T.C. Summary Opinion 2009-16

UNITED STATES TAX COURT

LISA R. COLEMAN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 12085-07S, 16591-07S. Filed January 29, 2009.

Lisa R. Coleman, pro se.

Scott B. Burkholder, for respondent.

DEAN, Special Trial Judge: These consolidated cases were

heard pursuant to the provisions of section 7463 of the Internal

Revenue Code (Code) in effect when the petitions were filed. 

Pursuant to section 7463(b), the decisions to be entered are not

reviewable by any other court, and this opinion shall not be

treated as precedent for any other case. Unless otherwise

indicated, subsequent section references are to the Code in
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1Petitioner’s $19,441 charitable contribution deduction

included a $562 carryover from 2003. Petitioner neither argued

nor established that she had a $562 carryover from 2003. 

Petitioner is deemed to have conceded the issue. See Money v.

Commissioner, 89 T.C. 46, 48 (1987); see also Stutsman v.

Commissioner, T.C. Memo. 1961-109 (and cases cited therein).

2The $1,239.26 figure consists of amounts evidenced by: 

(1) Copies of checks numbered 8652, 8653, 8662, 8674, and 8720

payable to Bethel Pentecostal Church (Bethel) that total $395.25;

(2) copies of checks numbered 8713 and 8823 payable to “Bishop

Martin” and “Sister Cascada” that total $125; and (3) copies of

checks numbered 8686, 8712, 8851, 8794, 8790, 8776, and 8793

payable to various persons who performed services for the church

that total $719.01.

effect for the years in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure. 

For 2004 and 2005 respondent determined deficiencies in

petitioner’s Federal income taxes of $3,090 and $3,409 and

accuracy-related penalties under section 6662(a) of $618 and

$681.80, respectively. Respondent disallowed petitioner’s

claimed deductions for “Schedule A taxes” of $3,370 and her

$19,441 charitable contribution deduction for 2004.1 For 2005

respondent disallowed petitioner’s claimed $5,993 theft loss

deduction, her $11,396 mortgage interest deduction, and $10,561

of her claimed $11,061 charitable contribution deduction.

For 2004 and 2005 respondent concedes that petitioner is

entitled to deductions for charitable contributions of $1,239.262
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3The $3,014 figure consists of amounts evidenced by: 

(1) Copies of checks numbered 8950, 9016, 9043, 9044, 9046, 9068,

9084, 9144, 9168, and 9177 payable to Bethel that total $280; (2)

copies of checks numbered 8981, 8990, 9145, 9146, 9149, 9150, and

9167 payable to various charities that total $1,200; (3) copies

of checks numbered 8996 and 9119 payable to various persons who

provided services for Bethel that total $200; (4) copies of

checks numbered 9032 and 3215 payable to “Bishop T. Martin” and

“Thomas Martin” that total $834; and (5) $500 that was allowed by

respondent’s revenue agent during the examination of petitioner’s

return.

and $3,0143 and “Schedule A taxes” of $3,370 and $3,582,

respectively.

The issues remaining for decision are whether petitioner is: 

(1) Entitled to claim charitable contribution deductions in

excess of those respondent allowed; (2) entitled to claim a

mortgage interest deduction of $11,396 for 2005; (3) entitled to

claim a theft loss deduction of $5,933 for 2005; and (4) liable

for the accuracy-related penalty for each year.

Background

Some of the facts have been stipulated and are so found.

The stipulation of facts and the exhibits received into evidence

are incorporated herein by reference. When the petitions were

filed, petitioner resided in California.

Charitable Contributions

During the years at issue, petitioner was employed as a law

enforcement technician with the Los Angeles County Sheriff’s

Department. She also served as the pastor of Bethel, which is a

member church of Mount Sinai Holy Church of America, Inc.
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Petitioner made expenditures on behalf of Bethel by cash or check

For example, petitioner purchased a 15-passenger van for use by

Bethel so that she could pick up church members for Sunday school

and morning worship. The van bears Bethel’s name and is parked

on Bethel’s premises, but it is titled in petitioner’s name. In

addition, petitioner purchased a “250 foot black rod [sic] iron

fence” that runs the perimeter of Bethel’s property. 

On petitioner’s Schedules A, Itemized Deductions, attached

to her Forms 1040, U.S. Individual Income Tax Return, petitioner

claimed deductions for charitable contributions of $19,441 and

$11,061 for 2004 and 2005, respectively. As reflected on

petitioner’s 2004 Schedule A, her charitable contribution

deduction consisted of gifts by cash or check of $18,379, gifts

other than by cash or check of $500, and a $562 carryover from

2003. As reflected on petitioner’s 2005 Schedule A, her

charitable contribution deduction consisted of gifts by cash or

check of $10,561 and gifts other than by cash or check of $500.

