TAX COURT OPINION

Case: Nora G. Castillo
Docket Number: 20265-12S
Judge: Gale
Opinion Type: bench
Filed: 09/19/2013
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 NORA G. CASTILLO, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ORDE R ) ) ) ) Docket No. 20265-12S. Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to the parties a copy of the pages of the transcript in the above case before Judge Joseph H. Gale for the Los Angeles, California trial session on September 10, 2013, containing his oral findings of fact and opinion. Decision will be held in abeyance pending the parties' consideration of whether the petitioner is entitled to head of household filing status for 2010. (Signed) Joseph H. Gale Judge Dated: Washington, D.C. September 19, 2013 SERVED SEP 1 9 2013 Capital Reporting Company 3 Bench Opinion by Judge Joseph H. Gale September 10, 2013 Nora G. Castillo v. Commissioner Docket No. 20265-12S Judge: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. This case was heard as a Small Tax Case pursuant to the provisions of section 7463 of the Internal Revenue Code in effect when the petition was filed. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code and Rule 152 of the Tax Court Rules of Practice and Procedure. Hereinafter, all section references are to the Internal Revenue Code in effect for the year at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Petitioner Nora G. Castillo appeared on her own behalf. Christopher J. Richmond appeared on behalf of respondent. Respondent determined a $2,408 deficiency in petitioner's 2010 Federal income tax based on 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 unreported income. Petitioner timely petitioned for redetermination. Petitioner concedes that she had the unreported income, but contends that she is entitled to deductions for automobile expenses that she incurred in connection with earning this income. 6 Petitioner also contends that the deficiency 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 respondent determined is too high in view of the amount of income she failed to report. We must decide: (1) whether petitioner has shown entitlement to any additional deductions, and (2) whether the deficiency determined is otherwise correct. BACKGROUND Some of the facts have been stipulated and are so found. Petitioner resided in California at the time the petition was filed. During 2010 petitioner provided non- employee services to Senior Care Consulting as a home health care worker. She received $5,047 in non- employee compensation from Senior Care Consulting for these services. In connection with rendering the services, petitioner drove her own automobile from one work location to another, and used her vehicle to drive clients to medical appointments and on various errands. Petitioner did not keep a contemporaneous log of her mileage driven, however, and at trial did 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 not produce any documentary evidence of any expenses arising from her use of her automobile in connection 3 with rendering the services for Senior Care 4 Consulting. Petitioner is uncertain of the mileage 5 6 7 8 9 driven. Petitioner timely filed a Federal income tax return on Form 1040 for taxable year 2010, but did not report the $5,047 of non-employee compensation that she received from Senior Care 10 Consulting or claim any vehicle expenses in 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 connection therewith. Respondent, having received an information return from Senior Care Consulting indicating that it had paid petitioner non-employee compensation in that amount, issued petitioner a notice of deficiency determining that she had failed to report non-employee compensation of $5,047, which gave rise to various computational adjustments resulting in a deficiency in income tax of $2,408 for 2010. DISCUSSION Generally, the Commissioner's determinations are presumed correct, and the taxpayer bears the burden of proving those determinations wrong. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Taxpayers are required to maintain - www.CapitalReportingCompany.com 866.488.DEPO Capita Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 records that are sufficient to enable the Commissioner to determine their correct tax liability. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. Deductions are a ma·tter of legislative grace, and the burden of showing entitlement to a claimed deduction is on the taxpayer. Rule 142 (a)'; INDOP,CO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Certain business expenses described in section 274 (d) are subject to especially strict substantiation rules. Those expenses include the use of "listed property, " defined in section 280F (d) (4) to include passenger automobiles. To deduct automobile expenses, the taxpayer must "substantiate H by adequate records or by sufficient evidence fo] corroboratÑ the taxpayer' s own tes=t=-i-merf" four Jti elements. Sec. 274(d). These elements are: "(1) the amount of the expense; (2) the mileage for each business use of the vehicle as well as the total 19 mileage for all purposes during the taxable period; 20 21 22 23 24 25 (3) the date on which the property was used; and (4) the business purpose of the property." Didonato v. Commissioner, T.C. Memo. 2013-11, 2013 WL 149637, at * 25. For such expenses, we cannot estimate the allowable deductions. Id., at * 26 (citing Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd 412 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 F.2d 201 (2d Cir. 1969). Thus, to claim deductions for automobil.e expenses, petitioner must satisfy stringent substantiation requirements. But petitioner has offered no evidence to substantiate any of her claimed expenses. Therefore, petitioner is not entitled to any deductions for automobile expenses. As to petitioner's contention that the deficiency amount is too high given the amount of income she failed to report, we observe, as recorded in the notice of deficiency, that the additional $5,047 in income that she failed to report triggered a number of adjustments above and beyond the additional $705 in income tax due. The additional income also caused petitioner to be liable for self- employment tax of $713 and reduced the earned income tax credit to which she was entitled by $990. 18 Petitioner has in- any event offered no evidence of 19 20 21 22 any specific error in the deficiency determination. We therefore sustain the deficiency, subject to one qualification. The qualification is as follows. 23 Petitioner claimed two dependents on her 2010 return 24 25 but a filing status of "single." Respondent has apparently accepted these items. However, it would 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 - appear that petitioner' s having dependents may 2 entitle her to head of household filing status for 3 4 2010. We will therefore withhold entering a decision f.oer this case pending the parties' consideration of H S whether petitioner is entitled to head of household filing status for 2010. In consider the foregoing an appropriate decision will be entered. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 5:00 p.m., the above- entitled matter was concluded.) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com