T.C. M em o . 2 0 2 1 -2 7

UNITED STATES TAX COURT

LUKE J OSEPH CHIARELLI, Pet i t i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo s . 4 5 2 -1 6 , 2 1 1 5 -1 8
. Fi l edM arch 3 , 2 0 21
.

Lu k e J o s ep h Ch i arel l i , p ro s e. Geo rg e W . Bezo l dan dLau ri e B. Do wn s , fo r res po n den t.

M EM ORANDUM FINDINGS OF FACT AND OPINION NEGA, Jud g e: Res p o n d en td et erm in edd efi ci en ci es i n th e Fed eral i n co m e t ax o f p et i t i o n er, Lu ke J
. Ch i arel l i , fo r t ax y ears 2 01 2 , 2 0 1 3, an d2 01 5 (y ears at i s su e) an dd et erm i n edaccu racy -rel at edp en al t i es u n d er s ect i o n 6 66 2 (a) fo r

Served 03/03/21-2
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[* 2 ] n eg li g en ce, d i s reg ardo f ru l es o r reg u l at i o ns , an d/ o r a s ub s t an t ial u n d ers t at em en to f i n co m e t ax as fo l l o ws : 1

Year D efi ci en cy Pen al ty s ec. 6 6 6 2 (a) 2 01 2 $ 23 ,6 6 2 $ 4 , 6 20 2 01 3 1 5 ,7 7 1 3 , 1 54 2 01 5 1 7 ,5 8 4 -0
- OnJ an u ary

6 , 2 0 1 6 , p et i t i o n er t i m el y fi l eda p et i t i o n d i s p u t i n g t h e n o t i ce o f d efi ci en cy

d at edOct o b er 9 , 2 0 1 5 , fo r t ax y ears 2 0 1 2 an d 2 0 1 3 . OnJ an u ary 3 0 , 2 0 1 8 , p et i t i o n er t i m el y

fi l eda s ep arat e p et i t i o n d i s p u t i n g th e n o t i ce o f d efi ci en cy d at edDecem

b er 2 9 , 2 01 7 , fo r t ax y ear 2 0 1 5 . Th es e cas es were co n s o l i d at edfo r tri al , b ri efi ng , an d o p i n i on . Aft er co n ces s i o n s , 2 th e i s s ues rem ai n i n g fo r d eci s i o n are wh et h er: (1 ) p et i t i o ner i s en t i t ledt o n o n cas h ch ari t ab l e co n tri b ut i o n d edu c1 Un l es s o th erwi s e i nd i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev enu e Co de (Co d e) i n effect fo r t h e rel ev an ty ears . Al l Ru l e referen ces are t o th e Tax Co u rt Ru l es o f Pract ice an dPro cedu re. Al l m on et ary am ou n t s are ro u n dedt o th e n eares td o ll ar. Al l p ercen t ag es are ro u n d edt o th e n eares t wh o l e n u m b er. 2 Res p o n d en tco n ced edthe accu racy -rel at edp en al ty u n d er s ec. 6 6 6 2 (a) fo r 2 0 1 5 b y s t i p u lat io n . Pet i t i o n er co n ced eda ch ari t ab le co nt ri bu t i o n d educt i o n cl ai m edi n co n nect i o n wi th h i s p u rp o rt edch ari t ab l e co n tri b u t i o n o f a Bu i ck LeSab re fo r t ax y ear 2 01 3
.-3
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[* 3 ] t i on s cl ai m edfo r t h e y ears ati s s u e an d(2 ) p et i t i o n er i s l i ab l e fo r t h e s ect i o n 6 6 6 2 (a) accu racy -rel at edp en al t i es fo r t ax y ears 2 0 12 an d2 0 13
. FINDINGS OF FACT So m e o f t h e fact s are s t i p u l at edan dare s o fo u nd . Th e s t i p u l at io n o f fact s
an d th e at t ach edex h i b i t s are i n co rp o rat edh erei n b y th is referen ce. Atth e t i m e t h e p et i t i o n s were fi l ed , p et i t i o n er res i d edi n W i s co n s in
. Pet i t i o ner i s an at t o rn ey ad m i tt edt o p ract i ce i n th e St at e o f W is co n si n an d b efo re t h i s Co u rt . Aft er p et i t i o n er’ s m o th er recei veds ev eral i n h eri t an ces fro m rel at i v es , p et it i o n er’ s m o ther d i edo n Au gu s t 1 6 , 2 0 1 2
. Pet i t i o n er i n h eri tedfro m h i s m o th er s ev eral i t em s o f p ers o n al p ro p erty i n cl u di ng cl o thi n g, fu rn itu re, an d
an t i qu es (i n h eri t edp ro p ert y ). Sh o rt l y thereaft er p et it i on er h i redTarqu i n i o F. Du ran t e o f Ced arb u rg Au ct i o n an dEs t at e Sal es , LLC, t o i t em i ze an d p rep are ap p rai s al s o f th e i nh eri t edp ro p ert y fo r al l th e y ears ati s s u e. M r. Du ran t e ad v i s ed p et i t i o n er t o d o n at e a l arg e p o rt i o n o f t h e i nh eri t edp ro p ert y t o ch ari ty . Pet i t i o ner p rep aredan dt i m el y fi l edFo rm

1 0 4 0 , U.S. In d i v i du al In co m e Tax Retu rn , fo r each o f t h e y ears ati s s u e. OnSch edu l es A, It em i zed Dedu ct i o ns , p et i t i o n er cl ai m edn o n cas h ch ari t ab l e co n tri b u ti o n d edu ct i o n s o f $ 8 9,1 1 0 , $ 9 3 ,0 8 7 , an d$ 7 7,3 0 0 fo r t ax y ears 2 0 1 2, 2 0 13 , an d2 0 1 5, res p ect iv el y . Pet i t i o ner at t ach edFo rm

8 2 8 3 , No n cas h Ch ari t ab l e Co nt ri bu t i o n s , t o h is retu rn fo r each o f-4
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[* 4 ] th e y ears at i s s u e. Fo r each o f t h e y ears ati s s u e Sect io n A o f Fo rm 8 2 8 3 d i rect ed p et i t i o n er t o l i s teach i t em o r g ro up o f s i m i l ar i t em s o f d o n at edp ro p ert y wi th a v al u e o f $ 5 ,0 0 0 o r l es s an dp ro v i d e t h e n am e an dad dres s o f t h e d o n ee
o rg an i zat i o n , a d es cri p t i o n o f t h e d o n at edp ro p ert y , an dth e fai r m ark etv al u e o f th e d o nat edp ro pert y . Un l es s an i t em h ada v al u e o f $ 5 00 o r l es s , Sect i o n A al s o req u i redp et it i on er t o p ro v i d e t h e d at e o f t h e d o nat i on , th e d at e h e acq u i redth e d o n at ed p ro pert y , th e m an n er o f i t s acq u i s i t i o n , h i s co s to r ad ju st edb as i s t h erei n , an d th e m et h o d h e u s edt o d et erm i n e t h e fai r m ark etv al ue. Pet i t i o n er l eftSect i o n A b l an kfo r each o f t h e y ears ati s s u e. Fo r each o f t he y ears ati s s u e Sect i o n B, PartI o f Fo rm 8 2 8 3 d i rect ed p et i t i o n er t o p ro v i d e d et ai l edi nfo rm at i on ab o u t each i t em (o r g ro up o f s i m i l ar i t em s ) o f d o n at ed p ro p ert y v al u edi n ex ces s o f $ 5 ,0 0 0 , i n cl u d in g a d es cri p t i o n o f th e i t em , a b ri ef s u m