In the notices of deficiency for 2004 and 2005, respondent

disallowed “Cash Contributions” of $19,441 and $10,561,

respectively. Respondent disallowed petitioner’s claimed “Cash

Contributions” because petitioner “did not verify that the

amounts shown were contributions, and paid; [therefore,] the

amounts are not deductible.”

 
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Mortgage Interest Deduction

On April 25, 2006, letters of administration were filed

naming petitioner as the legal representative of her mother’s

estate. Petitioner’s mother, Lula Mae Coleman, died intestate on

August 15, 2005. In 2005 petitioner made some payments to the

entities holding mortgages on her parent’s home at “319 E

Newfield St”. Petitioner, however, has lived in her home at “E

90th” for over 11 years and resided at her “E. 90th” home during

2005. On petitioner’s 2005 Schedule A, she claimed an $11,396

mortgage interest deduction for the interest paid with respect to

the mortgages on her parent’s home at “319 E Newfield St”. 

Respondent disallowed petitioner’s claimed mortgage interest

deduction because she did not establish that the amount was her

interest expense and that she paid it. 

Theft Loss Deduction

On October 27, 2005, petitioner filed an incident report for

a burglary at Bethel. On the incident report, the police officer

recorded petitioner’s statement that two computers, including

monitors and printers, worth $2,000 were stolen. Petitioner also

submitted a “Supplementary Loss Report”, on which she claimed a

total additional loss of $10,740. Petitioner claimed that the

additional loss items consisted of musical equipment, chaffing

dishes, roasters, a “T.V.”, computer equipment, food, clothes,

toys, and cases of paper. 
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On petitioner’s 2005 Schedule A, petitioner described the

event as a “HOME BURGLARY” in which various household items with

a basis of $19,145 and a $10,148 fair market value were stolen. 

Petitioner claimed a $5,933 “TOTAL” theft loss that respondent

disallowed because she did not establish that a theft occurred

and that she sustained a loss.

Discussion

I. Burden of Proof

The Commissioner’s determinations in a notice of deficiency

are presumed correct, and the taxpayer bears the burden to prove

that the determinations are in error. See Rule 142(a); Welch v.

Helvering, 290 U.S. 111, 115 (1933). But the burden of proof on

factual issues that affect the taxpayer’s tax liability may be

shifted to the Commissioner where the taxpayer introduces

credible evidence with respect to the issue and the taxpayer has

satisfied certain conditions. See sec. 7491(a)(1). Petitioner

has not alleged that section 7491(a) applies, and she has neither

complied with the substantiation requirements nor maintained all

required records. See sec. 7491(a)(2)(A) and (B). Accordingly,

the burden of proof remains on her.

II. Charitable Contribution Deductions

Petitioner testified that Bethel was in need of repairs when

she “received” it and that she “put a lot of money into the

church because I think that that’s my responsibility as the
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 pastor of the church to make sure that the church is functioning

and in decent order.” According to petitioner, she had to rent

equipment, charge things to her Home Depot account, and hire men

to perform repairs. “[She] had to pay that on behalf of the

church because the church did not have a fund in order to do

that. That’s where [her] contributions came from.” 

Unreimbursed expenditures made incident to the rendition of

services to a qualifying charitable organization may constitute a

deductible contribution. Rockefeller v. Commissioner, 76 T.C.

178, 183 (1981), affd. 676 F.2d 35 (2d Cir. 1982); McCollum v.

Commissioner, T.C. Memo. 1978-435; Miller v. Commissioner, T.C.

Memo. 1975-279; sec. 1.170A-1(g), Income Tax Regs. But

deductions for charitable contributions are allowed “only if

verified under regulations prescribed by the Secretary.” Sec.

170(a).

A. Monetary Contributions of Less Than $250

In pertinent part, section 1.170A-13(f)(1), Income Tax

Regs., provides that separate contributions of less than $250 are

not subject to the “contemporaneous written acknowledgment”

requirement of section 170(f)(8) regardless of whether the sum of

the contributions to an organization equals $250 or more. 

Rather, monetary charitable contributions of less than $250 must

be substantiated by a canceled check; a receipt from the

organization that shows the name of the donee, the date of the
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contribution, and the amount thereof; or “other reliable written

records” that show the name of the donee, the date of the

contribution, and the amount thereof. Sec. 1.170A-13(a)(1),

Income Tax Regs. A letter or other communication from the

organization that acknowledges the receipt of a contribution and

that shows the date and amount thereof constitutes a receipt. 

Id. 

