TAX COURT OPINION

Case: Patricia A. Brookshire
Docket Number: 3474-09
Judge: Cohen
Opinion Type: memo
Filed: 09/01/2010
Pages: 9

JM P TC . Memo . 2010-193 1 UNITED STATES TAX COURT PATRICIA A .I BROOKSHIRE, Petitioner V . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket No . 3474-09 . Filed September 1, 2010 . Patricia A . Brookshi r re, pro se . Olivia J . Hyatt , for respondent . MEMORANDUM FINDINGS OF FACT AND OPINIO N COHEN, Judge : Respondent determined deficiencies i n petitioner's income tax and additions to tax for 2004 and 2006 a s follows : I SERVED Sep 01 2010 Additions .to Tax Year Deficiency Sec . 6651(a)(1) Sec . 6651!11(a)(2) Sec . 6654(a ) 2004 2006 $12,356 12,634 $2,751 .97 1,766 .25 1$2,446 .20 1628 .00 $350 .0 8 346 .2 9 'The .addition to tax will continue to accrue from the due date of the return at a rate of 0 .5 percent for each month, or fraction thereof, of nonpayment, not exceeding 25 percent . The issues for decision are whether petitioner had unreported income during the years in issue, whether she had deductions beyond those conceded by respondent, and whether she is liable for the additions to tax . All section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure . FINDINGS OF FAC T Some of the facts have been stipulated ; and the stipulated ii facts are incorporated in our findings by this reference . Petitioner resided in Georgia at the time that she filed her 11 petition . Petitioner was a graphic designer and compute r technician during the years in issue . During 2004, petitioner received wages of $12,196 from U .S . Personnel . Petitioner received nonemployee'!compensation from ilk Columbia Theological Seminary, Inc ., of $2,837 in 2004 ; from Agnes Scott College of $18,510 in 2004 and $2,900 in 2006 ; and from the Westminster Schools of $17,554 in 2004 and $3,850 in 2006 . During 2006, petitioner received wages of .$10,858 from Pat Cornelius & Associates, Inc ., and $50,696 from DigiPrint Ink , Ltd . Petitioner received interest income totaling $1,117 in 2006 . Petitioner failed,to file Federal income tax returns fo r 2003, 2004, 2005, and 2006 . Respondent prepared substitutes for -returns for petitioner for 2004 and 2006, using a filing status of single . Notices of deficiency were sent to petitioner on - November 10, 2008, for 2004 and 2006 . . The notices were based o n third-party reporting of petitioner's income as set forth above . OPINION The petition in this case had attached a form containing a hodgepodge of frivolous, irrelevant, and spurious arguments common to petitions following a program of tax defiance . Se e Jensen v . Commissioner , T .C . Memo . 2010-143 ; Sullivan v . Commissioner , T .C . Memo . 2 i 010-138 ; Cook v . Commissioner , T .C . Memo . 2010-137 . The forml setsout a general denial of tax liability ; a claim of'various deductions and exemptions and a filing status other than a-llowed .in .the statutory notice ; an assertion that the figures used "stem from illegal immigrants" using the taxpayer's Social Security number ; an allegation that penalties should be waived because "the Internal Revenue Code is i so complex and confusing" ;i a claim for credit,"for the illegal telephone excise tax" for each year ; a claim'l'of deductibl e expenses of tax preparation and advice on filing (even though no return was filed) ; and aclaimed lack of records allegedl y justifying reconstruction and estimates, with a citation of and quotation from Cohen v . Commissioner , 266 F .2d 5 (9th Cir . 1959) , remanding T .C . Memo . 1957-172 . The petition and the attachment referred to petitioner as "he" and used the, possessive "his" throughout, although petitioner is female . 1Petitioner'requeste d Columbia, South Carolina, as the place of trlial . Before, during, and after trial, petitioner presented an "affidavit of expenses and deductions" that'llshe insisted should be accepted as proof of her business expenses for the years i n issue . When the case was called for trial, .petitioner belatedly presented-some receipts substantiating expenses, and responden t conceded some deductions . Petitioner stipulated the items of jj income set forth above and the third-party records that were th e subject of information returns on which they substitutes for returns and notices of deficiency were based . The Court ordered seriatim briefs, with respondent filin g the opening brief, so that the record could be clarified as t o what deductions were agreed and why others were denied . In her brief, petitioner admitted that she received wages and othe r income but that she maintained no records of amounts paid to her . She attempted to avoid the stipulation and renewed hearsay - 5 - objections to the evidence of her income received-with the stipulation . She has shown neither error in the stipulation nor any reason to relieve her from it. . See Rule 91(e) . Even if the y had not been stipulated, the business records of the payors o f income would have been received in evidence under Rules 803(6 ) and 902(11) of the Federal Rules of Evidence . Petitioner has not raised any reasonable dispute with respect to any item of income . See sec . 