Opinion, and the parties’ stipulations of fact are found

accordingly. 

Petitioners filed a Federal income tax return for taxable

year 2002. Respondent mailed to petitioners a statutory notice

of deficiency for the 2002 tax year on July 15, 2005.

Petitioner Jerry Frazier (Mr. Frazier) is an employee

working in maintenance, and petitioner Patricia A. Frazier (Ms.
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Frazier) is a customer service representative for Federal Express

Corp. Mr. Frazier also is in the lawn mowing business and filed

a Schedule C for that business.

Petitioners claimed Schedule A deductions of $66,986. Of

that amount, respondent disallowed the following expenses because

of lack of substantiation:

 Expense Amount

Medical and dental $7,700 

 (After 7.5-percent limitation) 5,931

Cash charitable contributions 9,115

Noncash charitable contributions 280

Other

 Unreimbursed employee business

 expenses

 Mr. Frazier 7,086

 Ms. Frazier 7,800

 Total 14,886

 Tax preparation fees 225 

 Uniforms 1,080

 Total other 16,191

(After 2-percent limitation) 14,609

The unreimbursed employee business expenses for Mr. Frazier

consist of mileage of $5,256 and business expenses of $1,830. 

The unreimbursed employee business expenses for Ms. Frazier

consist of mileage of $6,900 and business expenses of $900.

Petitioners did not offer any credible substantiation for

the Schedule A deductions respondent disallowed.

On petitioners’ Schedule C for the lawn mowing business,

petitioners claimed deductions for bad debts, utilities, taxes
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2Petitioners do not claim the benefit of sec. 7491. 

Moreover, sec. 7491(a) does not shift the burden of proof to

respondent because petitioners failed to maintain records or

comply with substantiation requirements as required by sec.

7491(a)(2)(A) and (B).

and licenses, supplies, rent, advertising, and car and truck

expenses.

On Schedule C for 2002, petitioners claimed the

following expenses for which respondent disallowed a deduction:

 Expense Amount

Bad debts from sales or services $390

Utilities 1,601

Taxes & licenses 80

Supplies 479

Rent/lease other business property 12,500

Rent/lease vehicles/machinery/equipment 3,375 

Advertising 910 

Car and truck expenses 7,500

Petitioners did not offer any credible substantiation for

the foregoing Schedule C expenses. 

Discussion

The deficiency determined by respondent in the notice of

deficiency is presumed correct, and petitioners have the burden

of proving the notice of deficiency is in error. See Rule

142(a)(1); Welch v. Helvering, 290 U.S. 111 (1993).2

I. Schedule A Deductions

A. Medical and Dental Expenses

Section 213 permits a deduction for medical and dental

expenses to the extent the expenses exceed 7.5 percent of
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adjusted gross income. Petitioners did not substantiate by

credible evidence the amounts claimed for medical and dental

expenses on their tax return.

B. Charitable Contributions

Section 170 permits a deduction for any charitable

contribution as defined in section 170(c) if the contribution is

verified as prescribed in the regulations under section 1.170A13, Income Tax Regs. For each charitable contribution of money,

taxpayers are required to keep a canceled check, a receipt 

from the donee, or some other reliable written record. Sec.

1.170A-13(a), Income Tax Regs. For nonmonetary contributions,

taxpayers are required to keep a receipt showing the name of the

donee, the date and location of the contribution, and a

description of the property contributed. Sec. 1.170A-13(a),

Income Tax Regs. Petitioners did not substantiate by credible

evidence the amounts claimed for charitable contributions on

their tax return.

C. Unreimbursed Employee Business Expenses

Section 162 permits a deduction for ordinary and necessary

business expenses. To the extent the expenses are related to a

vehicle or meals and entertainment, petitioners must meet the

substantiation requirements of section 274.

The expenses petitioners claimed are primarily related

to a claimed business use of their vehicles. Section 274(d)
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requires that expenses related to listed property, which

includes passenger automobiles used for transportation, be

substantiated by providing an adequate record of the following

elements of the expense: (1) The amount of the expense; (2) the

time of the expense; (3) the business or investment purpose; and

(4) the business or investment use. Sec. 1.274-5T(b)(6),

Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).

Under section 1.274-5T(c)(2), Temporary Income Tax Regs., 50

Fed. Reg. 46017 (Nov. 6, 1985), an adequate record requires that

the taxpayer maintain a logbook and documentary evidence such as

receipts, paid bills, or similar evidence that in combination are

sufficient to establish each element of the expense. Petitioners

have not substantiated the claimed unreimbursed employee business

expenses in accordance with sections 162 and 274.

D. Tax Preparation Fees

Section 212 permits a deduction for costs incurred in the

preparation of a tax return. Petitioners have not substantiated

that they paid for the preparation of their tax return.

E. Work Attire/Uniforms

Section 162 permits a deduction for work clothes or uniforms

required as a condition of employment when the clothing is not

suitable for general or personal wear and is not worn for general

or personal purposes. Yeomans v. Commissioner, 30 T.C. 757, 767-
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769 (1958). Petitioners have not established that the

requirements for deductibility have been met.

II. Schedule C Deductions

A. Bad Debts From Sales or Services

In the case of a noncorporate taxpayer, section 166 permits

a deduction for a business debt that becomes worthless during the

taxable year. Sec. 166(a), (d)(1)(A). To qualify for a

deduction under section 166, the taxpayer must establish that the

debt was included in the taxpayer’s income. Sec. 1.166-1(e),

Income Tax Regs. Additionally, the taxpayer must prove that the

debt is worthless. Sec. 166(a). Petitioners have failed to

establish that the amounts claimed as bad debts were reported as

income in taxable year 2002 or a prior taxable year. Moreover,

petitioners have not established that the amounts claimed as bad

debts were worthless.