Sec. 1.170A-13(a)(2), Income Tax Regs., provides that the

reliability of “other reliable written records” is determined on

the basis of all of the facts and circumstances. Factors

indicative of reliability include but are not limited to: 

(1) The contemporaneousness of the writing evidencing the

contribution; (2) the regularity of the taxpayer’s recordkeeping

procedures, e.g., a contemporaneous diary entry stating the

amount and date of the contribution and the name of the

organization that is made by a taxpayer who regularly makes such

diary entries; and (3) in the case of a de minimis contribution,

any written or other evidence from the organization evidencing

the contribution that would not otherwise constitute a receipt

(including a “token” traditionally associated with the

organization and regularly given by the organization to persons

making cash donations). Id.
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Petitioner has submitted into evidence a log of the 2004 and

2005 disputed monetary contributions of less than $250 and copies

of the following canceled checks: 

 Check 

 Date No. Payee Amount Description

 12/031 

 8632 Cash $20.00 Donation

 1/04 8645 Sparkletts 15.25 Water

 Water

 1/04 8650 Sam’s Club 170.51 Supplies

 2/04 8684 Mr. Barrueta 55.00 Repair-elec.

 3/04 8705 OfficeMax 25.00 Supplies

 4/04 8740 U.S. Postmaster 34.00 Postage

 5/04 8749 Sparkletts 104.00 Water

 Water

 4/04 8756 OfficeMax 66.00 Supplies

 6/04 8764 OfficeMax 67.00 Supplies

 6/04 8774 Gas Co. 30.00 Utilities

 6/04 8781 Sparkletts 10.00 Water

 Water

 6/04 8787 Sam’s Club 100.03 Supplies

 8/04 8833 Sparkletts 128.00 Water

 Water

 9/04 8850 Sam’s Club 161.55 Supplies

 11/04 8870 U.S. Postmaster 34.00 Postage

 4/05 9034 Bishop Batten2 100.00 Donation

 4/05 9187 Pastor Johnson2 50.00 Donation

 Total 1,170.34

1 This contribution was made in 2003 and thus is not

deductible as a charitable contribution for 2004. See sec.

170(a)(1). Respondent’s disallowance thereof is sustained.

2 Respondent disallowed the deductions for these

contributions, reasoning that the payments fail the “to or for

the use of” the organization requirement, see sec. 170(c), since

the checks were deposited into the individuals’ personal banking

accounts rather than an account of a charitable organization. 

Since petitioner has not proven that the payments were “to or for

the use of” a charitable organization rather than for the

personal use of the individuals, respondent’s disallowance

thereof is sustained. See Davis v. United States, 495 U.S. 472,

478-486 (1990). 
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Petitioner’s log also lists the following cash contributions

of less than $250 for 2004, which respondent disputes:

 Payment 

 Date method Recipient Amount Description

 2/04 Cash Los Angeles Mission $35.55 Gift

 8/04 Cash Los Angeles Mission 26.55 Gift

 10/04 Cash Los Angeles Mission 45.00 Gift

 12/04 Cash Los Angeles Mission 37.17 Gift

 8/04 Cash March of Dimes 50.00 Gift 

 11/04 Cash Neighborhood curb 10.00 Gift

 painting

 3/04 Cash Easter Seals 75.00 Gift

 6/04 Cash United Negro 100.00 Gift

 College Fund

 8/04 Cash United Negro 150.00 Gift

 College Fund 

 Total 529.27

Petitioner has not provided receipts substantiating the

foregoing charitable contributions. Petitioner’s entitlement to

her charitable contribution deductions therefore hinges on the

canceled checks or her “other reliable written record”. 

The Court finds that neither the notations on the canceled

checks nor the payees of the canceled checks prove that

petitioner paid the expenses on Bethel’s behalf. Indeed, the

subject matter of the canceled checks indicates that the

expenditures might be nondeductible personal expenses. See sec.

262(a). 

With respect to the log, it is dated “11/22/06” and appears

to have been created by petitioner’s return preparer, Mr.

Applewhite. Thus, petitioner has failed to establish the

contemporaneous nature of the log, and she has not established
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that she regularly and contemporaneously recorded her

contributions in the log. See sec. 1.170A-13(a)(2)(i)(A) and

(B), Income Tax Regs. The Court accords little probative weight

to the log. 

Without other reliable evidence to substantiate her

deductions for charitable contributions of less than $250 for

2004 and 2005, the Court finds that petitioner is not entitled to

claim her deductions. In addition, the Court will not apply the

Cohan rule to estimate a deductible amount. See Cohan v.

Commissioner, 39 F.2d 540 (2d Cir. 1930); see also Bond v.

Commissioner, 100 T.C. 32, 41 (1993) (“the reporting requirements

[of section 1.170A-13, Income Tax Regs.,] are directory and not

mandatory.”); Vanicek v. Commissioner, 85 T.C. 731, 742-743

(1985) (an estimate must have a reasonable evidentiary basis). 

Without reliable evidence upon which to base an estimate, an

allowance here would amount to “unguided largesse.” Williams v.

United States, 245 F.2d 559, 560 (5th Cir. 1957). Accordingly,

respondent’s determinations are sustained.

