1 All section references are to the Internal Revenue Code

in effect during the year in issue, unless otherwise indicated. 

All Rule references are to the Tax Court Rules of Practice and

Procedure.

T.C. Memo. 1998-86

UNITED STATES TAX COURT

PEPI SCHAFLER, F.K.A PEPI SUMMER, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 24158-96. Filed February 26, 1998. 

Pepi Schafler, pro se.

Roger Bracken, for respondent.

MEMORANDUM OPINION

PANUTHOS, Chief Special Trial Judge: This case was heard

pursuant to the provisions of section 7443A(b)(3) and Rules 180,

181, and 182.1 Respondent determined a deficiency in
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2 Respondent concedes that: (1) Petitioner paid medical

expenses in the amount of $2,002, and (2) petitioner is entitled

to a miscellaneous itemized deduction for the cost of a safe

deposit box in the amount of $65. Respondent made concessions as

to other deductions. These concessions are set forth in the

discussions relating to the specific issues.

petitioner's 1992 Federal income tax in the amount of $4,158 and

an addition to tax under section 6651(a) in the amount of $1,039. 

After concessions by respondent,2 the issues remaining for

decision are: (1) Whether petitioner is entitled to deduct a

theft loss claimed on her return; (2) whether petitioner is

entitled to deduct legal fees claimed on her return in excess of

the amount allowed by respondent; (3) whether petitioner is

entitled to deduct medical expenses claimed on her return in

excess of the amount allowed by respondent; (4) whether

petitioner is entitled to deduct charitable contributions claimed

on her return in excess of the amount allowed by respondent; and

(5) whether petitioner is subject to the addition to tax under

section 6651(a) for failure to file a timely return.

Background

For convenience, we have combined the findings of fact and

discussion of pertinent legal issues. Some of the facts have

been stipulated, and they are so found. At the time that the

petition was filed, petitioner resided at North Bethesda,

Maryland.

Petitioner signed her 1992 Federal income tax return on

December 14, 1993, and respondent received it on December 17,
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1993. Petitioner's return contained numerous mathematical

errors. Petitioner reported adjusted gross income in the amount

of $32,508.46, while the proper amount should have been

$31,463.28. Petitioner claimed expenses on Schedule A in the

amount of $23,517, but did not claim these expenses on line 34 of

her return (Form 1040). Instead, petitioner claimed a standard

deduction in the amount of $3,000. Respondent corrected the

return to reflect the claimed Schedule A expenses on line 34 in

lieu of the standard deduction. Lastly, petitioner reported

taxable income in the amount of $27,208.46, but her return

reflects no income tax liability and requests a refund in the

amount of $68.54. After making corrections to petitioner's

return, respondent made a computational assessment in the amount

of $844. Sec. 6213(b).

Upon examination, respondent disallowed all of the expenses

claimed by petitioner on Schedule A of her return. The expenses

remaining in issue, after concessions by respondent, are as

follows:

Expense Amount Claimed on Return Amount Allowed Amount in Issue

Theft loss $8,660 -0- $8,660

Legal fees 13,793 $7,278 6,515

Medical expense 4,974 2,002 2,972 

Charitable 2,260 640 

12,296

 contribution 

1 Although petitioner claimed a deduction for charitable contributions

in the amount of $2,260 on her return, the record contains a list of

petitioner's purported contributions totaling $2,936.
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Discussion

We begin by noting that petitioner bears the burden of

proving that respondent's determination is erroneous. Rule

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

deductions are a matter of legislative grace, and petitioner

bears the burden of proving that she is entitled to any

deductions claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79,

84 (1992). 

1. Theft Loss

Petitioner traveled to Florida for several weeks from

December 1992 through January 1993. Included in her belongings

were several pieces of jewelry. In early January 1993,

petitioner noticed that some of her jewelry was missing. On

Schedule A of her 1992 return, petitioner claimed a theft loss in

the amount of $8,660, which respondent reduced by computational

adjustment to $5,414. Upon examination, respondent disallowed

the entire theft loss claimed by petitioner. Petitioner argues

that she is entitled to a deduction with respect to the theft

loss in the amount of $8,660. 