B. Utilities/Taxes & Licenses/Supplies/Rent/Advertising

Section 162 allows a deduction for all ordinary and

necessary expenses paid or incurred during the taxable year in

carrying on a trade or business. To qualify as a deduction, the

expense must not be capital. Sec. 263(a). Section 6001 requires

taxpayers to maintain adequate books of account or records that

are sufficient to establish the amount of gross income,

deductions, or other matters required to be shown by such persons
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on their tax return. The taxpayer has the burden of proving that

the amounts claimed as deductions satisfy the requirements of

sections 162 and 212 or are otherwise allowable as a deduction. 

Rule 142; Welch v. Helvering, 290 U.S. 111 (1993). 

Petitioners offered into evidence a copy of an invoice from

National Pen Corp. for the purchase of pens. The invoice is

addressed to Jerry T. Frazier, Frazier & Frazier Lawn Service, is

dated April 18, 2002, and reflects a balance due of $121.16. 

Petitioners did not offer into evidence any credible proof of

payment or of the business purpose of the purchase.

Petitioners offered into evidence a copy of an invoice

stating that an order was placed for a storage building to be

built at their residence. The invoice is dated March 19, 2002,

and reflects that the total cost is $5,520. The invoice states

that the total cost is due upon completion of the work. 

Petitioners did not provide proof of payment and did not

establish the business purpose of the claimed storage building. 

Petitioners also provided a copy of an invoice for the

purchase of pens. Petitioners did not establish proof of

payment or the business purpose of the purchase.

C. Utilities

With respect to utilities, petitioners provided a summary

of their water bill for 2002 and a summary of their monthly

electricity charges for the City of Munford. Petitioners claim
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that the utility shed used the same amount of electricity and

water as their residence and that the claimed deduction for

utilities reflects the business portion of the utility expenses. 

Petitioners did not establish the business purpose of the shed,

when the shed was built, or the business portion of the

utilities.

D. Car and Truck Expenses

Under section 162, automobile expenses are deductible if the

automobile is used in connection with a trade or business or in

connection with an income-producing activity. Sec. 1.162-2(f),

Income Tax Regs. Additionally, section 274(d) requires that

expenses related to listed property, which includes passenger

automobiles used for transportation, must be substantiated by

providing an adequate record of the items set forth pursuant to

section 1.274-5T(b)(6), Temporary Income Tax Regs., supra. 

Section 1.274-5T(c)(2), Temporary Income Tax Regs., supra,

requires an adequate record, which means that the taxpayer must

maintain a logbook and documentary evidence such as receipts,

paid bills, or similar evidence that in combination establish

each element of the expense. Petitioners did not offer any

credible evidence substantiating their car and truck expenses.

In sum, petitioners have failed to prove that they are

entitled to any deductions beyond the amounts respondent allowed 

in the notice of deficiency. 
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III. Notice CP21A

The Court set the instant case to be called for trial on 

May 21, 2007, in Memphis, Tennessee. According to respondent, 

on Monday, May 14, 2007, petitioners signed a decision document

prepared by respondent conceding a $12,164 income tax liability,

the amount of the determined deficiency for tax year 2002, and

respondent signed the decision on May 17, 2007.

At the calendar call respondent’s counsel stated that

because of the proximity to the date of the trial respondent

brought the decision to the calendar call for filing. However,

during the calendar call respondent discovered a typographical

error in the decision document, which incorrectly showed the tax

year as 2003 rather than 2002. During the calendar call

petitioners appeared and stated that they did not wish to be

bound by the decision they signed because they claimed respondent

had conceded all issues in the Tax Court proceeding by sending

Notice CP21A, which they received on the preceding Friday or

Saturday. 

Apparently, this was the first time petitioners raised the

concession issue with respondent. Notice CP21A informed

petitioners that respondent “changed * * * [their] account” for

tax year 2002 by crediting petitioners $12,164 plus interest,

which was the amount of the deficiency in issue. Notice CP21A

was admitted into evidence. The transcript of petitioners’
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account shows an “Additional Tax Assessed by Examination” on

petitioners’ 2002 tax year account of $12,164, made on November

21, 2005, which is after the date petitioners filed their

petition with this Court for the same year. That assessment was

based on the deficiency respondent determined in the July 15,

2005, notice of deficiency for the taxable year 2002. The

assessment was made during a time in which it was prohibited

under section 6213(a). On May 21, 2007, petitioners were

credited $12,164 described as “Prior Tax Abated”. The purpose of

that action was to reverse the unlawful assessment made on

November 21, 2005.

The record establishes that an improper assessment of

$12,164 was made on the petitioner’s 2002 tax year account

after they filed their petition with this Court seeking a

redetermination of a deficiency for tax year 2002 in the same

amount. Within a few days of petitioners’ receipt of Notice

CP21A, an abatement of prior tax of $12,164 was credited against

petitioners’ account for taxable year 2002 in order to remedy

respondent’s erroneous premature assessment of the same amount.

Accordingly, we hold that Notice CP21A does not prevent

respondent from assessing the tax in issue. Consequently, we 

uphold respondent’s determination in the notice of deficiency.
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To reflect the foregoing,

Decision will be entered for

respondent.