TAX COURT OPINION

Case: Willie Andrew Whipple, Jr. & Mary Angela Whipple
Docket Number: 30100-08
Judge: Chiechi
Opinion Type: memo
Filed: 03/01/2011
Pages: 8

T.C. Memo. 2011-49 ÚNITED STATES TAX COURT WILLIE ANDREW WHiPPLE, JR., AND MARY ANGELA WHIPPLE, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No 30100-08. Filed March 1, 2011. Willie Andrew Whipple, Jr., and Mary Angela Whipple, pro sese. Kristen I. Nygren, for respondent MEMORANDUM FINDINGS OF FACT AND OPINION CHIECHI, Judge: Respondent determined the following defi- ciencies in, addition under section 6651(a) (1)T to, and accuracy- All section refêÝences are t o the Iriternal Revenue Code (Code) to the Tax Court Rules of Practice and Procedure. in effect for the years at issue. All Rule references are - 2 - related penalties under section 6662(a) on petitioners' -Federal income tax (tax): Year 2004 2005 2006 2007 Deficiency $18, 958 . 00 32,345.15 32,089.00 106, 881. 00 Addition to Tax Accuracy-Related Under Sec. 6651(a) (1) - - $904.75 -- -- Penalty Under Sec. 6662 (a) $3, 791.60 - 6,469.03 6,417.80 21, 376 .20 We must decide whether üe should sustain respondent's determinations in the noticets of deficiency that respondent has not conceded. We hold that ee should. FINDINGS OF FACT Some of the facts have been stipulated by petitioner Willie Andrew W11ipple , Jr . (Mr . Whipple ) , 2 and respondent and are so found. At the time petitioner filed the petition in this case, they resided in Georgia. On December 4, 2006, respondent received petitioners' tax return for their taxable yeÃr 2004 (2004 return) . Petitioners included with the 2004 retu n Schedule C, Profit or Loss From Business (Schedule C) , for heir taxable year 2004 (2004 Schedule C) . In the 2004- Schedule C petitioners claimed a loss of 2Respondent filed a mot ion to dismiss for lack of prosecu- tion as to petitioner Mary Angela Whipple (MS. Whipple) . shall grant that motion and shall enter the same decision with respect to Mr. Whipple . to Ms. Whipple that we shall enter with -respect We - 3 - $55,419. In calculating that 2004 Schedule C loss, petitioners claiméd, inter alia, coåt of goods sold -of $6, 622 *and deprecia- tion 'and section 179 expense*of $39,115. Petitioners alsos ' included with the -2004~teturn Schedule Ei Supplemental Income and Loss (Schedule E),rfor their taxable yeare2004 (2004 Schedule E). In the 2004 Schedule E, petitioners ólaimed a total.rental real estate loss of. $20, 043 I On November 29, -2006, respondent received via facsimile - petitioners' tax return for their taxable year 2005 (2005 re- turn). Petitioners included with the 2005 return- Schedule C for their" taxable year 2005 (2005 Schedule -C):. In the 2005 Schedule C, petitioners claimed a l'o'ss of; $90,838. Ins calculating that 2005 Schedule C loss, petitionersi claimed, inter, aliar : cost of goods sold of $16,444; expenses for commissions and fees of a $8, 406 contract labor- of $253778, meals, and entertainment of $4,083, and travel of $6,7763 and othersexpenses of $30,668.3 Petitioners also included with the 2005-returneSchedule E for, their taxable year 2005 (2005 Schedule, E). In the 2005 Schedule E, petitioners claimed a total rental real estate loss of $6,280. Ön April 17, 2007,* petitioners filed electronically, their ax return "fór their taxable year 2006 '(2006 return).; Petition- 3The other expenses that petitioners cl'aid d in the "2005 ' Schedule 'C bonsisted ofivehicle fuel*assistance for sales representatives of $4, 988 and telemarketing ofs $25, 68-0 . , - 4 - ers included with the 2006 return Schedule C for their taxable year 2006 (2006 Schedule C) In the 2006 Schedule C, petitioners claimed a loss of ,$94, 459. In calculating that 2006 Schedule C loss, petitioners claimed, inter alia, cost of goods sold of, $49, 536 and expenses for commissions and fees of $9, 786; contract labor of $22,643, meals and entertainment,of $1,976, travel of $13, 255, and utilities of $74 291. Petitioners also included with the 2006 return -Schedule E for their taxable year 2006. (2006 Schedule E) . In the 2006 Schedule E,; petitioners claimed a total rental real estate" loss' of $25,000 . . On April 15, 2Ø08, petitioners filed electronically their tax return for their taxabl year 2007 (2007 return) . Petition- ers included with the 2007,return Schedule C for their ,taxable year 2007 (2007 Schedule C) In the 2007 Sche,dule C, petitioners claimed a loss of $266,996. In calculating that 2007 Schedule C loss, petitioners claimed, inter alia, cost of goods ,sold of $66,912; expenses for car aAd truck of $27,340, commissions and fees of $15, 949, contract lábor .of $49, 952, meals and entertain- ment of $2,254, travel of $a,474, and utilities of $4,380; and other expenses of $50,186. Petitioners also included with the "2007 return Schedule E for their taxable year 2007 (2007 Schedule *The other expenses thAt petitioners claimed in the 2007 Schedule C corîsisted of expenses of $4,532. te#emarketing of $45,654 and unidentified - 5 - E) . In the -2007 Schedule E, petitioners claimed a total- rental real -estate loss of $41, 557 Respondent issued to petitioners á nótice sof deficiency for their taxable years 2004, 2005, and 2006 