m ary o f i ts p h y s i cal co n di ti o n atth e t i m e o f t h e d o n at i o n , i t s ap p rai s edfai r m ark etv al u e, t h e d at e i t was acq ui red , the m an n er o f i ts acq u i s i t i o n,
an d h i s co s to r ad

ju s t edb as is th erei n . OnSect i o n B, PartI fo r t ax y ear 2 0 1 2 p et i t i o n er d es cri b edal l o f t he d o n at ed p ro p erty as “ m i s cel lan eo u s h o u s eh o l di t em s ” i n “ ex cel l en t ” co n di t i o n wi th an ag g reg at e ap p rai s edfai r m ark etv al ue o f $ 8 9 ,1 1 0 . Pet it i on er d i d n ots p eci fy th e d at es thath e acq u i redth e d on at edp ro p ert y an d wro t e t hatth e m an n er o f acq u i s i--5
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[* 5 ] t i on was b y p u rch as e. Pet i t i o n er cl ai m edan ag g reg at e b as is i n the d o n at ed p ro p erty o f $ 2 51 ,8 00 b u tp ro v i d edn o i n fo rm at i o n as t o h o w h e d et erm i n edth i s fi gu re. OnSect i o n B, PartI fo r 2 0 1 3 , p et it i on er d es cri b ed the d o nat edp ro p ert y as

“ cl o th i n g an d h o u s eh o ldfu rn i tu re” i n “ ex cel l en t ” co n d i t i o n wi th an ag g reg at e ap p rai s edfai r m ark etv al u e o f $ 9 3 ,0 8 7 . Pet i t i o ner l i s tedth e m an n er o f acq u i s i t i o n
as i n h eri t an ce b u tal s o wro t e t hatth e d o n at edp ro p ert y was acq ui redo n “ v ari o u s ” d at es . Pet i t i on er cl ai m edan ag g reg at e b as i s i n t h e d o nat edp ro p ert y o f $ 25 5 ,3 0 0 b u tp ro v i d edn o i n fo rm at i o n as t o h o w h e d et erm i n ed thi s fi gu re. OnSect i o n B, PartI fo r 2 0 1 5 , p et it i on er d es cri b ed the d o nat edp ro p ert y as

“ v ari o us h o u seh o ldi t em s an dcl o th i n g ” i n “ ex cel l en t ” co n d i ti o n wi th an ag g reg at e ap p rai s edfai r m ark etv al u e o f $ 7 7 ,3 0 0 . Pet i t i o ner d i dn o ts p eci fy th e d at es h e acq u iredth e d o n at edp ro p ert y an dwro te t h atth e m an n er o f acq ui s i t i o n was b y p u rch as e. Pet i t i o n er cl ai m eda b as i s i n the d o n at edp ro p ert y o f $ 1 50 ,0 0 0 b u t p ro v id edn o i n fo rm at i o n as t o h o w h e d et erm i n edth i s fi g u re. Fo r each o f t he y ears ati s s u e Sect i o n B, PartII o f Fo rm 8 2 8 3 d i rect ed p et i t i o n er t o l i s teach i tem i n cl ud edo n Sect i o n B, Part I wi th a v al ue o f $ 5 0 0 o r l es s an dt o p ro vi d e h i s s ig n atu re an dd at e t h ereo f. Sect io n B, PartIII o f Fo rm 8 2 8 3 req u i red th e ap p rai s er, M r. Du ran t e, t o p ro v i de h i s s i g n atu re, t i t l e, an dd at e-6
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[* 6 ] o f s i g natu re v eri fy i n g h i s ap p rai s al an dh i s qu al i fi cat i o n s as an ap p rai s er. Sect i o n B, PartIV o f Fo rm 8 2 83 req u i redth e d on ee o rg an i zat io n t o l i s t i t s n am e
an d em p l o y er i d en t i fi cat i o n n u m b er an dt o cau s e an au th o ri zedi n di v idu al t o p ro v id e h i s o r h er s ig n atu re, t i t l e, an dd at e o f s ig n atu re ack n owl ed g i n g b o th i t s
s t atu s as a qual i fi edo rg an i zat i o n an d i t s recei p to f t h e d o n at edp ro p erty o n th e d at e s p eci fi ed . Pet i t i o n er s ub m i t tedSect io n B, Part s II, III, an dIV u n si g n edan d i n co m pl et e fo r each o f t h e y ears ati s s u e. In Feb ru ary

2 0 1 5 , i n res p o n s e t o th e ex am in at i o n o f h i s 2 0 1 2 t ax return , p et i t i o n er s ub m it t edt o res p on d en tad d i ti o n al d o cu m en t at io n t o s ub s t an ti at e h i s 2 0 1 2 n o n cas h ch ari tab l e co n tri b u t i o n s . Pet i t i o ner’ s s ub m i s s i o n s i ncl u d eda l et t er p rep aredb y

M r. Du ran t e, d at edOct o b er 8 , 2 0 1 2 , wh ich s t at edth atp et i t i o ner’ s 2 0 1 2 n o n cas h ch ari tab l e co n tri b u t i o n s were d el i v eredt o “ Go o dwi l l In du s tri es / Sal v at i o n Arm

y ” an dth atan ap p rai s al p rep aredb y M r. Du ran te (2 0 1 2 ap p rai s al ) was at t ach ed . Th e 2 0 1 2 ap p rai s al i n di cat edth atth e d o n at edp ro p ert y
was i n h eri t edan dth ati twas d el i v eredt o Go o dwi l l an d t h e Sal v at i o n Arm y o n

“ v ari o us ” u n s p eci fi edd at es . Th e 2 0 1 2 ap prai s al g ro up edi t em s i nt o g en eri c cat eg o ri es , s u ch as $ 5 4 ,0 0 0 wo rt h o f “ l arg e b ag s o f cl o th es ”, an dd i dn o tp ro v i d e i d en t i fy i n g i nfo rm at i o n ab o u t in d i v i dual i t em s . Pet i t i o n er d i dn o ts ub m ita recei p t fro m Go o dwi l l o r t h e Sal v at i o n Arm y t o s ub s t an t i at e h is 2 0 1 2 n o n cas h ch ari t ab le-7
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[* 7 ] co n tri b ut i o n s. Pet i t i on er’ s l o n e recei ptfo r 2 0 1 2, d at edJ u l y 2 6, was fro m

an
o rg an i zat i o n cal l edDryh o o t ch , b u tth atrecei p td i dn o ti d en t ify i n d i v i du al i t em s o f d o n at ed p ro pert y . 3 Th e l et t er d at edOct o b er 8 , 2 0 1 2, d i dn o tm en t i o n Dryh o o t ch
as an o rg an i zat i o n t o wh i ch p et i t i o n er m ad e n on cas h ch ari t ab l e co n tri b u t io n s i n 2 0 1 2
. In Feb ru ary