Individual taxpayers may deduct losses arising from fire,

storm, shipwreck, or other casualty, or from theft, if the loss

is sustained during the taxable year and not compensated by

insurance or otherwise. Sec. 165(a), (c)(3). Personal casualty

or theft losses are deductible to the extent that the losses, as
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3 We also note that even if petitioner was able to

establish that her jewelry was stolen, she would be entitled to a

deduction, if at all, for the taxable year 1993, the year in

which she discovered the theft, rather than for the year in

issue. McKinley v. Commissioner, 34 T.C. 59, 63 (1960). 

reduced by $100 per casualty, exceed 10 percent of adjusted gross

income. Sec. 165(h)(1) and (2). The term "other casualty"

refers to losses arising from sudden and unexpected events. 

White v. Commissioner, 48 T.C. 430, 435 (1967). A taxpayer is

not entitled to claim a theft loss pursuant to section 165 with

respect to lost or misplaced property. See Sussel v.

Commissioner, T.C. Memo. 1966-243 (disallowing theft loss where

evidence indicated bracelet might have been lost rather than

stolen). Where it is established that a theft loss has occurred,

the taxpayer must treat the loss as sustained in the year in

which the loss is discovered. Sec. 165(e). 

To meet her burden of proof on this issue, petitioner must

establish that a theft or other casualty occurred. Bellis v.

Commissioner, 540 F.2d 448, 449 (9th Cir. 1976), affg. 61 T.C.

354 (1973). At trial, petitioner testified that she was not sure

whether her jewelry was stolen, lost, or misplaced. On the basis

of the record before us, we conclude that petitioner has failed

to prove that any theft or other casualty occurred with respect

to her missing jewelry.3 For that reason, petitioner is not
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4 By order of the State of New York Supreme Court for the

County of Erie, dated Oct. 25, 1989, petitioner was entitled to

receive $500 per week for temporary maintenance during pendency

of the divorce action.

entitled to a deduction under section 165. Accordingly, we

sustain respondent on this issue.

2. Legal Expenses

Petitioner filed for divorce from her former husband, Donald

Summer, in September 1986. The divorce proceedings were

acrimonious, and petitioner and Mr. Summer disputed the property

of the marital estate. As a result, petitioner, Mr. Summer, and

their respective attorneys devoted a great deal of time and

effort in an attempt to reach a property settlement agreement,

which had not been finalized as of the taxable year in issue. 

Petitioner's 1992 return reflects alimony received in the

amount of $19,000.4 Schedule A of petitioner's 1992 return

reflects legal expenses paid in the amount of $13,793. The

parties have stipulated that petitioner is entitled to deduct as

legal expenses $7,278 paid to the law firm of McGee & Gelman in

connection with petitioner's lawsuit against Marine Midland Bank. 

At trial, petitioner argued that she is entitled to deduct

additional legal expenses paid to McGee & Gelman in the amount of

$2,122. Given the parties' stipulation and the lack of

additional evidence in the record, we conclude that petitioner is
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entitled to deduct as legal expenses payments made to McGee &

Gelman in the amount of $7,278.

The expenses remaining in issue in the amount of $6,515 were

paid to the law firm Birzon & Zakia with regard to petitioner's

divorce action against her former husband. Section 212 permits

deductions for all ordinary and necessary expenses paid or

incurred for the production of income, or for the management,

conservation, or maintenance of property held for the production

of income. Generally, attorney's fees and other costs paid in

connection with a divorce, separation, or decree for support are

personal expenses which are nondeductible by either spouse. Sec.

1.262-1(b)(7), Income Tax Regs. The regulations further provide,

however, that legal fees paid by a taxpayer are deductible

pursuant to section 212 insofar as they are attributable to the

production or collection of taxable alimony payments. Id.; see

also Hesse v. Commissioner, 60 T.C. 685, 693-694 (1973), affd.

without published opinion 511 F.2d 1393 (3d Cir. 1975). 

Petitioner argues that the legal expenses in issue were paid

in order to secure alimony owed to her by her former husband and

are, therefore, deductible. At trial, petitioner offered as

evidence the billing records of Birzon & Zakia. Petitioner

explained that, in accordance with the laws of the State of New

York, a party in a divorce proceeding must establish entitlement

to alimony by proving that he or she maintained a certain

lifestyle during the course of the marriage. Petitioner further
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explained that many of the billing records in question relate to

a 3-day trial which primarily concerned petitioner's entitlement

to alimony.

The billing records in question are not sufficient to allow

us to ascertain with precision those legal fees which are

attributable to petitioner's alimony income. Nevertheless, the

record reflects that petitioner paid legal fees in the amount of

$9,845 to Birzon & Zakia during the taxable year in issue. 

