TAX COURT OPINION

Case: Curtis G. & Edna L. Lockett
Docket Number: 3978-94
Judge: Couvillion
Opinion Type: memo
Filed: 03/03/1997
Pages: 4

RV C STAT. s.r. mxt T. C. Memo. 1997-107 UNITED STATES TAX COURT CURTIS G. AND EDNA L. LOCKETT, Petitioners y. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 3978-94. Filed March 3, 1997. Curtis G. Lockett, pro se. Ruth Perez, for respondent. MEMORANDUM OPINION COUVILLION, Special Trial Judge: This case was heard pursuant to section 7443A(b)(3)I and Rules 180, 181, and 182. Respondent determined deficiencies in Federal income taxes of $7,012 and $5,985, respectively, for petitioners' 1991 and 1992 tax years. Unless otherwise indicated, section references are to the 1 Internal Revenue Code in effect for the years at references are to the Tax Court Rules of Practice and Procedure. issue. All Rule SEÑVED MAR 3 1997 - 3 - referred to as a "compound" that he administered to his daughter and that, to petitioner's satisfaction, placed her sickle cell anemia in remission. Petitioner was convinced that his compound was effective because, for a time period in which he was unable to administer the compound to his daughter, her condition worsened, and she lost her left eye. When the compound was again administered to her, she became well. Petitioner is not a doctor of medicine, although he holds a college degree in biology, chemistry, and physics. For the years prior to the years in question, petitioner did not consider his home laboratory as a trade or business for tax purposes. Also, the record does not indicate that petitioner ever contacted or made known to doctors and/or pharmaceutical companies his development of the compound, which he was satisfied relieved his daughter of her sickle cell anemia. Petitioner did not administer this compound to anyone other than his daughter, nor did he ever sell or market the compound. He was of the belief that his compound would be effective in suppressing AIDS and other human immune system problems. Sometime in 1991, or a short time prior thereto, petitioner decided to proceed commercially with his compound. He discontinued his contracting business and spent considerable amounts of money in improving his laboratory. He adopted a trade name of TEL Sickle Cell Research & Development and attempted to obtain tax-exempt status from the Internal Revenue Service - 5 - shown on your tax return were paid or incurred during the taxable year and that the expenses were ordinary and necessary to your business". On Schedule A, Itemized Deductions, of their 1991 return, petitioners claimed an itemized deduction for the following: Uniform rental Leftover equipment expenses Less 2% (sec. 67(a)) Deduction claimed $ 360.00 5,435.00 (18.8.44) $5,606.56 Respondent disallowed that amounton the ground that no information was provided to support the claimed deduction. The determinations of the Commissioner in a notice of deficiency are presumed correct, and the taxpayer bears the burden of proving that the determinations are incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). When this case was originally heard, the Court, after hearing the testimony of petitioner and one witness for respondent, recessed the trial because petitioner had no books and records to present. Petitioner stated that his books and records were held at different places over the United States; that he would gather his records and meet with counsel for respondent; and that, if a settlement of the case was not reached, the case would be recalendared for trial. Over 1 year later, the.parties had failed to agree on a settlement; whereupon the case was recalendared for completion of the trial. - 7 - generally that a taxpayer liable for any tax shall maintain such records, render such statements, make such returns, and comply with such regulations as the Secretary may from time to time prescribe. The meager records petitioner presented to substantiate the expenses at issue do not satisfy the recordkeeping requirements of section 6001 and do not prove that the expenses claimed were paid or incurred. The Court holds that 8 petitioners have not sustained their burden of establishing their entitlement to a deduction of their Schedule C expenses for 1991 and 1992. Respondent, therefore, is sustained on this issue. The second issue relates to the year 1991 and Schedule A, Itemized Deductions, in the amount of $5,606.56 claimed by petitioners that were also disallowed by respondent for lack of . substantiation. As noted above, petitioners claimed a deduction of $360 for uniform rental and $5,435 for leftover equipment expenses, subject to the limitation provisions of section 67(a). The $5,435 represented payments petitioner claims he made during 1991 on equipment that had been used in his construction activity. No documentary evidence was presented to substantiate either the $5,435 for equipment payments or the $360 uniform . rental expenses. Respondent, therefore, is sustained on this 1ssue. Decision will be entered under Rule 155.