2 0 1 5 , i n res p o n s e t o th e ex am in at i o n o f h i s 2 0 1 3 t ax return , p et i t i o n er s ub m it t edt o res p on d en tan o ther l et t er p rep aredb y M r. Du ran t e d at ed Decem b er 6 , 2 0 1 3, wh i ch s t at edth atp et i t io n er’ s n o n cas h ch ari t ab le co nt ri bu t i o ns fo r 2 0 1 3 were d el i v eredt o “ Go o dwi l l In dus tri es / Sal v at i o n Arm y ” an d t h atan ap p rai s al p rep ared by

M r. Du ran t e (2 0 1 3 ap p rai s al ) was at t ach ed . Pet i t i o ner d i d
n o ts ub m i ta recei p t fro m th e Sal v at i o n Arm y t o s ub st an t i at e h i s 2 01 3 co n tri b u t i on s . Pet i t i o n er’ s l o n e recei p t fo r 2 0 1 3 , d at edNo v em ber 2 3 ,was fro m

Go o dwi l l
. Th atrecei p td id n o ti d en t ify i n d i v i du al i t em s o f d o n at edp ro p ert y . Ho wev er, t h ere
was a n o t at i o n o n th e recei p t i n d i cat i n g th at d on at edi t em s were l i s t edo n the at t ach ed2 0 1 3 ap p rai s al . Th e 2 0 1 3 ap p rai s al g ro up ed d o n at edi tem s i n t o g en eri c cat eg o ri es an d d i dn o tp ro v i d e i d en t i fy i n g i n fo rm at io n ab o u ti n d i v i du al i tem s .

3 Th e recei p t fro m Dryh o o t ch s t at ed thatth e o rg an izat i o n d o es “ n o tp ro v i d e an y g o o d s o r s erv i ces i n co n si d erat i on fo r an y p ro p ert y co n tri b u t ed .” Th e recei p t d i dn o t co n t ai n i n fo rm at i o n cl earl y i d en t i fy in g Dryh o o t ch as a qu al ifi eds ec. 5 0 1 (c)(3 ) o rg an i zat i o n .-8
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[* 8 ] By l et t er d at ed Ap ri l 3 , 2 0 1 5 , p et i t i o n er s upp l i edres p o n den t ’ s ex am i n i n g ag en t wi th ad d i t io n al d o cu m en t at i o n t o s ub s t an t i at e h i s 2 0 1 2 an d2 0 1 3 n o n cas h ch ari t ab le co n tri b u t i on s . Pet it io n er at t ach edt o th atl et ter m o d i fi edv ers i o n s o f t h e l et t ers d at edOct o b er 8 , 2 01 2 , an dDecem b er 6 , 2 0 1 3 , wh i ch n o w i n cl u d edp et i
t i on er’ s an dM r. Du ran t e’ s i d en t i fy i n g t ax p ay er n u m bers . Pet i t i o n er al s o at t ach ed
m o di fi edv ers i o n s o f t he 2 0 1 2 an d2 0 13 ap p rai s al s , b ot h o f wh ich n o w i d en t i fi ed
s o m e i n di v i du al i t em s o f cl o th in g b uts t il l fai l edt o i n cl u d e s p eci fi c i nfo rm at i o n ab o utth e v al ue o r co n d i t i on o f i n d i v i du al i t em s . In J an uary2 0 1 7 , ap p ro x i m at el y o n e y ear aft er t h e p et i t i o n fo r 2 0 1 2 an d 2 0 1 3 was fi l ed , p et it i o n er s ub m i t t edad d i t i o n al d o cu m en t at i on t o res p on d en t ’ s Offi ce o f Ap p eal s t o s ub s t an ti at e h i s n on cas h ch ari t ab l e co n tri b u t io n s fo r 2 0 1 2
an d 2 0 1 3 . Th es e d o cu m en t s i n cl u dedup d at edFo rm s 8 2 8 3 fo r 2 0 12 an d 2 0 1 3 d at edFeb ru ary

1 0 , 2 0 1 5 . Onth es e fo rm s p et i t i o ner n ow i n cl u d edh i s s i g n atu re d at edFeb ru ary

1 0 , 2 0 1 5 , o n Sect i o n B, PartII. M r. Du ran t e al s o p ro v i dedh i s
s i gn atu re d at edFeb ru ary

1 0 , 2 0 1 5 , o n Sect i o n B, PartIII. Sect io n A an d Sect i o n B, Part IV rem ai n edi n co m p l et e an du n s i g n ed
. Pet i t i o ner s ub s equ en tl y

s ub m i t t edt o res po n d en t ’ s Offi ce o f Ap p eal s a l et t er fro m M r. Du ran t e d at edJ u ne 1 7 , 2 0 1 7 , d es cri bi n g M r. Du ran t e’ s m o re t h an 3 0 y ears ’ ex p eri en ce i n t h e ap p rai s al i n du s try an dth e v al u at i on m et h o d o l o g y u s edfo r-9
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[* 9 ] p et i t i o n er’ s d o nat edp ro p ert y . W i th res p ectt o h is v al u at i o n m et ho d o l o g y , M r. Du ran t e b ro ad l y

s t at edthath e res earch edth e o ri gi n al co sto f t h e i n h eri t ed p ro p erty , d et erm i n edi ts co n d i ti o n , an dth en s et a fai r m ark etv al u e fo r each i t em . Aft er p et i ti on er fi l edh i s p et i t io n fo r 2 0 15 , th e In t ern al Rev en u e Serv i ce Offi ce o f Ap p eal s req u es t edb y l et t er d at edAp ri l 2 5 , 2 0 1 8 , th atp et i ti o n er s ub m it ad d it i o n al d o cu m en t at i o n t o s ub s t an t i at e h i s 2 0 1 5 n o n cas h ch ari t ab l e co n tri b u t i on s . Inres p on se, b y

l et ter d at edM ay

1 4 , 2 0 1 8 , p et i t i o n er s ub m i t t eds ev eral d o cu m en t s i n cl u d i ng a l et t er p rep aredb y M r. Du ran te d at edDecem b er 3 , 2 0 1 5 , wh i ch s t at edth atal l d on at i o ns i n 2 0 1 5 were m ad e t o Go o dwi l l . Pet i t i o n er al s o
s ub m i t t eda recei p tfro m