Moreover, petitioner's divorce was contentious, and the question

of alimony payments was at issue in the divorce proceedings. See

Summer v. Summer, 85 N.Y.2d 1014, 654 N.E.2d 1218 (1995)

(considering petitioner's award of maintenance in connection with

divorce proceedings). Furthermore, because petitioner's return

reflects taxable alimony received during 1992 in the amount of

$19,000, we are satisfied that a portion of petitioner's legal

fees is allocable to alimony. Relying upon the principles

enunciated in Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930),

we conclude that $3,000 of petitioner's legal fees is

attributable to the production or collection of taxable alimony;

therefore, petitioner is entitled to a deduction in that amount. 

See Feldman v. Commissioner, T.C. Memo. 1991-153. 

3. Medical Expenses

During the taxable year in issue, petitioner incurred

various expenses for medical treatment and health insurance. 

Respondent has conceded that petitioner paid expenses for medical
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care in the amount of $716 and for health insurance provided

through the Greater Buffalo Chamber of Commerce in the amount of

$1,286. Therefore, remaining in issue are medical expenses in

the amount of $2,972. 

Section 213 in relevant part provides:

SEC. 213(a). Allowance of Deduction.--There

shall be allowed as a deduction the expenses paid

during the taxable year, not compensated for by

insurance or otherwise, for medical care of the

taxpayer * * * to the extent that such expenses

exceed 7.5 percent of adjusted gross income.

The taxpayer must substantiate any deductions claimed under

section 213 by furnishing the name and address of each person to

whom payment for medical expenses was made and the amount and

date for each such payment. Moreover, the taxpayer must be

prepared to substantiate any claimed deductions by furnishing

statements or itemized invoices from the individual or entity to

which payment for medical expenses was made. These statements or

invoices should indicate the nature of the service rendered, and

to or for whom rendered. Blackburn v. Commissioner, T.C. Memo.

1982-529; sec. 1.213-1(h), Income Tax Regs. 

A portion of the medical expenses remaining in issue is

related to the cost of petitioner's transportation and lodging

with regard to medical treatment received in Boston. The record

reflects that petitioner received medical treatment at Beth

Israel Hospital in Boston on July 7, 1992. Petitioner traveled

from her home in Buffalo to Boston to receive treatment by
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specialists recommended to her. The record does not reflect the

amount paid by petitioner for this treatment, or the date on

which petitioner rendered the payment. On July 8, 1992,

petitioner was treated at Boston Orthopedic Group, Inc. (BOG), in

Brookline, Massachusetts. Included in the expenses allowed by

respondent is a check in the amount of $125 written to BOG. 

Respondent did not allow petitioner to deduct any expenses with

respect to her treatment at Beth Israel. 

The record reflects that petitioner incurred expenses for

transportation and lodging with respect to her stay in Boston

from July 4 to July 8, 1992. To prove that she is entitled to

deduct her transportation expense, petitioner must establish that

her travel was "primarily for and essential to" her medical care. 

Sec. 213(d)(1)(B). We find credible petitioner's testimony,

corroborated by documents in the record, that she traveled to

Boston for the purpose of receiving medical treatment. 

Therefore, petitioner is entitled to deduct the cost of her

transportation between Boston and Buffalo ($223).

We now turn to the expenses claimed with respect to lodging. 

To establish entitlement to expenses for lodging, a taxpayer must

prove that there is no significant element of personal pleasure,

recreation, or vacation in the travel. Sec. 213(d)(2)(B). In

addition, the taxpayer must prove that the travel was primarily

for and essential to medical care provided by a physician in a

licensed hospital (or a medical care facility which is related
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to, or the equivalent of, a licensed hospital). Sec.

213(d)(2)(A). 

Although we have concluded that petitioner traveled to

Boston with the primary motive of receiving medical care, the

record reflects that petitioner received medical treatment at a

licensed hospital on July 7, 1992, and orthopedic treatment on

July 8, 1992, while the expenses in issue concern lodging from

the night of July 4 through July 7, 1992. On the basis of the

record before us, we conclude that two of the four nights'

lodging were essential to petitioner's medical care. 

Accordingly, we will allow petitioner to deduct expenses for

lodging in the amount of $100, attributable to lodging for two

nights at a rate of $50 per night. See sec. 213(d)(2) (limiting

deduction for lodging to $50 per night). 

