t c summary opinion united_states tax_court christopher john totten petitioner v commissioner of internal revenue respondent docket no 10691-14s filed date christopher john totten pro_se peter t mccary and a gary begun for respondent summary opinion ashford judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed 1unless otherwise indicated all section references are to the internal_revenue_code in effect for the years at issue and all rule references are to the tax_court rules_of_practice and procedure some monetary amounts are rounded continued pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case by statutory_notice_of_deficiency dated date respondent determined the following deficiencies in petitioner’s federal_income_tax additions to tax pursuant to sec_6651 and accuracy-related_penalties pursuant to sec_6662 for the and taxable years years at issue year deficiency dollar_figure big_number addition_to_tax sec_6651 accuracy-related_penalty sec_6662 dollar_figure big_number dollar_figure big_number after concessions the following issues remain for decision whether an individual_retirement_account ira distribution of dollar_figure that petitioner received was a taxable_distribution for if so whether petitioner is liable for the additional tax imposed by sec_72 on the ira distribution for whether the payment of dollar_figure that petitioner received was taxable gross_receipts he should have reported on schedule c profit or loss from business for continued to the nearest dollar whether petitioner is entitled to deductions claimed on schedule a itemized_deductions for unreimbursed employee business_expenses of dollar_figure and dollar_figure amounts greater than respondent allowed for and respectively whether petitioner is entitled to schedule a miscellaneous_itemized_deductions of dollar_figure for tax preparation fees and dollar_figure for attorney’s and accountant’s fees for and dollar_figure for tax preparation fees for whether petitioner is entitled to a schedule a deduction for charitable_contributions of dollar_figure an amount greater than respondent allowed for whether petitioner is entitled to a deduction of dollar_figure for repair expenses claimed on schedule e supplemental income and loss for whether petitioner is entitled to a capital_loss deduction of dollar_figure claimed on schedule d capital_gains_and_losses for whether petitioner is entitled to residential energy credits of dollar_figure an amount greater than respondent allowed for and dollar_figure for whether petitioner is entitled to a first-time_homebuyer credit of dollar_figure for and whether petitioner is liable for additions to tax for failure to timely file a tax_return for the years at issue we resolve all issues in favor of respondent background some of the facts have been stipulated and are so found the stipulation of facts first supplemental stipulation of facts second supplemental stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in florida when he timely filed his petition with the court i petitioner’s medical sales work during the years at issue petitioner was a medical sales representative working as a full-time w-2 wage earner for an employer and as an independent_contractor primarily for a medical sales company as an employee petitioner sold and provided repair services for medical equipment medical_supplies and computer systems as an independent_contractor he sold small accessories that complemented his employer’s medical products and that his employer did not sell petitioner worked out of his home_office and drove his mercedes benz e500 mercedes to various medical facilities and hospitals within his designated geographical territory of central florida to sell the medical products of his employer and the medical sales company because the medical product sec_2petitioner’s form_1040 u s individual_income_tax_return for return included two forms 1099-misc miscellaneous income one from the medical sales company and one from a medical center complemented each other petitioner drove the same route and visited the same physicians and hospitals for both his employer and the medical sales company each week petitioner would occasionally travel outside the designated geographical territory of his employer but when he did so it was by plane an expense for which his employer reimbursed him his employer did not however reimburse travel_expenses within his designated geographical territory ii petitioner’s additional income in in the parent company of one of petitioner’s clients asked him to install a computer server and a workstation petitioner purchased the computer server the necessary software and the workstation and installed them for the parent company he received dollar_figure from the parent company in petitioner also received an ira distribution of dollar_figure in as of the close of petitioner was under 59½ years of age iii petitioner’s real_property during the years at issue petitioner resided at all times at his home on bimini drive bimini property in orlando florida which he purchased in petitioner purchased a condominium on travini circle travini property in sarasota florida in as an investment_property and rented it to tenants during the years at issue on date petitioner purchased a property on l b mcleod road mcleod property in orlando florida but he did not reside at the property in iv tax_return petitioner used tax preparation software to prepare his return and filed it late on date on the return he