Go o dwi l l , d at edDecem

b er 3 , 2 0 15 , an dan ap p rai s al (2 0 1 5 ap p rai s al ). Th e 2 0 15 ap p rai s al g ro up edp u rp ort edd o nat i o n i t em s i n t o g en eri c cat eg o ri es an d d i dn o tp ro v i d e i d en t i fy i n g i n fo rm at io n ab o u tth e i n d i v i du al i t em s d o n at ed , s u ch as th e ag e o r co n d it i on . Pet i ti o n er al s o s ub m i t t eda m o d i fi ed Fo rm 8 2 8 3 fo r 2 0 1 5, wi th h i s s i g n ature d at edDecem b er 3 , 2 0 1 5 , o n Sect i o n B, Part II. Onth at s am e fo rm M r. Du ran t e al s o p ro v id edh i s s i gn atu re d at ed Decem
b er 3 , 2 0 15 , o n Sect i o n B, PartIII. On th ats am e fo rm M r. Du ran t e al s o p ro v i d ed h i s s i g n atu re d at edDecem b er 3 , 2 0 15 , o n Sect io n B, Part III. On th ats am e fo rm , Sect i o n A an dSect io n B, PartIV rem ai n ed i n co m p l et e an du n si gn ed
.-1 0
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[* 1 0 ] OPINION I. Bu rd en o f Pro o f Th e Co m m is s i o n er’ s d et erm i n at i o n s i n a n o t i ce o f d efi ci en cy are g en eral l y p res u m edco rrect , an dth e t ax p ay er b ears th e b urd en o f p ro v i n g t h o se d et erm i n at i on s erro n eo u s . Ru l e 1 4 2 (a); W el ch v . Hel v eri n g , 2 9 0 U.S. 1 1 1 , 1 1 5 (1 9 3 3 ). Deduct io n s are a m at t er o f l eg i s l at i v e g race; th e t ax p ay er m u std em o n s trat e h i s o r h er en t i t l em en tt o d educt i o n s al l o wedb y th e Co d e an d s ub s t an t i at e t h e am o u n t s
u n d erl y i n g cl ai m ed d educt i o n s. See INDOPCO, In c. v . Co m m i s s i o ner, 5 0 3 U.S. 7 9 , 8 4 (1 9 9 2 ); s ec. 1 .6 0 0 1 -1 (a), In co m e Tax Reg s . Incert ai n ci rcu m s t an ces th e b u rd eno f p ro of o n fact ual i s s u es m ay s h i ftt o th e Co m

m i s s i o ner. See s ec. 7 4 9 1 (a). Pet it io n er d o es n o tco n t en d t h ath e h as s at is fi ed th e req u i rem en t s o f
s ect i on 7 4 9 1 fo r s hi ft i n g th e b u rd en o f p ro o f. See Ru l e 1 4 2 (a). Acco rd i n g l y , th e b u rd eno f p ro of rem ai ns o n h i m o n al l fact ual i s s u es . II. An al y s i s Sect io n 1 7 0 al l o w s as a d edu ct i o n an y co n tri b u t i o n m ad e wi th i n th e t ax ab l e y ear t o a ch ari t ab l e o rg an i zat i o n . Sec. 1 7 0 (a)(1 ), (c). Th e t ax p ay er m us ts at i s fy cert ai n s tatu t o ry

an d reg u l at ory

s ubs t an ti at i o n req u i rem en t s i n o rd er t o d edu ct ch ari t ab le co n tri b u t i on s . See i d .; s ec. 1 .1 7 0 A-1 3 , In co m e Tax Reg s . Th e n atu re o f-1 1
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[* 1 1 ] th e req u i reds ubs t an t i at i o n d ep en d s o n th e d o ll ar am ou n to f t he co n tri b u t i o n
an d o n wh et h er t h e co n tri bu t i o n co ns i s t s o f cas h o r p ro p ert y . Pet i t i o ner co n ten d s th ath e m ad e n o ncas h ch ari t ab l e co n tri b ut i o ns wi th ag g reg at e v al u es o f $ 8 9 ,1 10 , $ 9 3 ,0 8 7 , an d$ 7 7 ,3 00 du ri n g 2 0 1 2 , 2 0 1 3 , an d2 0 1 5,
res p ect i vel y . Pet i t i on er co nt en d s th ath e s tri ct l y co m p l i edo r atl eas t s ub st an t i al l y
co m p l iedwi th t h e ap p li cab l e s ub s t an t i at i o n req u i rem en t s . Res p o nd en t co n t en d s th atp et i t i o n er d idn o tp ro p erl y s ub s t an t i at e h i s n o n cas h ch ari t ab l e co n tri b u t i o n s . A. Co n tri bu t i o n s Gen eral l y Un d er s ect i o n 1
. 1 7 0 A-1 3 (b )(1 ), In co m e Tax Reg s ., a t ax p ay er m u s t m ai n t ai n fo r each n o ncas h ch ari t ab l e co n tri b u t i o n wi th a fai r m ark etv al ue o f $ 5 ,0 0 0 o r l es s a recei p tfro m

th e d o nee o rg an i zat i o n u n l es s d o i ng s o i s i m pract ical . Th e d o n ee recei p tm

u sts h o w: (1 ) t h e n am e o f t h e d o n ee o rg an i zat i on , (2 ) t he d at e an d l o cat io n o f t h e co n tri b u ti o n , an d(3 ) a d es cri p ti o n o f th e p ro p ert y i n d et ai l reas o n ab l y s u ffi ci en tu n d er t he ci rcu m s t an ces . Id . A t ax p ay er wh o l ack s a d o n ee recei p t i s req u i redt o k eep rel i ab l e wri t t en reco rd s i n cl u di n g , am o n g o th er t h i n g s : (1 ) t h e
n am e an dad dres s o f t h e d o n e o rg an i zat i on t o wh i ch th e co n tri b u t i o n was m ad e, (2 ) t h e d at e an d l o cat i o n o f t he co n tri b ut i o n , (3 ) a d es cri p t i o n o f t he p ro p ert y i n d et ai l reas o n ab l e u nd er t h e ci rcu m s t an ces (i n cl u d i n g th e v al u e o f th e p ro pert y ),
an d (4 ) th e fai r m ark etv al u e o f th e p ro p ert y atth e t i m e t h e co n tri b u t i o n was m ad e,-1 2
-

[* 1 2 ] th e m et h odu sed t o d et erm i n e t h e fai r m ark etv al u e, an d i f t h e fai r m ark et
v al u e was d et erm in edb y ap p rai s al , a co p y

o f t h e s i g n edrep o rto f t h e ap p rai s er. Van Du sen v . Co m

m i s s i o n er, 1 3 6 T.C. 5 1 5 , 5 3 2 (2 0 1 1 ); s ec. 1 .1 7 0 A -1 3 (b )(2 )(i i ), In co m e Tax Reg s . Fu rt h er, n o d edu ct i o n i s al l o w edfo r “ an y co n tri b ut io n o f cl o th i n g o r a h ou s eh o l d i t em ” u n l es s s u ch p ro p ert y i s “ in g o odu s edco n di t i o n o r b et t er.” Sec. 1 7 0 (f)(1 6 )(A). Th e recei pt s p et i t i o ner s ub m i t t edt o s ubs t an ti at e h i s n o n cas h ch ari t ab l e
co n tri b u t i o n s fo r t h e y ears at i s s u e o ffered n o d et ai l wi th res p ectt o i t em s d o n at ed
an d th us l ack ed a d es cri p ti o n o f t h e p ro p ert y i n d et ai l reas o nab l e u n d er t h e ci rcu m s t an ces . See s ec. 1 .1 7 0 A-1 3(b )(2 )(i i ), In co m e Tax Reg s . Pet i t i o n er al l eg ed th ath e m ad e d o n at io n s t o the Sal v at i o n Arm y du ri n g 2 0 1 2 an d2 0 1 3 , b u th e fai l ed t o p ro v i d e res p o nd en t wi th an y recei p t s fro m

th e Sal v at i on Arm

y . Pet i t i o ner’ s d o cu m en t ary

s ubm i s si o ns i m

pl i edth atm

u l ti p l e d el i v eri es t o Go o dwi l l o ccu rred du ri n g each o f th e y ears ati s s u e, b u th e d i dn o ts ub m i ta recei p tfro m Go o dwi l l fo r t ax y ear 2 0 1 2 an ds ubm it t edo n l y o n e recei p tfro m