and'a-notice of defi- ciency, for their taxable year 2007 (collectively, notices) - In those notices, respondent determined to disalslow the costs- of goods sold that petitioners claimed in the .2004 Schedule C, the 2005'Schedule C, the 2006 $chedule C, and the 2007 Schedule C of $6 , 622, $16 i 444 , $4 9 , 536 and $66; 912, respectively i Respondent also dete'rmined in the notices to disallow the following expenses that petitioners claimed-in those resþective Schedules C: Claimed 2004 - 2005 2006 2007 Expense Disallowed Car and truck Depreciation and Schedüle C Schedule C Schedule C Schedule C $27,340 , -- -- sec. 179 expense $Ü,115 -- - Commissions and fees Contract labor Meals and entertainment Travel Utilities Other expenses -- - - - -- - -- $8 40 25, 778 4, 083 6,776 - 30,668 9,786 22, 643 1, 976 13,255 7, 291 -- 49,677 15,949 49, 952 2, 254 8;474 4, 380 50,186 Respondent also determined in the notices that petitioners are not entitled in calculating "total income" for their taxable years 2004, 2005, 2006, and 2007, respectively, to the total rental real estate losses that they claimed-in the-2004 Schedule E the 2005 SchEule E,--the 2006 Éched1Île E, and the 2007 Sched- ule E of $20 , 043 , $6, 280 , $25, O O O and $41, 557, respeòtivaly . Respondent further determined in the notices that petition- ers have interest income for their taxable .years 2006 and 42007 of $182 and $94, respectively. Respondent also.determined in the notices that petitioners are subject to the additional tax under section 72 (t) for early withdrawals- from certain qualified plans for their taxable years 2005, 2006, and 2007, respectively. In addition, respondent determined in the notices - that petitioners are liable for their taxable year 2005 for an addi- tion to tax under section 6651(a) (1) and for their taxable years 2004, 2005,, 2006, and 2007, respectively, for accuracy-related penalties under section 6662 (a) . 4 OPINION Mr. Whipple bears the burden of proving that the determina- tions in the notices that remain at issue are erroneous." See Rule 142(a); Welch v. Helve ing, 290 U.S. 111, 115' (1933). Moreover, deductions are a matter of legislative grace, and Mr. Whipple bears "the burden of proving entitlement to any deduction claimed. See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992) . The Code and the régulations thereunder required Mr. Whipple to maintain records sufficient to establish the amount of sMr. Whipple does not älaim that the burden of proof shifts to respondent under sec. 7Î91(a) . On the record liefore us, we conclude that' the burden oft proof does not shift to respondent under that section. See id. - 7 - any dédüction claimed. See sec. 6001; sec. 1.6001-1(a) ," Income Tax Regs 2 keãpondent bears the burden of production with respect-tot the addition -to tax under sëàtion 6651(ar) (1)'that respondent determined for petitioners' taxable year 2005-and the accuracy- relâteu þen'alty under- sectïon 6662(a) that respondent determined for each of their taxable years 2004, 2005; 2006, and-2007. Seë sede 7491(c). In support of his position that we should not sustain the determinations in the notices that respondent has not conceded, Mr. Whipple relies principally on his testimony.' We found Mr. Whipple's testimony to be in certain material respects general, vague, conclusory, unco'rroborated, and self-serving. We shall not rely on the testimony of Mr. Whipple to establish his posi- tion that we should not sustain the determinations in the notices that respondent has not conceded. See, e.g., Tokarski v. Commis- sioner, 87 T.C. 74, 77 (1986). 'Mr. Whipple also relies on certain documents of his that he those stipulated documents. However, and respondent stipulated. Respondent made certain concessions on the hasis of some of respondent declined to make any concessions on' the basis of remaining stipulated documents of Mr. Whipple. those remaining stipulated documents do hot establish Mr. Whipple's' position with respect the notices" which remain at appear to relate. Moreover, except for Mr.-;Whipple's documents that he sand respondent stipulated, Mr. Whipple did not proffer ny documents at trial in support of his position with respect issue and to which those documents to any of the sdeterminations in We oonclude that the the determinations in the notices that remain at issue.es to - 8 - Based upon our examination of I the entire, record before us, we find that Mr. Whipple has{failed to carry his burden of . establishing that we should not sustain respondent's determina- tions in the notices that regpondent has -not conceded. We have considered all of Mr. Whipple's contentions and y arguments that are not disclîssed herein, and we find them.t-o be without merit, irrelevant, a d/or moot. To reflect the foregoing and the concessions of respondent, Decision will be entered with respect to Mr. Whipple under Rule 155." 70n the record before us, we find that responde t has s t s- fied respondent's burden of production with respect to the addition to tak under sec. 6651(a) (1) year 2005 and the accuracy related penalty under sec. 666.2(a) each of their taxable yeard 2004,, 2005,4 2006, and 2007. for petitioners' taxable for "See supra note 2.