listed the bimini property address as his home address he reported wages of dollar_figure dollar_figure paid from his employer and dollar_figure paid from a financial services employer dollar_figure of ordinary dividends and dollar_figure of other income from a form 1099-misc petitioner attached to the return a schedule a a schedule c and a schedule e he claimed dollar_figure of itemized_deductions on the schedule a a dollar_figure deduction on the schedule c for a net_loss for his business as a medical sales representative and a dollar_figure deduction on the schedule e for a rental real_estate loss for the travini property a schedule a for as relevant here on the schedule a petitioner claimed a deduction of dollar_figure for noncash charitable_contributions and miscellaneous deductions before application of the floor of sec_67 of dollar_figure a form_8283 3the record does not include a copy of a form 1099-misc reporting dollar_figure for and neither petitioner nor respondent explained whether this reported amount related to petitioner’s work as a medical sales representative noncash charitable_contributions attached to the return provided the details of petitioner’s schedule a noncash charitable_contributions in part i of section a of this form captioned donated property dollar_figure or less and certain publicly traded securities--information on donated property he reported donating clothes computers and furniture with an aggregate reported fair_market_value of dollar_figure to a donation center and in part i of section b of this form captioned donated property over dollar_figure except certain publicly_traded_securities --information on donated property petitioner reported donating to a foundation n ew toys h ousehold items money with an aggregate reported appraised fair_market_value of dollar_figure the schedule a miscellaneous deductions consisted of dollar_figure for unreimbursed employee business_expenses dollar_figure for tax preparation fees and dollar_figure for attorney’s and accountant’s fees according to a form 2106-ez unreimbursed employee business_expenses attached to the return petitioner’s unreimbursed employee business_expenses consisted of dollar_figure for passenger_automobile expenses using the standard mileage rate and dollar_figure for business_expenses other than passenger_automobile expenses parking fees tolls 4in the description of donated property following money is a word beginning with the letter c that is cut off by the next column transportation travel_expenses and meal and entertainment_expenses on the form 2106-ez petitioner reported driving his passenger_automobile big_number miles for business zero miles for commuting and big_number miles for other purposes b schedule c schedule e and credits for as relevant here on the schedule c petitioner reported total gross_receipts of dollar_figure from the medical sales company and the medical center and total expenses of dollar_figure including dollar_figure for car and truck expenses on the schedule e petitioner reported among other things dollar_figure of rental income and dollar_figure of total expenses including dollar_figure for repairs for the travini property petitioner also claimed a residential_energy_efficient_property_credit of dollar_figure shown on a form_5695 residential energy credits for qualified_geothermal_heat_pump_property costs of dollar_figure related to the bimini property v tax_return petitioner used tax preparation software to prepare a form_1040 for return and filed it late on date on the return he listed the mcleod property address as his home address he reported wages of dollar_figure paid from his employer and dollar_figure of taxable interest he also reported dollar_figure as an ira distribution on line 15a of the tax_return with rollover noted next to line 15a and reported zero as the taxable_amount of the ira distribution on line 15b petitioner attached to the return a schedule a a schedule c and a schedule d he claimed dollar_figure of itemized_deductions on the schedule a a dollar_figure deduction on the schedule c for a net_loss for his business as a medical sales representative and a dollar_figure deduction on the schedule d for a net_long-term_capital_loss after the limitation imposed by sec_1211 a schedule a for as relevant here on the schedule a petitioner claimed a deduction before application of the floor of sec_67 of dollar_figure for miscellaneous deductions consisting of dollar_figure for unreimbursed employee business_expenses and dollar_figure for tax preparation fees according to a form 2106-ez attached to the return petitioner’s unreimbursed employee business_expenses consisted of dollar_figure for passenger_automobile expenses using the standard mileage rate dollar_figure for travel_expenses while away_from_home_overnight dollar_figure for meals and entertainment_expenses after reducing the amount by the limitation imposed by sec_274 and dollar_figure for business_expenses other than passenger_automobile expenses parking fees tolls transportation travel_expenses and meal and entertainment_expenses on the form 2106-ez petitioner reported driving his passenger_automobile big_number miles for business zero miles for commuting and big_number miles for other purposes b schedules c and d for as relevant here on the schedule c petitioner did not report any gross_receipts or the dollar_figure he received from the parent company in on the schedule d petitioner reported long-term_capital_losses