B. Donations of Money or Property of $250 or More

As is relevant here, section 170(f)(8) provides that no

deduction is allowed for all or part of any charitable

contribution of $250 or more unless the contribution is

substantiated by a contemporaneous written acknowledgment from

the organization. See also sec. 1.170A-13(f)(1), Income Tax
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Regs. A written acknowledgment is contemporaneous if it is

obtained by the taxpayer on or before the earlier of the date the

taxpayer files the original return for the taxable year of the

contribution or the due date (including extensions) for filing

the original return for the year. Sec. 170(f)(8)(C); sec.

1.170A-13(f)(3), Income Tax Regs. The written acknowledgment

must state the amount of cash and a description (but not

necessarily the value) of any property other than cash that the

taxpayer donated and whether the organization provided any

consideration to the taxpayer in exchange for the donation. Sec.

170(f)(8)(B)(i) and (ii); sec. 1.170A-13(f)(2)(i) and (ii),

Income Tax Regs.

To substantiate the following disputed 2004 deductions for

charitable contributions of $250 or more, petitioner has

submitted into evidence a log of her contributions and certain

letters:

 Payment 

 Date method Recipient Amount Description

 “various” Cash Bethel $18,293.71

 2004

 “various” Cash Bethel 4,091.20 Van payments

 2004

 2004 Cash Bethel 794.39 Van insurance 

 4/04 Property Dorothy 500.00 7 bags clothing, 

 Brown TV, household 

 School items

 7/04 Property Dorothy 500.00 10 bags 

 Brown clothing, TV,

 School household 

 items

 Total 24,179.30 
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4The log and the letters fail to differentiate between

contributions that were below $250 and those of $250 or more in

the $18,293.71 sum that petitioner alleges that she paid at

various intervals during 2004. The Court notes that such cash

contributions would not be deductible even under the less

stringent standard of sec. 1.170A-13(a)(1), Income Tax Regs.,

because the letters do not show the dates of the “various”

contributions or the amounts thereof. 

To substantiate the following disputed 2005 deductions for

charitable contributions of $250 or more, petitioner has

submitted into evidence a log of her contributions, copies of

canceled checks, certain letters, and photographs:

 

 Payment 

Date method Recipient Amount Description

 9/05 Check Mr. Degado $1,000.00 Repair-church

 No. 9141

 10/05 Check Bishop 300.00 Donation

 No. 9151 Batten

 “various” Cash Bethel 9,000.00 Wrought iron

 2005 black fence

 “various” Cash Bethel 1,000.00 Tractor mower

 2005

 “various” Cash Bethel 3,854.68 Van payments

 2005

 2005 Bethel 1,124.63 Van insurance

 4/05 Property Dorothy 500.00 7 bags 

 Brown clothing, TV,

 School household 

 items

 Total 16,779.31 

Although petitioner’s log shows a $13,038 charitable

contribution for 2004, petitioner has provided three letters

purporting to substantiate cash contributions of $18,293.71 to

Bethel during 2004.4 A letter from Bishop Coward, dated June 3,
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5Petitioner testified that the title “Elder L.C. Kincy” is

the name that she uses in her pastorage.

6Specifically, the defects include: (1) Petitioner’s log is

not a written acknowledgment from the organization; 

(2) petitioner’s log, the Bishop Coward letter, and the Secretary

Jackson letter were not contemporaneous; and (3) the Pastor Kincy

letter acknowledging petitioner’s own charitable contributions is

suspect in that it purports to be written by an individual other

than petitioner. Thus, the Court accords little weight to the

Pastor Kincy letter.

2008, alleges that petitioner paid $18,293.71 in 2004 for “major

repair work on the property”. A letter from Pastor Kincy, dated

January 14, 2005, alleges that petitioner made a “contribution of

$18,293.71” in 2004.5 A letter from Secretary Jackson, dated

December 4, 2006, alleges the same. 

Aside from other defects,6 the three letters and the log

fail to satisfy the requirement that the organization provide a

statement as to whether or not the organization provided any

goods or services in consideration for the donation. See sec.

170(f)(8)(B)(ii); sec. 1.170A-13(f)(2)(ii), Income Tax Regs. 

Therefore, petitioner’s $18,293.71 charitable contribution

deduction is not allowable. See Kendrix v. Commissioner, T.C.

Memo. 2006-9 (disallowing the taxpayer’s charitable contribution

deductions because the requirements of section 170(f)(8)(B)(ii)

were not satisfied since the “receipts” did not state whether the

church provided any goods or services in consideration for the

contributions); Castleton v. Commissioner, T.C. Memo. 2005-58,

affd. 188 Fed. Appx. 561 (9th Cir. 2006). 
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Petitioner cannot deduct the $1,000 charitable contribution

for a tractor lawnmower that she allegedly donated to Bethel

because neither the log nor the letter, dated February 5, 2007,

evidencing the contribution satisfies the contemporaneous

acknowledgment requirements of section 1.170A-13(f)(2) and (3),

Income Tax Regs. 