With respect to petitioner's claims for the expenses

relating to her treatment at Beth Israel Hospital in Boston,

petitioner has offered no evidence of the amount and date of any

payment for such services. Petitioner, therefore, has failed to

meet the substantiation requirements provided by section 1.213-

1(h), Income Tax Regs. Furthermore, we are unsure as to whether

the cost of this treatment was covered in whole or in part by

petitioner's health insurance. See Cooper v. Commissioner, T.C.

Memo. 1987-334. Therefore, we conclude that petitioner is not

entitled to any deduction for expenses related to her treatment

at Beth Israel Hospital.
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5 Although petitioner's list indicates a total of $2,926,

the sum of the items listed is $2,936.

Petitioner has failed to offer evidence concerning the 

medical treatment underlying the expenses remaining in issue. 

Petitioner, therefore, has failed to meet her burden of proof

with respect to the remaining expenses, and we sustain

respondent's determination to that extent.

4. Charitable Contributions 

On her return, petitioner claimed a deduction for charitable

contributions in the amount of $2,260. The return reflects cash

contributions in the amount of $890 and contributions other than

cash in the amount of $1,370. Petitioner submitted a list,

prepared before her examination by respondent's agent, of the

charitable contributions which she purportedly made during the

taxable year. The total amount reflected on this list, $2,936,

exceeds by $676 the amount claimed on her return.5 To

substantiate the deductions claimed, petitioner submitted

canceled checks, letters from charitable organizations, and notes

prepared before trial consisting of her estimation of the fair

market value of donated property; however, these materials relate

to only a portion of the deductions claimed. Respondent has

allowed petitioner to deduct cash contributions in the amount of

$145 and noncash contributions in the amount of $495. 

Petitioner's claimed contributions, as reflected by her list and

by other items in the record, are as follows:
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 Amount Amount

Allowed

Contributions by Cash or Check

University of Buffalo

 School of Architecture $150

Planned Parenthood 30

Temple Sinai 10

Jewish Review 20

Amherst Police Club 10

Buffalo Council on World Affairs 100

March of Dimes 100

Greater Buffalo Chamber of Commerce 225

Buffalo Museum of Science 26

Albright Knox Art Museum 35

NCCL1 25

 731 $145

Contributions of Property

Child & Family Services $50

Erie County Medical Center 125

Ronald McDonald House 100

Salvation Army 975

 1,250 495

Unspecified2

Temple Sinai dues $400

University of Buffalo 30

United Fund 25

Buffalo Philharmonic 60

Metropolitan Museum 35

United Jewish Fund 350

Operation Exodus 50

American Heart Association 5

Womens (sic) ORT 25 -0-

 980 

 Total 

1 2,961 640

1 Although the record contains a canceled check with

respect to this item, petitioner's list of charitable

contributions claimed on her return does not appear to reflect

it. After this item is added to petitioner's list, her total

deductions claimed for charitable contributions is $2,961.
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2 Petitioner offered no written substantiation or detailed

testimony with respect to these items. 

Section 170(a) allows as a deduction any charitable

contribution which is made within the taxable year. A charitable

contribution is a contribution or gift for the use of an

organization described in section 170(c). If the contribution is

made in property other than money, the amount of the contribution

is the fair market value of the property. Sec. 1.170A-1(c)(1),

Income Tax Regs.

A taxpayer making a charitable contribution is required to

keep a canceled check, a receipt from the donee organization, or

some other reliable written record showing the name of the donee,

the date of the contribution, and the amount of the contribution. 

Cavalaris v. Commissioner, T.C. Memo. 1996-308; sec. 1.170A13(a)(1), Income Tax Regs. The reliability of a written record

is to be determined on the basis of all the facts and

circumstances of a particular case. Sec. 1.170A-13(a)(2)(i),

Income Tax Regs. Factors indicating that a written record is

reliable include the contemporaneous nature of the writing and

the regularity of the taxpayer's recordkeeping procedure. Id.

With respect to the claimed charitable contributions listed

above as "unspecified", petitioner has offered no reliable

written records or testimony. Similarly, with respect to the

claimed contributions of property, petitioner has offered no

reliable written records or testimony to establish that she is
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entitled to a deduction in excess of the amount allowed by

respondent. We, therefore, sustain respondent's determination

insofar as it relates to those items.