consisting of dollar_figure from the sale of shares of munder growth opportunities fund class a munder growth and dollar_figure from the sale of shares of davis new york venture fund class a davis ny venture on the schedule d petitioner reported the following property date acquired date date munder growth davis ny venture date date date sold sale price dollar_figure big_number cost or other basis dollar_figure big_number c credits for petitioner also claimed a nonbusiness_energy_property_credit of dollar_figure shown on a form_5695 for qualified natural_gas propane or oil furnace or hot water boiler costs of dollar_figure related to the bimini property lastly petitioner claimed a credit of dollar_figure on a form_5405 first-time_homebuyer credit and repayment of the credit on the form_5405 petitioner listed a property on marathon avenue marathon property in orlando florida as the home qualifying for the credit petitioner reported purchasing the property on date and entering into a binding contract to purchase the property before date i burden_of_proof discussion in general the commissioner’s determinations set forth in a notice_of_deficiency are presumed correct and except for the burden of production in any court_proceeding with respect to a taxpayer’s liability for any penalty addition_to_tax or additional_amount see sec_7491 the taxpayer bears the burden of proving otherwise see rule a 290_us_111 the burden of production remains on the taxpayer even with respect to the additional tax under sec_72 because the sec_72 additional tax is a tax and not a penalty addition_to_tax or additional_amount within the meaning of sec_7491 see elaine v commissioner tcmemo_2017_3 at and cases cited thereat however for this presumption to adhere in cases such as this one involving unreported income the commissioner must provide some reasonable foundation connecting the taxpayer with the income-producing activity see 994_f2d_1542 11th cir aff’g tcmemo_1991_636 once the commissioner has done this the burden_of_proof shifts to the taxpayer to prove by a preponderance_of_the_evidence that the commissioner’s determinations are arbitrary or erroneous 293_us_507 it is undisputed that during the years at issue petitioner was a medical sales representative petitioner also conceded that he received dollar_figure from the parent company of one of his clients on the basis of this credible and undisputed evidence we are satisfied that respondent has proved a likely source of the unreported income thus the burden_of_proof shifts to petitioner to show that respondent’s determination in regard to the unreported income was arbitrary or erroneous 5as noted supra pp petitioner did report on hi sec_2010 return that he received an ira distribution of dollar_figure but reported zero as the taxable_amount 6we also note that under sec_6201 if a taxpayer asserts a reasonable dispute with respect to an item_of_income reported on an information_return filed by a third party and the taxpayer meets certain other requirements the commissioner bears the burden of producing reasonable and probative evidence in addition to the information_return concerning the portion of the deficiency attributable to the income item petitioner has not raised a reasonable dispute with respect to the accuracy of income reporting by the third parties here indeed he concedes that he received the reported income to the extent petitioner attempts to dispute the accuracy of the reporting see infra pp we conclude in any event it is not reasonable under sec_6201 see eg carlson v commissioner tcmemo_2012_76 hyde v commissioner tcmemo_2011_131 accordingly the burden of production with respect to the income in this case does not shift to respondent under sec_6201 petitioner does not otherwise contend that the burden_of_proof should shift to respondent under sec_7491 as to any relevant issue of fact nor has he established that the requirements for shifting the burden_of_proof under sec_7491 have been met accordingly the burden_of_proof remains on petitioner ii taxability of ira distribution and additional tax under sec_72 petitioner conceded that he received an ira distribution of dollar_figure in however petitioner reported the ira distribution as a nontaxable rollover on hi sec_2010 return sec_408 provides that any amount_paid or distributed out of an ira is included in the gross_income of the payee or distributee as provided under sec_72 an amount will not be treated as a taxable_distribution from an ira if it is a qualified rollover sec_408 a distribution is considered a qualified rollover_distribution if the entire amount an individual receives is paid into a qualifying ira or other eligible_retirement_plan within days of the distribution sec_408 petitioner testified that he used the funds to pay medical_expenses the ira distribution did not therefore meet the requirements for a qualified rollover_distribution we sustain respondent’s determination that the ira distribution was a taxable_distribution for sec_72 imposes an additional tax on early distributions from a qualified_retirement_plan including an ira made to a taxpayer before he attains the age of 59½ see sec_72 a i c petitioner had not attained the age of 59½ when he received the distribution at issue the ira distribution was therefore an early distribution subject_to the additional tax the additional tax however does not apply for certain enumerated exceptions see sec_72 petitioner asserts that the exceptions