Go o dwi l l fo r each o f t ax y ears 2 0 1 3 an d2 0 1 5 . Becau s e p et it i o n er d i d n o to b t ai n p ro p er recei p t s , h e was req u i red t o k eep rel iab le wri t t enreco rd s m eet i n g th e reg u lat o ry req u i rem en ts . See i d
. Pet i t i o ner’ s wri tt en reco rd s co n s i s t edo f p u rp o rt edqu al ifi edap p rai s al s th at d i dn o t d es cri b e t he p ro p ert y i n s u ffi ci en td et ai l fo r a p ers o n u n fam i l i ar wi th th e-1 3
-

[* 1 3 ] p ro p ert y

co nt ri b ut ed . Fu rt h er, p et i t i o n er’ s wri t t en reco rd s p ro v i d edn o cred i b l e ev i d en ce as t o t h e ap p ro p ri at e v al u at io n o f i n di v i du al i t em s d o n at ed
. Acco rd i ng l y , we fi n d p et i t i o n er d i dn o tm ai n tai n rel i ab l e wri t ten reco rd s i n
co n nect io n wi th h i s n o n cas h ch ari t ab l e co n tri b u ti o n s . See i d
. B. Co n tri bu t i o n s Ex ceed i n g $ 2 5 0 Onth e reco rdb efo re u s , p et i ti o ner’ s p u rp o rt edn o n cas h ch ari t ab l e co n tri b ut i on s fo r t ax y ears 2 0 1 2 , 2 0 1 3, an d2 0 1 5 i n cl ud ed i t em s v al u edat$ 2 50 o r m o re. Su ch co n tri b u ti o n s m

u s tb e s ub s t an t i at ed b y

a “ co n t em

p o ran eo u s wri t t en ackn o w l
ed g m en t ” (CW A) fro m

th e d o n ee. Sec. 1 7 0(f)(8 )(A). Th u s , p et it i o n er was req u i redt o s ub s t an ti at e an y s u ch cl ai m edco n tri b ut i o n s wi th CWAs th ati n cl u d ed : (1 ) a d es cri p t i o n (b u t n o tv al u e) o f t h e p ro pert y co n tri b u ted ; (2 ) a s t at em en to n wh et h er t h e d o n ee p ro v i d edan y g o o d s o r s erv i ces i n co ns i d erat i o n , i n wh o l e o r i n p art , fo r th e p ro p ert y

d on at ed ; an d(3 ) i f th e d on ee p ro v i d edg o o d s o r s erv i ces , a d es cri p t io n an d g o o dfai th es t i m at e o f t h ei r v al u e. See s ec. 1 7 0 (f)(8 )(B). In th e ab s en ce o f a CW A m eet i n g th e s t atu t e’ s req u i rem en t s , “ [n ] o d edu ct i o n s h al l b e al l o wed ”. Sec. 1 7 0 (f)(8 )(A); cf. s ec. 1 7 0 (f)(8 )(D). Al th ou g h p et i t i o n er co n t en d s th at h e d o nat edt o Go o dwi l l an d t h e Sal v at i o n Arm y du ri n g th e y ears ati s su e, h e d i dn o to b t ai n a CW A fro m Go o dwi ll fo r 2 0 1 2
o r fro m th e Sal v at i on Arm

y fo r an y o f t h e y ears ati s s ue. Th e recei p t s th atp et i
--1 4
-

[* 1 4 ] t i o n er s ub m i t t ed du ri n g an daft er t h e ex am i n at i o n p eri o d s fo r t he y ears at i s su e d i dn o td es cri b e i n d et ai l th e i t em s o f p ro p erty d o n at ed . See s ec. 1 7 0 (f)(8 )(B). Acco rd i n g l y , p et i t i o n er d i d n o t s tri ct l y co m p l y wi th th e s ub s t an t i at i on req u i rem en ts fo r d o n at i on s o f p ro p ert y v al uedi n ex ces s o f $ 2 5 0 . See i d
. C. Co n tri bu t i o n s Ex ceed i n g $ 5 0 0 Si m i l ar i t em s o f p ro p ert y are co n s i d eredas a g ro up fo r p u rp o s es o f d et erm i n i n g wh et h er a co n tri b u t i o n ex ceed s th e $ 50 0 thres h o ld . Sec. 1 7 0 (f)(1 1 )(F). Th e t erm “ si m il ar i t em s o f p ro p ert y ” i s d efi n ed t o m ean “p ro p ert y o f t h e s am e g en eri c cat eg o ry

o r t y p e,” s u ch as cl o th in g , el ect ro n i cs , o r h o u s eh ol dap p l i an ces . Sec. 1 .1 7 0 A-1 3 (c)(7 )(i i i ), In co m e Tax Reg s . Onth e reco rdb efo re u s , p et i t i o n er’ s p u rp ort edn o n cas h co n tri bu t i o n s fo r t ax y ears 2 0 1 2 , 2 0 13 , an d2 0 1 5 i n cl u ded i t em s o r g ro up s o f i t em s thatex ceed edth e $ 5 0 0 th res h ol d . Fo r t hes e co n tri b u t i o n s p et i t i o n er was req u iredt o : (1 ) m eetth e i n fo rm at io n req u i rem en ts fo r n on cas h
co n tri b u t i o n s o f $ 2 5 0 or m o re; (2 ) m ai n t ai n wri t ten reco rd s wi th a m o re d et ai l ed d es cri p t io n o f t h e p ro p ert y , i n cl u d i n g the m an n er an d ap p ro x i m at e d at e o f acq u i s i
t i on an dth e co s to r o th er b as i s i n th e p ro pert y ; an d (3 ) s tat e s u ch i n fo rm at i o n i n h i s i n co m e t ax retu rni f req u i redb y th e ret u rn fo rm

o r i t s i ns tru ct i o ns . See s ec. 1 7 0 (f)(1 1 )(B); s ec. 1 .1 7 0 A-1 3 (b )(3 )(i )(A) an d(B), In co m e Tax Reg s .-1 5
-