Petitioner cannot deduct the $300 payment to Bishop Batten

because neither the log nor the canceled check evidencing the

payment satisfies the acknowledgment requirements of section

1.170A-13(f)(2) and (3), Income Tax Regs. In addition, since the

check was deposited into Bishop Batten’s personal bank account

rather than an account of a charitable organization, petitioner

has not proven that the payment was “to or for the use of” a

charitable organization rather than for the personal use of the

individual. See sec. 170(c); Davis v. United States, 495 U.S.

472, 478-486 (1990). 

Petitioner cannot deduct the items donated to the Dorothy

Brown School because the log evidencing the contribution does not

satisfy the contemporaneous acknowledgment requirements of

section 1.170A-13(f)(2) and (3), Income Tax Regs. 

Petitioner submitted no other records and did not present

testimony from any other representative of Bethel to substantiate

her $18,293.71 cash contributions, her donation of the tractor

lawnmower, or her $300 payment to Bishop Batten. Similarly,
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7Petitioner did not call the worker as a witness to

corroborate her charitable contribution.

petitioner provided no other evidence to substantiate her

charitable contributions to the Dorothy Brown School. 

Accordingly, the Court will not apply the Cohan rule to estimate

a deductible amount. See Williams v. United States, 245 F.2d at

560; Vanicek v. Commissioner 85 T.C. at 742-743; see also Cohan

v. Commissioner, 39 F.2d at 543-544; Bond v. Commissioner, 100

T.C. at 41. Respondent’s determinations are sustained.

Petitioner has provided a “receipt”, a letter from Bethel,

canceled checks, the log, and photographs of the old and new

fence to substantiate payments of $10,100 to a Mr. Degado for her

purchase of the black wrought iron fence. The so-called receipt

is dated September 16, 2005, and purports to be from Juan Degado.

The receipt was not issued by Mr. Degado. The receipt was

created on June 2, 2008, by the new owner of the fencing business

based upon information supplied by petitioner and, allegedly, by

one of the workers who installed the fence.7 The Court,

therefore, accords little weight to the receipt. 

The letter from Bethel concerning the fence is dated October

1, 2005, and is signed by “Elder L.C. Kincy, Pastor [and] Sis

Angelique Jackson, Secretary”. The letter acknowledges a $9,000

donation for a “250 foot black rod [sic] iron fence”. The

letter, however, fails to satisfy the requirement that the
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8The $3,000 check was signed by petitioner on Sept. 9, 2005,

and was drawn on an account titled in her mother’s name. 

Cal. Prob. Code sec. 7000 (West 1991) provides that title to

a decedent’s property passes on the decedent’s death to the

decedent’s heirs as prescribed by the laws governing intestate

succession. As of Aug. 15, 2005, title to the account passed to

petitioner’s father and certain heirs (including petitioner). 

See Cal. Prob. Code secs. 6400, 6401, and 6402 (West Supp. 2008),

7000; see also United States v. Natl. Bank of Commerce, 472 U.S.

713, 722 (1985) (State law determines the nature of property

rights). 

Federal law determines the appropriate Federal income tax

treatment of petitioner’s $3,000 purported contribution. United

States v. Natl. Bank of Commerce, supra at 722. An estate is a

separate taxable entity. See sec. 641; Herter v. Commissioner,

T.C. Memo. 1961-19. Generally, estates are allowed deductions

for charitable contributions if the contributions are paid out of

the estate’s gross income and are made “pursuant to the terms of

the governing instrument”. Sec. 642(c)(1). Because petitioner

is not the taxpayer who made the contribution, she is not

entitled to claim a deduction for the contribution. See Mellott

v. United States, 257 F.2d 798 (3d Cir. 1958); United States v.

Norton, 250 F.2d 902, 905 (5th Cir. 1958); see also Stussy v.

Commissioner, T.C. Memo. 1997-293.

organization provide a statement as to whether the organization

provided any goods or services in consideration for the donation. 

See sec. 170(f)(8)(B)(ii); sec. 1.170A-13(f)(2)(ii), Income Tax

Regs. 

The canceled checks consist of a $1,000 payment to Mr.

Degado that was drawn on petitioner’s personal account on

September 16, 2005, and a $3,000 payment to Mr. Degado that

contained the notation “Iron Gates”.8 The canceled checks,

however, are not written acknowledgments from the organization. 

See sec. 170(f)(8).
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9See supra note 8.

10Petitioner entered into evidence a bank statement for the

period Jan. 1 to 31, 2006, showing a $3,000 payment by “Draft

009207” that bears petitioner’s handwritten notation “Iron

Gates”. Putting aside the hearsay matter, the Court notes that

the payment was “Effective” on Jan. 12, 2006, and posted on Jan.