With respect to petitioner's claimed charitable

contributions in cash or by check, it is not entirely clear from

the record which items serve as the basis of respondent's

allowance. Two items, purported donations to the University of

Buffalo School of Architecture and Planning and to the March of

Dimes, are not substantiated by a check or letter from the donee

which reflects the amount of the donation; therefore, petitioner

has failed to meet her burden of proof with respect to those

items. Rule 142(a). Moreover, petitioner has not proven that

the following payees indicated on checks and credit card receipts

reflected in the record were qualified donees for purposes of

section 170(c): Jewish Review, Amherst Police Club, Buffalo

Museum of Science, NCCL, and the Greater Buffalo Chamber of

Commerce. Petitioner, therefore, is not entitled to a deduction

with regard to those items. Although petitioner has met her

burden of proof with respect to the remaining items in dispute,

the total amounts reflected on those checks do not exceed the

amount allowed by respondent. Accordingly, we sustain

respondent's determination on this issue to that extent. 

 5. Addition to Tax Under Section 6651(a)

We now address respondent's determination that petitioner is

liable for the addition to tax under section 6651(a) for failure
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to file a timely return. Generally, individual income tax

returns must be filed on or before the 15th day of April

following the close of the calendar year. Sec. 6072(a). Section

6081, however, provides that the Secretary may grant a taxpayer

an extension to file for no greater than 6 months. Section

1.6081-4(a), Income Tax Regs., provides that taxpayers, upon

meeting certain requirements, shall be allowed an automatic 4-

month extension. A taxpayer may seek an additional 2-month

extension by submitting, to the internal revenue officer with

whom the return is required to be filed, a signed Form 2688 or a

letter setting forth the full reasons for the extension. Perry

v. Commissioner, T.C. Memo. 1990-228; sec. 1.6081-1(b)(1), (5),

Income Tax Regs.

 Section 6651(a)(1) provides for an addition to tax for

failure to file a timely return. A taxpayer may avoid the

addition to tax by establishing that the failure to file a timely

return was due to reasonable cause and not willful neglect. Rule

142(a); United States v. Boyle, 469 U.S. 241, 245-246 (1985). 

The addition to tax is equal to 5 percent of the amount required

to be shown as tax on the return, with an additional 5 percent

for each additional month or fraction thereof that the return is

filed late, not exceeding 25 percent in the aggregate. For

purposes of determining the number of months in which the return

is filed late, the date of filing is the date on which the return
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6 We note that petitioner's request for an automatic

extension does not indicate any amount estimated as tax owed for

the taxable year. We have previously ruled that requests for

(continued...)

is received by the Commissioner. Pryor v. Commissioner, T.C.

Memo. 1994-287. 

Petitioner argues that reasonable cause existed with respect

to her failure to file a timely return because many of the

documents she needed to file the return were held by the court in

connection with her divorce proceedings. Despite petitioner's

assertion, the record reflects that petitioner's divorce

proceedings did not end until 1995, long after petitioner filed

her return in December 1993. Furthermore, petitioner could have

retained copies of the documentation related to her 1992 return

before submitting originals to the court which handled her

divorce matter. We conclude that petitioner is liable for the

addition to tax under section 6651(a). 

We now turn to the calculation of the addition to tax. The

record contains petitioner's Form 4868, "Application for

Automatic Extension of Time To File U.S. Individual Income Tax

Return", dated April 12, 1993, in which petitioner requested an

extension to file until November 1, 1993. Pursuant to section

1.6081-4(a), Income Tax Regs., however, the automatic extension

is for a period of 4 months. The record does not contain a

request for an extension for an additional 3 months. Therefore,

petitioner's return was due on August 15, 1993.6 Since
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6(...continued)

extension are invalid where the taxpayer failed to properly

estimate the amount of tax owed for the taxable year. Crocker v.

Commissioner, 92 T.C. 899, 910 (1989). Since the validity of the

application for automatic extension does not affect the

calculation of the addition to tax in this case, we need not, and

do not, consider this issue.

petitioner's return is deemed to have been filed on December 17,

1993, the date it was received by respondent, the return was

filed late for a period of 4 months and a portion of a fifth

month. Accordingly, we sustain respondent's determination that

petitioner is liable for the maximum addition to tax under

section 6651(a).

To reflect the foregoing,

Decision will be entered 

under Rule 155.