[* 1 5 ] As ad dres s edab o v e, p et i t i o n er d i dn o tm eetth e i nfo rm at i o n req u i rem en t s fo r n o n cas h co n tri b ut i o n s o f $ 25 0 o r m o re. See s ec. 1 7 0 (f)(8 )(B). Fu rt h er, p et i t i o n er fai l edt o m ai n t ai n wri t t en reco rd s wi th m ore d et ai l ed d es cri pt i o n s o f t h e p ro p erty o r t o s t at e s u ch i n fo rm at i o n i n h i s t ax retu rn s as req u i redb y th e ret u rn s o r th ei r i n s tru ct i o n s . Fo r each i t em o r g ro up o f i t em s th atex ceed edth e $ 5 0 0 th res h
o l d , th e Fo rm s 8 2 8 3 i n s tru ct edp et i t i o n er, i n t er al i a, t o s t at e t h e m an n er an d ap p ro x i m at e d at e o f acq u is i t io n (m o n th an dy ear) an d the co s tb as i s o r o th er b as i s . Fo r each o f t h e y ears ati s s u e, rat her t h an l i s t i n g each i tem o r g ro up o f i t em s
s ep arat el y

as i ns tru ct ed , p et i t i o n er p ro v i d ed a s i n g l e ag g reg at edl in e o f i n fo rm at i on fo r al l i tem s d o n at ed . Rat h er t han p ro v i d i n g a m o n th an dy ear as i n s tru ct ed , p et i t i o n er wro t e “ v ari o u s” i n the b o x p ro v i d edfo r t he d at e o f acq u i s i t i o n. As t o th e m an ner o f acq u is i t io n , o n p et i t i o n er’ s Fo rm s 8 2 8 3 fo r 2 0 1 2 an d2 0 1 5 , h e wro t e th atth e d o n at edp ro p ert y was acq u i redb y

p u rch as e, b u th e t es t i fi edth ath e i n h eri t edal l o f t h e d o n at edp ro p ert y . Ad d i t i o n al l y , fo r each y ear at i s s u e p et i
t i on er o ffered an ag g reg at e b as i s i n th e d o n at edp ro pert y as a wh o l e, wi th o u t p ro v id i n g cred ib l e ev i d en ce as t o h i s b as es i n i n di v idu al i t em s . Thu s , b ecau s e p et i t i o n er d i dn o tm eetth e s ub st an t i at i o n req u irem en t s fo r l es s v al u edi tem s o r p ro v id e cred i b le ev id en ce as t o th e d at e o r m an n er o f acq u i s i t i o n an dh i s b as es i n-1 6
-

[* 1 6 ] d o n at ed i t em s , we h o l dth atp et i t i o n er d i d n ots tri ct l y co m p l y wi th the req u i rem en t s fo r n o n cas h ch ari t ab l e co n tri b u t i o n s i n ex ces s o f $ 5 0 0. D. Co n tri bu t i o n s Ex ceed i n g $ 5 ,0 0 0 Si m i l ar i t em s o f p ro p ert y are co n s i d eredas a g ro up fo r p u rp o s es o f d et erm i n i n g wh et h er a co n tri b u t i o n ex ceed s th e $ 5,0 0 0 th res h o ld . Sec. 1 7 0 (f)(1 1 )(F);
s ec. 1 .1 7 0A-1 3 (c)(7 )(i ii ), In co m e Tax Reg s . Onth e reco rdb efo re u s , p et it i o n er’ s p u rp ort edn o n cas h ch ari t ab l e co n tri b u t i o n s fo r t ax y ears 2 0 1 2, 2 0 1 3 , an d2 0 1 5 i n cl u d edi t em s o r g ro up s o f i t em s th atex ceed edth e $ 5 , 0 00 th res ho l d . Fo r co n t ri
b u t i o n s o f p ro p ert y i n ex ces s o f $ 5 ,0 0 0 , i n ad d i t i o n t o co m p l y in g wi th th e s ub s t an t i at i o n req u i rem en t s fo r p ro p ert y i n ex ces s o f $ 2 50 an d$ 5 00 , p et i t i o n er was req u i redt o o bt ai n a “ qu al i fi edap p rai s al ” o f each d o n at edi t em an dat t ach t o each t ax return a fu l l y

co m p l et edap p rai s al s u m

m ary o n Fo rm 8 2 83 . See s ec. 1 7 0 (f)(1 1 )(C); s ec. 1 .1 7 0 A-1 3 (c)(2 ), In co m e Tax Reg s . Th e p u rp ort ed qu al ifi edap p rai s al s p rep aredb y M r. Du ran t e d o n o t i n cl u d e th e i n fo rm at i o n req u i redu n d er t h e reg u l at i o n s . See s ec. 1 .1 7 0 A-1 3 (c)(3 )(i i ), In co m e Tax Reg s . Th es e ap prai s al s fai l ed t o p ro v id e t h e fo l l o wi n g req u i red i n fo rm at i o n : the p hy s ical co n d i t i o n an dag e o f i n d i v i dual i t em s , th e qu al i fi cat i o ns
o f t h e ap p rai s er, a s t at em en tth ateach ap p rai sal was p rep aredfo r i n co m e t ax p u rp os es , an dth e ap p rai s edfai r m ark etv al u es o f i nd i v i du al i t em s d on at ed . See i d.-1 7
-

[* 1 7 ] Fu rt h er, p et i ti o ner d i dn o ts ub m i ta fu l l y co m p let edap p rai s al s u m

m ary o n Fo rm 8 2 8 3 fo r an y

o f t h e y ears ati s s u e. Th u s , b ecau s e p et i t i o ner d idn o tat t ach
co m p l et edap p rai s al s u m

m ari es t o h i s retu rn s o r o b t ai n qu al i fi edap p rai s al s as req u i redfo r t h e y ears ati ss u e, h e d i dn o t s tri ct l y co m p l y wi th th e requ i rem en t s fo r
n o n cas h ch ari t ab l e co n tri b u t io ns i n ex ces s o f $ 5 ,0 0 0 . See i d
. E. Sub s t an t i al Co m

p l i an ce In ap p ro p ri at e ci rcu m s t an ces , s o m e o f t h e rep ort i ng req u i rem en t s s etfo rt h i n s ect io n 1 .1 7 0A-1 3 , In co m e Tax Reg s ., can b e s at i s fi edb y s ubs t an ti al , rat h er th an l i teral , co m

pl i an ce. See Hewi ttv . Co m m i s s i o n er, 1 09 T.C. 2 5 8, 2 6 5 (1 9 9 7 ) (d es cri bi n g s ubs t an t i al co m p l i an ce as s at i s fi edwh ere t h e t ax p ay er h as “pro v i d ed
m o sto f t h e i n fo rm at io n req u i red ”), aff’ dwi th o utp ubl i s h edo p in i o n , 1 6 6 F.3 d3 3 2 (4 th Ci r. 1 9 9 8 ). M o sto ft en we h av e fo u nds ub s t an ti al co m p l i an ce i n cas es th at i n v o l v ed p ro cedu ral reg u l at o ry req u i rem en t s wh ere, d es pi t e a l acko f s tri ct
co m p l ian ce, t h e t ax pay er s ub s t an t i al l y co m pl i edb y fu l fi l l in g th e es s en t i al s t atu t o ry pu rp o s e. See, e.g
. , Bo n d v . Co m m i ss i o ner, 1 00 T.C. 3 2 , 4 1 -4 2 (1 99 3 ). As a g en eral m at t er, t ax p ay ers h av e h adg reat d i ffi cu lt y i n m eet i n g the
s ub s t an t i al co m