13, 2006. Thus, it appears that petitioner would be entitled to

this $3,000 deduction, if at all, in 2006, not 2005. See secs.

446(a), 461(a).

Taken together, the canceled checks, the letter, the log,

and the photographs corroborate petitioner’s claim that she

expended some money to purchase the fence on Bethel’s behalf. 

Although petitioner has not complied with the substantiation

requirements of section 170(f)(8) and the regulations thereunder,

the Court is satisfied that petitioner made some payments on

behalf of Bethel–-but not $10,100. Putting aside the evidentiary

issues, the receipt indicates that petitioner made three payments

of $3,000, a $1,000 payment, and a $100 payment. The record

establishes that petitioner has not provided any other evidence

establishing payments over $1,0009 to Mr. Degado in 2005. Thus,

petitioner has not proven that she paid the remaining $9,100 in

2005.10 Accordingly, the Court finds that petitioner is entitled

to a $1,000 charitable contribution deduction for the fence for

2005. See Cohan v. Commissioner, supra at 544 (estimates of a

taxpayer’s deductions bear heavily against the taxpayer whose

inexactitude is of his or her own making); see also Bond v.

Commissioner, supra at 41.
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11In addition, petitioner has not proven that the limited

exceptions of sec. 170(f)(3) apply. See also sec. 1.170A-7(a)

and (b), Income Tax Regs.

12There is no evidence in the record as to the number of

miles petitioner drove in her charitable endeavors that would

allow a charitable contribution deduction based either on

petitioner’s out-of-pocket expenses or on the standard mileage

deduction. See sec. 170(i); sec. 1.170A-1(g), Income Tax Regs. 

Petitioner cannot deduct the “Van Payments” as charitable

contributions since she continues to own the property. The

“contributions”, therefore, consist of less than petitioner’s

entire interest in the property and are not deductible.11 See

sec. 170(f)(3); sec. 1.170A-7(a)(1), Income Tax Regs.; cf. Logan

v. Commissioner, T.C. Memo. 1994-445 (classifying the donee’s

“rent-free” use of the taxpayer’s real property as a mere right

to use property and disallowing a deduction for its fair rental

value as a charitable contribution under section 170(f)(3)). 

Respondent’s determination is sustained.

Petitioner cannot deduct the insurance premium payments for

the van as charitable contributions. Petitioner has not shown

that Bethel was the sole beneficiary of the policy. See Orr v.

United States, 343 F.2d 553 (5th Cir. 1965). In addition,

neither petitioner’s log nor the letter from the insurance agent

dated June 2, 2008, satisfies the contemporaneous acknowledgment

requirements of section 1.170A-13(f)(2) and (3), Income Tax Regs. 

Respondent’s determination is sustained.12
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III. Mortgage Interest Deduction

Section 163(a) allows a deduction for interest paid or

accrued within the taxable year on indebtedness. The

“indebtedness” for purposes of section 163 must, in general, be

an obligation of the taxpayer and not an obligation of another.

Golder v. Commissioner, 604 F.2d 34, 35 (9th Cir. 1979), affg.

T.C. Memo. 1976-150; Smith v. Commissioner, 84 T.C. 889, 897

(1985), affd. without published opinion 805 F.2d 1073 (D.C. Cir.

1986). 

Petitioner was not directly liable on the mortgages for

which she claimed a mortgage interest deduction. But petitioner

argues that she is entitled to a deduction for mortgage interest

that she paid in 2005 pursuant to section 1.163-1(b), Income Tax

Regs., which provides in pertinent part: “Interest paid by the

taxpayer on a mortgage upon real estate of which he is the legal

or equitable owner, even though the taxpayer is not directly

liable upon the bond or note secured by such mortgage, may be

deducted as interest on his indebtedness.” 

Petitioner claims that she has both a vested and an

equitable interest in her mother’s property at “319 E Newfield

St”. Petitioner testified that she started making the mortgage

payments in February when her mother became ill and was no longer

able to work.
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State law determines the nature of property rights, while

Federal law determines the appropriate Federal income tax

treatment of those rights. See United States v. Natl. Bank of

Commerce, 472 U.S. 713, 722 (1985); Aquilino v. United States,

363 U.S. 509, 513 (1960). Thus, whatever rights or interests

petitioner held in the property is determined pursuant to

California law.

As is relevant here, title to the property of a decedent’s

estate vests, subject to administration, in his or her heirs

immediately upon death under California law. Cal. Prob. Code

sec. 7000; Olson v. Toy, 54 Cal. Rptr. 2d 29, 33 (Ct. App. 1996);

Bethel v. Kerksey (In re Estate of Williams), 140 Cal. Rptr. 593,

597 (Ct. App. 1977) (“when there is an intestate succession,

there is an automatic vesting of title in the intestate heirs

subject to administration”); see also Cal. Prob. Code secs. 6400,

6401, and 6402. Such vesting is not contingent on any assent,

acceptance, or election by the heirs. Taylor v. Crippled

Children’s Socy. (In re Estate of Taylor), 108 Cal. Rptr. 778,

781 (Ct. App. 1973) (citing Martin v. McGrath (In re Meyer’s

Estate), 238 P.2d 597, 605 (Cal. Dist. Ct. App. 1951)). 

