TAX COURT OPINION

Case: Randall Craig Howard
Docket Number: 18286-10S
Judge: Goeke
Opinion Type: bench
Filed: 06/27/2011
Pages: 7

UNITED STATES TAX COURT WA S INGTON, DC 20217 RANDALL CRAIG HOWARD, Petitioner v. COMMISSIONER OF INTERNAL REVE UE, Respondent ) ) ) ) ) ) ) ) ) O R D E R Docket No. 18286-10S. 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 Petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke at Tampa, Florida, on June 9, 2011, containing his oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, a decision will be entered for r spondent . (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. June 27, 2011 | 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 3 Bench Opinion By Jupge Joseph Robert Goeke June 9, 2011 Randall Craig Howard v. Commissioner Docket No.: 18286-10S THE COURTi 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 odal findings of fact and opinion shall not be relied upon as precedent in any other case. This case was heard pursuant to the provisions of Sectiog 7463 of the Internal Revenue Code in effect at thy time the petition was filed. Pursuant to Section N463(b) the decision to be entered is not reviewable by any other court. Section re erences after this are to the Internal Revenue Code in effect for the years in issue, and the Rule eferences are to the Tax Court Rules of Practice and Procedure. The present case is a deficiency case involving the years 2;007 and 2008. Respondent determined deficienciles in Federal Income Tax for both years in the amounts of $8,253 and $15,210 respectively. Respon ent also determined that the addition to tax under Section 6662(a) was applicable. Heritage eporting Corporation (2'02) 628-4888 4 1 2 3 4 5 6 7 8 9 10 11 12 13 The issues remaining before the Court are whether the Petitio:ner received Schedule C gross receipts in 2007 and 2008, whether Petitioner is liable for self-emp oymegt tax in 2007 and 2008, whether the Petitio er ntitled to certain Schedule A itemized deductions in 2007 and 2008 in excess of the amounts that thè Respondent has allowed, and whether the Petitioner received income in the form of a distribution from,an IRA account in 2008 in the amount of $29, 940 . Finally, the addition to tax is also in dispute as stated previously. At trial Pátitioner also argued that -heas entitled to certain Schedule C expenses in excess of 14. those claimed on his original return for 2007 and 15 16 17 18 19 20 21 22 23 24 25 2008. In the yea s at issue Petitioner worked as a Project Manager for 1 orthwestern Memorial Hospital in Chicago, Illinois. He also said he offered himself out as a self-employed engineer to certain of his friends and associates on a cash basis. However, he had no records of this activity, nor did he have any records supporting the expenses associated with this activity. Although Petitioner's employer did not require that he attend training seminars, he did claim Heritage Rpporting Corporation (2p2) 628-4888 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 5 to have attended various seminars to further his professional status as a Project Manager. He was unable to substantiate these activities, specifically the expenses associated with these activities, and testified at trial that he generally paid for such seminars in cash. Petitioner did not dispute that he received the IRA distribution in 2008 and that the distribution was pròperly taxed to him in that year. We first deal with the question of whether the Petitioner actually had a Schedule C activity as reflected on his amended returns for 2007 and 2008. After hearing Petitioner's testimony about the alleged Schedule C activity e find that the expenses associaþed with that activity are not credible. And, erŠfore, we find that the Petitioner buf ht - had me self-employment income in 2007 and 2008, eer did he have the unde lying expenses reflected on the 2007 and 2008 amended U.S. Income Tax returns. If Petitioner did have any activities outside of his emploiment that related to income, they were not substantiated and they certainly were not at a level consistent with the S hedule C9Ég t t he submitted on the Forms 1040X'Et the two years at ¢ issue. We now turn to the unsubstantiated expenses Heritage Rgporting Corporation (202) 628-4888 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 6 associated with Petitioner's Schedule A. As a matter of law deductions are a matter of legislative grace, and Petitioner has the burden of proving that he is entitled to any of the deductions claimed. Rule 142(a). New Colony Ice Company v. Helvering, 292 U.S. 435, 440 (1934). Taxpayers are required to maintain records sufficient to enable the Commissioner to determine their coryect tax liability, Section 6001 Treasury Reg. Sectiòn 1.6001-1(a). Petitioner claims certain business expenses associated with his driving to various seminars. He submitted what purports to be a record of his driving activities in the years in question -at- trial. We do not find that this record meets the requirements of Section 274-(d), which requires strict substantiation of automobile and tråvel expenses, and, therefore-, we find- that the traveliexpenses Petitioner has claimed on his Schedule A arè not allowable. Zvblut v. Commissioner, T.C. Memo. 2008-44. On his Scheidule A Petitioner also claimed various charitable expenses. Charitable expenses are governed by Section 170(a). The deduction must be substantiated in accordance wi'th regulations under Section 1.170A-13(d) (2) (v). Petitioner had absolutely no substantiation for his claimed charitable expenses, Heritage Rieporting Corporation (2102) 628-4888 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 7 nor did he even haye good records as to the charities involved, and gived ample opportunities to point to his check records, which were stipulated at trial, to substantiate expenses he was unable to do so. We find that Petitioner is hot entitled to any charitable contribution expensps, nor to any other expenses claimed on his Schedule A beyond those amounts allowed by Respondent for lack of substantiat,ion. Finally, etitioner offered no exception to the requirements thÀt the IRA distribution be included in his income in the manner provided by Section 72. We find that Respondent's determinations relative to the IRA distribution are correct . We finally turn to the accuracy related penalty under Section 6662(a). Petitioner claimed the expenses in question without any substantiation and we find that he did not make a reasonable attempt to comply with the provisions of the Internal Revenue Code. Therefore, we uphold the substantial understatement penaliy as determined by Respondent . When& to provide reasonable cause Petitioner had no testimony to support a reasonable cause for his 2007 and 2008 Federal Income Tax returns. In accord with this opinion a decision will be entered for Respondent . Heritage Reporting Corporation (202) 628-4888 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 8 This concludes the Court's oral findings of fact and opinion i this case. (Whereupoþ, at 12 : 54 p . m. , the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // // // // // // // // // // Heritage Ryporting Corporation (202) 628-4888