pl ian ce s t an d ardfo r ch ari t ab l e co n tri b u t i o n d edu ct i o n s . See, e.g
. , Bel ai r W o od s , LLC v . Co m m i s s i o ner, T.C. M em o. 2 0 18 -1 5 9 , at * 1 5; Al l i v . Co m m i s s i o n er, T.C. M em o . 2 0 1 4 -1 5 , at* 5 4 (s t at i n g th ats ub s t an t i al co m p l i an ce-1 8
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[* 1 8 ] “ s h o u l dn o tb e l i b eral l y ap p l i ed ”). Tax p ay ers can n o ts at i s fy th e CW A req u i rem en to f s ect i o n 1 7 0(f)(8 ) b y s ub s t an t i al co m

p l i an ce. Izen v . Co m

m i s s i on er, 1 4 8 T.C. 7 1 , 7 6 -7 7 , 8 2 (2 0 1 7 ). In M o h am edv . Co m m i s s i o n er, T.C. M em o. 2 0 1 2 -1 5 2 , 2 0 12 W L 1 9 3 7 5 5 5 , at* 7 , we co m p i l eda l i s t o f erro rs thatwe h av e ex cu s edth ro u gh s ub s t an ti al co m p l ian ce i ncl u d in g , as rel ev an th erei n , fai l i n g t o co m p l et e Sect i on B o f Fo rm

8 2 8 3 an dth e i n cl u s i o n o f i n s u ffi ci en to r i nap p ro p ri at e i n fo rm at i o n wi th th e qu al i fi edap p rai s al
. Pet i t i o ner co n ten d s th ath e s ub s t an t i al l y co m pl i ed wi th the s ub s t an t i at i o n req u i rem en t s fo r n o n cas h ch ari t ab l e co n tri b u t i o n s . Pet i t io n er al s o co n t en d s th ath e
cu redan y d efect s i n h i s rep o rt i n g b y s up p ly i n g res p o nd en t th e req ui redi n fo rm at i on wi th i n 9 0 d ay s o f res p o nd en t ’ s req u es t therefo r. W e d o n o t fi n d t h atp et i
t i on er cl ears the h i g h b ar fo r s ub s t an ti al co m p l i an ce. Th e Fo rm s 8 2 8 3 t h atp et i t i o n er s ub m i t t edwi th h is retu rn s were al m o s t
en t i rel y i nco m p l et e an d l ack eds i g n atures fro m th e d o n o r, th e d o n ee, an d t h e ap p rai s er. Pet i t io ner d i dn o to th erwi s e p ro v i d e rel iab l e wri t t en reco rd s cred i b l y i d en t i fy i n g the i nd i v i dual i tem s d o n at ed , th ei r v al u es o r co n d i ti o n , th e m an n er o f acq u is i t io n , th e d o n at i on d at es , o r h i s b as es i n t h e p ro p erty . Th e up d at edFo rm s 8 2 8 3 thatp et it i o n er s ub m i t tedt o th e Offi ce o f Ap p eal s were u n t i m el y an d l eft Sect i o n A en t i rel y

i nco m p l et e an d Sect i o n B p art ial l y i n co m p l et e an dwi th o u ta-1 9
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[* 1 9 ] s i g n atu re fro m th e d o n ee. Th u s, p et i t i o n er fai ledt o p ro v i d e “ m o s to f t h e i n fo rm at i o n req u i red ” fo r u s t o ev al u at e wh eth er h e m ad e t h e al l eg edch ari t ab l e
co n tri b u t i o n s. See Hewi t t v . Co m m i s s i o ner, 1 0 9 T.C. at2 6 5 . Pet i t i o ner’ s l acko f d o cu m en t at i o n al s o d i ffers fro m th e erro rs we l i s t edi n M oh am edv . Co m m i s s i on er, 2 0 1 2 W L 1 9 3 7 5 5 5 , at* 7 , th atwe h av e p rev i o us l y ex cu s ed
. Pet i t i o ner co n ten d s th ath e cu redh i s d efect i v e s ubm i s s i o ns b y res p o n d i n g t o
res p o n d en t’ s req u es tfo r ad di t i o n al d o cu m en t at i o n wi th i n 9 0 d ay s i n acco rd an ce wi th s ect i o n 1 .1 7 0A-1 3 (c)(4 )(i v )(H), In co m e Tax Reg s . Ho wev er, p et i t i o n er’ s p o s i t i on i s g ro u nd edo n a m i s read i n g o f th atreg u l at io n , wh i ch s t at es th ata d educt i o n wi l l n otb e d i s al l o wedfo r fai l u re t o at t ach an ap p rai s al s umm ary t o a retu rn i f t h e d o n o r co m

p l i es wi th i n s tru ct i o n s t o s ub m i tth at d o cu m en twi th i n 9 0 d ay s o f a req ues t th erefo r. Id . By i t s t erm s th atreg u l at i o n d o es n o t ap pl y h ere
s i nce p et i t i o n er d i d at t ach ap prai s al s umm ari es t o each o f h is retu rn s . See i d .; s ee al s o Oakhi l l W o o ds , LLC v . Co m m i s s i on er, T.C. M em o . 2 0 2 0 -2 4, at * 1 4 -* 1 5 ; Bel ai r W o od s , LLC v . Co m m i s s i o ner, at * 1 3 -* 1 4 . Fu rt h er, t h atreg ul at io n ap p l i es
o n l y t o ap p rai sal s u m

m ari es an dd oes n o taffo rdp et it i o n er a wi n d o wt o cu re d efect s i n h i s qu al i fi edap p rai s al s . See Bel ai r W oo d s , LLC v . Co m m is s i o n er, at* 1 3 -* 1 4 ; s ee al so Ch rem v . Co m m i s s i o n er, T.C. M em o . 2 0 1 8 -1 6 4 , at * 2 4 n .9 ; M o h am edv . Co m

m i s s i o n er, 2 01 2 W L 1 9 37 5 55 , at* 4
.-2 0
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[* 2 0 ] Fo r al l th es e reas o n s , we h o ldth atp et i t i o n er d i d n o t co m p l y , ei th er s tri ct l y
o r s ub st an t i al l y , wi th the reg u l at o ry rep o rt i n g req ui rem en t s fo r n on cas h ch ari t ab l e
co n tri b u t i o n s. III. Sect io n 6 6 6 2 (a) Accu racy -Rel at edPen al ty Sect io n 6 6 6 2 (a) an d(b )(1 ) an d(2 ) i m p o s es a 2 0 % accu racy -rel at ed p en al t y
o n an y u n d erp aym en to f Fed eral i n co m e t ax wh i ch i s at tri b u tab l e t o n eg li g en ce, d i s reg ardo f ru l es o r reg u l at i on s , o r a s ub s tan t i al u n d ers tat em en to f i n co m e t ax . Sect i o n 6 6 6 2(c) d efi n es n eg l i g en ce as i n cl ud i n g an y fai l ure t o m ak e a reas o n ab l e at t em p tt o co m p l y wi th th e p ro v i s i on s o f t h e Co d e an dd efi n es d i s reg ardas an y carel es s, reck l es s , o r i nt en t i o n al d i s reg ard
. See s ec. 1
. 6 6 6 2 -3 (b )(1 ) an d(2 ), In co m e Tax Reg s . Anu n d ers t at em en t o f i n co m e t ax i s s ubs t an t i al i f i tex ceed s th e g reat er o f 1 0 % o f t h e t ax req u i redt o b e s h o wno n th e ret u rn o r $ 5 ,0 00 . Sec. 6 6 6 2 (d )(1 )(A). Res p o n d en tb ears th e b u rd en o f p ro du ct i o n wi th res p ectt o p et i t i o ner’ s l i ab i l i ty fo r s ect io n 6 66 2 p en al t i es an dm u s t p ro du ce s u ffi ci en tev i den ce i n d i cat i n g th ati ti s ap p ro p ri at e t o i m p os e t h em . See s ec. 7 4 9 1 (c); Hi g b ee v . Co m m i s s i o n er, 1 1 6 T.C. 4 3 8 , 4 4 6 (2 0 0 1 ). As p arto f t h atb u rd en , res p o n d en tm u sts h o wth atth e wri t ten s up erv is o ry