The Court considers several factors when determining whether

a taxpayer is an equitable or beneficial owner of the property

(and thus entitled to mortgage interest deductions). See Blanche

v. Commissioner, T.C. Memo. 2001-63, affd. 33 Fed. Appx. 704 (5th
- 22 -

Cir. 2002). As is relevant here, the factors include: 

(1) Whether the taxpayer had a right to possess the property and

to enjoy the use, rents, or profits thereof; (2) whether the

taxpayer had a duty to maintain the property; (3) whether the

taxpayer was responsible for insuring the property; (4) whether

the taxpayer bore the risk of loss of the property; (5) whether

the taxpayer was obligated to pay taxes, assessments, and charges

against the property; and (6) whether the taxpayer had the right

to improve the property without the owner’s consent. Id. 

Several of these factors weigh against petitioner for the

period before her mother’s death on August 15, 2005. 

Specifically, there is no indication that petitioner bore the

risk of loss or that she was responsible for maintaining the

property, insuring the property, or paying any taxes,

assessments, or charges; and there is no indication that she had

the right to make improvements. Thus, the Court finds that

petitioner was not an equitable or beneficial owner of the

property before her mother’s death on August 15, 2005.

Petitioner is not entitled to mortgage interest deductions for

payments she made before August 15, 2005, because she was not

directly liable on the notes securing the mortgages and she has
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13If a taxpayer pays mortgage interest accrued before the

date he became the legal or equitable owner of the mortgaged

property, the amount must be capitalized as part of his cost of

the property. See Koehler v. Commissioner, T.C. Memo. 1978-381

(and cases cited therein).

failed to prove that she was the legal, equitable, or beneficial

owner of the property before August 15, 2005.

13 

The property’s legal title, however, passed, in part, to

petitioner on August 15, 2005. Petitioner is entitled to

mortgage interest deductions for payments she made from August

15, 2005, subject to the substantiation requirement of section

6001. See Zards v. Commissioner, T.C. Memo. 1995-497 (only

mortgage interest paid for the period after the taxpayer becomes

the legal or equitable owner of the property is deductible by the

taxpayer). 

Petitioner provided copies of Forms 1098, Mortgage Interest

Statement, to substantiate her mortgage interest deductions. The

Forms 1098 show interest payments in 2005 of: (1) $7,857.64 to

Countrywide Home Loans (Countrywide); (2) $2,128.85 to POPA

Federal Credit Union (POPA); and (3) $825.49 to “Vodofsky”. In

addition, petitioner provided two canceled checks issued in

September 2005: One to Countrywide for $907.89 and one to POPA

for $245.50. Petitioner also entered into evidence bank 

statements from September to December 2005. For September

petitioner handwrote on the statement “HP” next to drafts in the

sum of $1,040.47. For October petitioner handwrote on the
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statement “2nd” with respect to a “Transfer to Coleman Lula M * *

* Loan 19” for $245.40. For November petitioner handwrote on the

statement “2nd” with respect to a “Transfer to COLEMAN LULA M * *

* Loan 19” for $245.40 and “HP” for a withdrawal to “MRS

ASSOCIATES” for $841.75. For December petitioner handwrote on

the statement “2nd” with respect to a “Transfer to COLEMAN LULA M

* * * Loan 19” for $245.40 and “HP” with respect to withdrawals

to Countrywide in the sum of $1,827.78 and “MORTGAGE JIT PMT” for

$1,728.43.

It is unclear from the record that the September drafts and

the payment to “MRS ASSOCIATES” were in fact mortgage payments. 

In addition, it is unclear from the record whether the “Mortgage

JIT PMT” relates to the three mortgages for which interest

deductions were claimed rather than to petitioner’s home at the

“E. 90th” address (for which no Form 1098 was entered into

evidence). Petitioner testified that she makes four mortgage

payments: One to Countrywide, one to Washington Mutual, one to

“Vodofsky”, and one to POPA. According to petitioner, the

“[Mortgage JIT PMT] could be to any one of the other three.” 

From the evidence, the Court finds that petitioner is not

entitled to mortgage interest deductions for the “Vodofsky”

mortgage because she has not established that she made interest

payments from August 15 to December 2005. See secs. 163(a), (h),

461. With respect to the Countrywide mortgage, petitioner has
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established that she made interest payments in September and

December 2005, but she failed to establish that she made interest

payments in August, October, and November 2005. Consequently,

the Court finds that petitioner is entitled to deductions for

mortgage interest paid to Countrywide in September and December

2005. See secs. 163(a), (h), 461. With respect to the POPA

mortgage, petitioner has established that she made interest

payments from September to December 2005. Accordingly, the Court

finds that petitioner is entitled to deductions for mortgage

interest paid to POPA from September to December 2005.

