TAX COURT OPINION

Case: Garrett Ripa & Suzanne Polanco-Ripa
Docket Number: 14497-09S
Judge: Colvin
Opinion Type: bench
Filed: 05/12/2010
Pages: 7

UNITED STATES TAX COURT WASHINGTON , D .C . 2021 7 GARRETT RIPA AND SUZANNE POLANCO-RIPA, Petitioners , V . Docket No . 14497-09S COMMISSIONER OF INTERNAL REVENUE, Respondent . 0 R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewith to petitioners and to respondent a copy of the pages of the transcript . of the trial of the above case before Special Trial Judge Lewis R . Carluzzo at Miami, Florida, on April 23, 2010, containing his oral findings of fact and opinion rendered at the conclusion of trial . In .accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed) Lewis R . Carluzzo Special Trial Judg e Dated : Washington,D .C . May 12, 2010 11 FiVED MY 13 2010 ; 3 1 Bench Opinion by Special Trial Judge Lewis R . Carluzzo 2 Garrett Ripa & Suzanne Polanco - Ripa v . Commissione r 3 Docket No . 14497-09S April 23, 201 0 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion in this case, an d 6 the following represents the Court's oral findings of 7 fact and opinion . The oral findings of fact an d 8 opinion shall not be relied upon as precedent in any 9 other case . 10 This proceeding for the redetermination of a 11 deficiency is a Small Tax Case conducted pursuant to 12 the provisions of section 7463 of the Internal Revenue 13 Code of 1986, as amended , and Rules 170 through 175 of 14 the Tax Court Rules of Practice and Procedure . 15 This bench opinion is made pursuant to the 16 authority granted by section 7459(b) of the Internal 17 Revenue Code of 1986, as amended, and Rule 152 of the 18 Tax Court Rules of Practice and Procedure . 19 Hereinafter in this bench opinion, unless 20 otherwise specified , section references are to the 21 Internal Revenue Code of 1986, as amended, in effect 22 for 2007 . Rule references are to the Tax Court Rules 23 of Practice and Procedure . 24 Garrett Ripa and Suzanne Polanco-Rip a 25 appeared pro sese . Michelle M . Robles appeared on Heritage Reporting Corporatio n (202) 628-4888 4 1 behalf of respondent . 2 In a notice of deficiency dated March 16, 3 2010, respondent determined a $7,845 deficiency in 4 petitioner's 2007 Federal income tax and imposed a 5 $1,569 section 6662(a) accuracy-related penalty . The 6 issues for decision are : (1) Whether petitioners are 7 entitled to an itemized deduction for charitabl e 8 contributions ; and (2) whether petitioners are liabl e for the above-referenced accuracy-related penalty . 10 Some of the facts have been stipulated an d 11 are so found . Petitioners are married to each other . 12 At the time the petition was filed they resided i n 13 Florida . Actually, very little factual background is 14 necessary . The relevant facts are as follows : 15 Petitioners' 2007 timely filed joint Federal 16 income tax return was prepared by a paid income ta x 17 return preparer . As relevant here, on that return 18 they claimed a $46,220 charitable contribution 19 deduction . Of that amount, $450 is shown as cas h 20 donations and the balance is attributable to property 21 donations . On a Form 8283, Noncash Charitabl e 22 Contributions, the donees are identified as "Church", 23 "Red Cross", "Salvation Army" and "Goodwil l 24 Industries" . That form further describes the donated 25 property as "clothes" and "electronics" . Heritage Reporting Corporation (202) 628-4888 5 1 In the above - referenced notice of deficiency 2 respondent disallowed the charitable contributio n 3 deduction and imposed a section 6662(a) penalty on 4 various grounds . 5 As we have observed in countless opinions, deductions are a matter of legislative grace, an d 7 generally the taxpayer bears the burden of proof to 8 establish entitlement to any claimed deduction . Sec . 9 7491 ( a) ; Rule 142 ( a) ; New Colonial Ice Co . v . 10 Helvering , 292 U .S . 435 , 440 (1934 ) . The taxpayer's 11 burden requires the taxpayer ( 1) to identify a 12 specific statute that allows . for the deduction claimed 13 and ( 2) to substantiate any deduction by keeping and 14 producing for the Commissioner ' s inspection, adequate 15 records that show the expense has been paid o r 16 incurred . Sec . 6001 ; Hradesky v . Commissioner , 6 5 17 T .C . 87, 90 ( 1975 ), affd . per curiam 540 F .2d 821 (5th 18 Cir . 1976) . 19 In general , a taxpayer is allowed to deduct 20 any contributions or gifts made to qualifyin g 21 organizations for their use . See sec . 170(a) . 22 Section 1 .170A-13 (a)(1), Income Tax Regs ., requires 23 that charitable contribution deductions , whether made 24 by cash or otherwise , be substantiated by at least one 25 of the following : ( 1) A canceled check ; ( 2) a receipt Heritage Reporting Corporatio n (202) 628-4888 6 1 or letter from the donee charitable organization 2 showing the name of the donee , the date of th e 3 contribution, and the amount of the contribution ; (3) 4 in the absence of a canceled check, receipt or letter 5 from the donee charitable organization , other reliable 6 written records showing the name of the donee, the 7 date of the contribution, and the amount of th e 8 contribution . If the donation is a small amount, any 9 written or other evidence from the donee charitable 10 organization acknowledging receipt is generall y 11 sufficient . The reliability of the records i s 12 determined on the basis of all relevant facts an d 13 circumstances . See sec . 1 .170A - 13(a)(2 )( C) . Income 14 Tax Regs . 15 In support of the claimed deductions , 16 petitioners offered receipts from two of the donees 17 listed on the return ( identified at trial as exhibits 18 4-P and 5-P) . Respondent objected to the documents on 19 the ground of authenticity . See Fed .R .Evid . 901 ; sec . 20 7453 . The Court reserved ruling on the exhibits . 21 Upon further consideration, respondent's objection to 22 each exhibit will be sustained . Because neithe r 23 exhibit is authentic , neither exhibit is probative . 24 See Rule 174 . 25 Having presented no other substantiating Heritage Reporting Corporatio n (202) 628-4888 7 1 evidence of the type required by section 170 and it s 2 corresponding regulation, petitioners are not entitled 3 to the charitable contribution deduction claimed o n 4 their 2007 return . Respondent's disallowance of that 5 deduction is sustained . 6 Respondent imposed a section 6662(a) 7 accuracy-related penalty in this case . Variou s 8 grounds for the imposition of the accuracy-related 9 penalty are given in the notice of deficiency . The 10 record demonstrates that the imposition of th e 11 accuracy-related penalty is appropriate because (1 ) 12 the petitioners failed to maintain adequate records to 13 support the deduction here in dispute and that failure 14 cons-titutes negligence and (2) the underpayment of tax 15 required to be shown on their 2007 Federal income tax 16 return is a substantial understatement of income tax 17 because it exceeds $5,000 . See section 6662(b)(1) and 18 (2), (c) and (d) . Under the circumstances, the fact 19 that the return was prepared by a paid income tax 20 return preparer does not insulate them from the 21 imposition of the penalty . See sec . 6664(c) . 22 To reflect the foregoing, decision will be 23 entered for respondent . 24 This concludes the Court's oral findings of 25 fact and opinion in this case . Heritage Reporting Corporation (202) 628-4888 1 (Whereupon , at 11 :25 a .m ., the bench opinion 2 in the above - entitled matter was concluded . ) 8 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Heritage Reporting Corporation (202) 628-4888