6201(d) . We conclude that she had unreported income in the amounts set . forth injour findings . Many of the expenses petitioner claimed were disallowed for lack of substantiation of amount , time, place , and business purpose under section 2741(d ) . Petitioner presented a mileage log that was inconsistent with her testimony and, as she admitted , was not correct ; she has now conceded that she is not entitled t o deduct mileage for 2006 .1 Some of the transportation expenses and entertainment expenses claimed were nondeductible personal expenses , such as those for commuting, social entertainment, an d gifts . See sec . 262 . He r claimed medical expenses, even i f accepted without substantiation, would not'be deductible because they do not exceed 7 .5 percent of her adjusted gross income .' See sec . 213(a) . Petitioner presented no evidence verifyin g charitable contributions as required by section 170 and section 1 .170A-13(a)(1), Income Tax Regs . - 6 - Respondent conceded that petitioner was, entitled to deduct a portion of the expenses of an office in her~home during 2004, when most of petitioner's income was nonempljoyee compensation . Petitioner attempts to recharacterize her wage income in both years as nonemployee compensation in order to claim expenses , including her office in the home, as business expenses deductible in full rather than employee expenses limited-by section 67(a) to the extent that the aggregate of miscellaneous deductions exceeds 2 percent of adjusted gross income . She admitted during he r 11 testimony that some items were reimbursable~by her employer, but she failed to seek reimbursement . She has not persuaded us tha t she was other than an employee, and her theory is implausible . To the extent that respondent has conceded some employee expenses, the-limitation of section 67(a) will apply . Petitioner claims deductions for computers and othe r equipment purchased in 200 .4 . If petitionerllhad filed a tax return for 2004, she might have elected under section 179 t o deduct, rather-than depreciate, the cost of'i,equipment purchased and placed in service that year . Her failure to file a return or to meet the other applicable requirements now precludes that opportunity . See Visin v . Commissioner , T .C . Memo . 2003-246, affd . 122 Fed . Appx . 363 (9th Cir . 2005) ; Verma v . Commissioner , T .C . Memo . 2001-132 ; Fors v . Commissioner , T .C . Memo . 1998-158 ; Starr v . Commissioner, T .C . Memo . 1995-190 , .,;affd . without published opinion 99 F .3d 1146 (9th Cir . 1996) . She has neithe r claimed depreciation nor presented evidence adequate to determin e an allowance for depreciation in either year . As to almost all of the expenses that she claimed , petitioner lacked corroborative receipts,,canceled .checks o r other records of expenditures . Some of the documents sh e presented were illegible, patently unreliable, or contradicted her claims . (The receipts that she produced included Diet Coke purchased at WalMart because she was thirsty) . Petitione r asserts that she did the best that she could considering the s passage of time and seeks, to rely on Cohan v . Commissioner , 3 9 F .2d 540, 543-544 (2d Cirl . 1930) . In cases in which the Cohan principle is applied and estimates are accepted, we bear heavily against "the taxpayer whose inexactitude is of * * * [her] own making ." Id . at 544 . Wei .can estimate the amount of the deductible expense only when the taxpayer provides evidence sufficient to establish a}rational basis upon which the'estimate can be made . See Vanicekly . Commissioner , 85 T .C . 731, 742-743 (1985) . Certainly .the necessity ofreconstructing in 2010" expenses allegedly incurred in 2004 and 2006 and the unreliability of recollection and estimates are problems of petitioner's ow n i making . She failed to file tax returns for at least 4 years, when contemporaneous schedules of deductions would have, or 8 - should have, been based on contemporaneous records . She failed to keep records of her income and expenses . !.She refused t o cooperate when contacted by respondent, and 'she .complied onl y belatedly and incompletely with the Court's ohrders and Rules requiring that records be turned over and th at facts and documents be stipulated . She obstructed theP determination of her tax liabilities by pursuing frivolous positions promoted by unreliable sources and did not seek competent tax advice . We ar e not persuaded that she is entitled to any dekductions not concede d by respondent. II I Respondent has satisfied the burden of going forward unde r section 7491(c) with respect to the additions to tax for failure to file returns or to pay tax under section 1j6651(a) and the I' failure to pay estimated taxes under section' 6654(a) . See Higbee f v . Commissioner , 116 T .C . 438, 446 (2001) . ?I-Petitioner's only excuse is that for 2004 and 2006 she believed that her busines s expenses "counter-balanced" the wages she earned and that she did not owe taxes . A single individual must file a return on receipt of gross income, such as wages, exceeding $7,950 in 2004 o r $8,450 for 2006, regardless of whether or not taxes are owed . See sec . 6012(a) . We do not believe that petitioner misunderstood the requirements of law or that she believed tha t I - 9 she did not have taxable income . She has not shown reasonabl e cause under section 6651 (a) or an exception to the addition t o tax under section 6654 . The additions to tax on the recompute d deficiencies will be sustained . To reflect respondent's concessions, Decision will be entere d under Rule 155 .