IV. Theft Loss Deduction

In general, section 165(a) and (c)(3) allows an individual a

deduction for any theft sustained during the taxable year and not

compensated for by insurance or otherwise. Among other

requirements, petitioner must establish that she personally

sustained the theft loss. See Draper v. Commissioner, 15 T.C.

135, 135-136 (1950) (only the owner of the misappropriated

property is entitled to a theft loss deduction because the loss

is personal to the owner); Malik v. Commissioner, T.C. Memo.

1995-204 (taxpayer could not claim a theft loss deduction because

he was not the victim of the theft).

The police officer’s incident report states that the

location of the theft was Bethel. The officer’s narrative

explains that “unknown person(s) broke into * * * the interior of
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[Bethel]” and stole 2 computers, including monitors and printers,

worth $2,000 that were located in an office in the “northwest

corner of [Bethel].” 

On her Form 4684, Casualties and Thefts Loss, petitioner

described the theft event as a “HOME BURGLARY” and described the

misappropriated property as “VARIOUS HOUSEHOLD ITEMS” worth

$10,148.

Petitioner testified that the items were taken from Bethel,

not from her residence. Petitioner explained that she uses “many

different things down at [Bethel], but they [are] my personal

items”. Petitioner also testified that she did not have anything

to prove that she owned the items. According to petitioner, she

had to take the loss because Bethel did not have insurance.

Petitioner has failed to prove that she owned the

misappropriated property. See also Urban Redev. Corp. v.

Commissioner, 294 F.2d 328, 332 (4th Cir. 1961) (the Court may

reject a taxpayer’s uncorroborated, self-serving testimony),

affg. 34 T.C. 845 (1960); Tokarski v. Commissioner, 87 T.C. 74,

77 (1986) (same). Because petitioner has failed to establish

that she personally sustained a theft loss, respondent’s

disallowance of the theft loss is sustained. See Draper v.

Commissioner, supra at 135-136; Malik v. Commissioner, supra; see

also INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992)

(stating that deductions are strictly a matter of legislative
- 27 -

14Because the Court finds that petitioner was negligent or

disregarded rules or regulations, the Court need not discuss

whether there is a substantial understatement of income tax. See

sec. 6662(b); Fields v. Commissioner, T.C. Memo. 2008-207.

grace, and taxpayers bear the burden of proving that they are

entitled to claim the deduction).

V. Accuracy-Related Penalty

Initially, the Commissioner has the burden of production

with respect to any penalty, addition to tax, or additional

amount. Sec. 7491(c). The Commissioner satisfies this burden of

production by coming forward with sufficient evidence that

indicates that it is appropriate to impose the penalty. See

Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Once the

Commissioner satisfies this burden of production, the taxpayer

must persuade the Court that the Commissioner’s determination is

in error by supplying sufficient evidence of reasonable cause,

substantial authority, or a similar provision. Id.

In pertinent part, section 6662(a) and (b)(1) and (2)

imposes an accuracy-related penalty equal to 20 percent of the

underpayment that is attributable to negligence or disregard of

rules or regulations or a substantial understatement of income

tax.14 Section 6662(c) defines the term “negligence” to include

“any failure to make a reasonable attempt to comply with the

provisions of this title,” and the term “disregard” to include

“any careless, reckless, or intentional disregard.” Negligence
- 28 -

also includes any failure by the taxpayer to keep adequate books

and records or to substantiate items properly. Sec. 1.6662-

3(b)(1), Income Tax Regs.

Section 6664(c)(1) provides an exception to the section

6662(a) penalty: no penalty is imposed with respect to any

portion of an underpayment if it is shown that there was

reasonable cause therefor and the taxpayer acted in good faith. 

Section 1.6664-4(b)(1), Income Tax Regs., incorporates a facts

and circumstances test to determine whether the taxpayer acted

with reasonable cause and in good faith. The most important

factor is the extent of the taxpayer’s effort to assess his

proper tax liability. Id. “Circumstances that may indicate

reasonable cause and good faith include an honest

misunderstanding of fact or law that is reasonable in light of *

* * the experience, knowledge and education of the taxpayer.” 

Id.

The Court finds that respondent has met his burden of

production and that petitioner was negligent. Petitioner did not

properly substantiate her deductions as required by the Code and

the regulations. Petitioner did not establish a defense for her

noncompliance with the Code’s requirements. Respondent’s

determinations are sustained. 
- 29 -

Other arguments made by the parties and not discussed herein

were considered and rejected as irrelevant, without merit, and/or

moot.

To reflect the foregoing,

Decisions will be entered

under Rule 155.