ap p ro v al req u i rem en to f s ect i o n 6 7 5 1 (b )(1 ) was t i m el y
co m p l iedwi th. See Graev v . Co m m i s s i o n er, 1 4 9 T.C. 4 8 5 , 4 9 3 (2 0 1 7), s up p l e--2 1
-

[* 2 1 ] m en ti n g an do v erru li ng i n p art1 4 7 T.C. 4 6 0 (2 0 1 6); s ee al s o Cl ay v . Co m m i s s i o n er, 1 5 2 T.C. 2 2 3 (2 0 1 9). Th e reco rdco n t ai ns a t i m el y p en al ty ap p ro v al fo rm , s i g n edb efo re fo rm al co m m u n i cat i on o f t h e p en al ti es t o p et i t i o n er. See Bel ai r W o o d s , LLC v . Co m m i ss i o ner, 1 5 4 T.C. 1 , 1 4 -1 5 (2 0 20 ); s ee al s o Cl ay
v . Co m m i s s i o n er, 1 5 2 T.C. at2 4 9 . Acco rd i ng l y , o n th e reco rd b efo re u s , we fi n d th atres p o n d en t h as m etth i s as p ecto f h i s b urd en o f p ro du ct i o n; an di f t h e Ru l e 1 5 5 co m p u t at i o ns co n fi rm

s ub s t an t i al u n d ers t at em en t s o f i nco m e t ax fo r 2 0 1 2 an d 2 0 1 3 , th en res p o n den th as m eth i s b u rd en o f p ro duci n g ev id en ce t h atth e p en al t y i s ju s t ifi ed . See s ec. 7 4 9 1 (c). Fu rt h er, we o b s erv e t h atwh i le p et i t io n er p ro p erl y at t ach edFo rm s 8 28 3 t o h i s t ax retu rn s , h e fai l edt o m ak e an y reas o n ab l e at t em ptt o p ro v id e t h e i n fo rm at i o n req u es t edo n the fo rm s o r o th erwi s e m ai n t ai n rel i ab l e wri t ten reco rd s fo r t h e d o nat edi t em s . Res p o n d en t h as s h o wn th atp et i t i o n er wh o l l y fai l edt o co m

p l y wi th the s ub s t an t i at i o n req u i rem en t s u n der s ect io n 1 7 0
an d i t s reg ul at i o n s . Acco rd i n g l y , we fi n d t h atres p o n d en t h as al so m eth i s b u rd en
o f p ro du ci n g ev i d en ce t hatth e u n d erp aym en t s were at tri b u t ab l e t o p et i t i o n er’ s
n eg li g en ce o r d i sreg ardo f ru les o r reg u l at i o ns . Si nce res p o n d en t h as m et h i s b u rd en , th e b u rd en o f p ro o f i s o n p et i t i o n er t o es tab l i s h th atth e i m p o s i t i o n o f t h e p en al t i es i s n otap p ro p ri at e. See Hi g b ee v . Co m m i s s i o n er, 1 1 6 T.C. at4 4 7.-2 2
-

[* 2 2 ] Sect io n 6 6 6 4 (c)(1 ) p ro v i d es an ex cep t i on t o the s ect io n 6 66 2 (a) p en al ty i f i t i s s ho wnth atthere was reas o n ab le cau s e fo r an y p o rt i o n o f th e u nd erp aym en tan d th e t ax p ay er act edi n g o odfai th . Th e d et erm in at i o n o f wh et her a t ax p ay er act ed wi th reas o n ab l e cau s e an di n g o o dfai th i s m ad e o n a cas e-b y -cas e b as i s , t ak i n g i n t o acco u n tal l th e p ert i n en tfact s an dci rcu m s t an ces , i n cl u d i n g th e kno wl ed g e
an d ex p eri en ce o f t h e t ax p ay er. Sec. 1 .6 6 6 4 -4 (b )(1 ), In co m e Tax Reg s . Pet i t i o ner co n ten d s th atth ere was reas on ab l e cau s e fo r, an dh e act edi n g o o dfai th wi th res p ectt o , th e u n d erp aym en t s fo r 2 01 2 an d2 01 3
. Onth e reco rd b efo re u s , we fi n dth at p et i ti o n er fai l edt o carryh i s b u rd en o f es t ab l i s h i n g reas o n ab l e cau s e. In s up p o rto f h is p o s i t i o n p et i t i on er al l eg es th ath e h iredan drel i edo n M r. Du ran t e t o co m

p l et e ap p rai s al s i n g oo dfai th
. As th e retu rn p rep arer an dan at t o rn ey l i cen s edt o p ract ice b efo re t h i s Co u rt , p et i t i o n er can n o treas o n ab l y cl ai m th ath i s rel i an ce o n M r. Du ran t e’ s p rep arat i on o f ap prai s al s co n s t i tu tes reas o n ab l e
cau s e fo r t h e o m i s s i o n s o n h is retu rn wh en a m ere cu rs o ry o v erv i ew o f h i s retu rn s
wo u l dh av e rev eal edthath e l ack edco m p let e ap prai s al s umm ari es fo r th e y ears at i s su e. See M et ra Ch em

Co rp . v . Co m

m i s s i o n er, 8 8 T.C. 6 54 , 6 62 (1 9 87 ); s ee al s o Lan gs t on v . Co m

m i s si o n er, T.C. M em o. 2 0 1 9 -1 9, at* 1 6 -* 1 8 , aff’ d , 8 2 7 F. Ap p ’ x 9 0 0 (1 0t h Ci r. 2 02 0 ). Acco rd i n g l y , we s u s t ai n res p on d en t ’ s d et erm i n at i o n th at p et i t i o n er i s l i ab l e fo r th e accu racy -rel at ed p en al t i es fo r 2 0 1 2 an d2 0 1 3
.-2 3
-

[* 2 3 ] W e h av e co n s id eredal l o f t h e arg um en t s m ad e b y th e p art i es an d , t o th e
ex t en tth ey

are n o tad dres s edh erei n , we fi n dth em t o b e m o o t , i rrel ev an t, o r wi th o u tm eri t . To refl ectthe fo reg o i n g , Deci s i o n s wi l l b e en t ered fo r res p o n den t .