for a distribution attributable to the individual’s being disabled within the meaning of sec_72 and a distribution made to an individual for medical_care expenses apply to his distribution see sec_72 b sec_72 provides that a person shall be considered disabled if he is unable to engage in any substantial_gainful_activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration the regulations provide that a n individual will not be deemed disabled if with reasonable effort and safety to himself the impairment can be diminished to the extent that the individual will not be prevented by the impairment from engaging in his customary or any comparable substantial_gainful_activity sec_1 17a f income_tax regs whether an impairment constitutes a disability is to be determined by considering all of the facts in the case sec_1_72-17a income_tax regs although petitioner submitted evidence that sufficiently proves that during the year at issue he had a serious medical illness he was employed full time throughout as a medical sales representative according to petitioner’s mileage logs for the years at issue he drove between and miles on a given day within his designated geographical territory his and returns apart from the ira distribution in show that his employment was his primary source_of_income during those years petitioner’s work with his employer and as an independent_contractor with the medical sales company required him to travel daily within his designated territory to sell medical equipment we do not doubt that petitioner’s illness placed certain limitations on him however his illness clearly did not prevent him from engaging in substantial_gainful_activity see id subpara we find that petitioner was therefore not disabled within the meaning of sec_72 further petitioner did not present any evidence to support his contention that he used the funds from the ira distribution to pay for medical_care expenses in on the record before us we find that none of the enumerated statutory exceptions applies to petitioner we sustain respondent’s determination to impose the sec_72 additional tax on the total amount of the ira distribution for iii schedule c gross_receipts petitioner conceded that he received dollar_figure from the parent company in respondent determined that petitioner should have reported that income as schedule c gross_receipts petitioner asserts that the amount was not taxable_income but rather reimbursement for items he had purchased on behalf of the parent company sec_61 defines gross_income as all income from whatever source derived including compensation_for services whether furnished by the taxpayer as an employee a self-employed_person or an independent_contractor and gross_income derived from a business see sec_61 and 348_us_426 petitioner argued at trial that the payments from the parent company were to reimburse him for his purchases of the computer server and the workstation he had installed for them in while reimbursement may be a possible explanation for the payments petitioner’s assertions are not supported by credible_evidence petitioner introduced at trial only the bottom portion of a check stub with an invoice date of date for dollar_figure and the notation server as the description petitioner testified that this payment was a reimbursement for his purchase of the computer server and that he received a separate check as reimbursement for his purchase of the workstation however the check stub neither states the name of the payor nor provides an explanation of the description moreover petitioner did not present any evidence showing he had purchased the computer server and the workstation even if petitioner had been reimbursed for his purchases of the computer server and the workstation he would have been compensated in some amount for the accompanying services he provided to the parent company to install the equipment on hi sec_2010 schedule c however petitioner reported zero gross_receipts and did not provide any evidence including testimony as to whether that income was reported elsewhere on hi sec_2010 return petitioner also did not provide any testimony to establish whether his services for the parent company were services provided through his employer accordingly we sustain respondent’s determination to include the dollar_figure from the parent company in petitioner’s income as schedule c gross_receipts for iv deductions tax deductions are a matter of legislative grace and the taxpayer bears the burden of proving entitlement to any deduction claimed 503_us_79 292_us_435 this burden requires the taxpayer to demonstrate that the claimed deductions are allowable pursuant to some statutory provision and to substantiate the expenses giving rise to the claimed deductions by maintaining and producing adequate_records that enable the commissioner to determine the taxpayer’s correct liability sec_6001 116_tc_438 65_tc_87 aff’d per curiam 540_f2d_821 5th cir a schedule a deductions for unreimbursed employee business_expenses for the years at issue petitioner claimed schedule a deductions for unreimbursed employee business_expenses for the years at issue in the following categories as reported on his and forms 2106-ez passenger_automobile expenses using the standard mileage rate for the years at issue business_expenses other than passenger_automobile expenses parking fees tolls transportation travel_expenses and meals and entertainment_expenses for the years at issue travel_expenses while away_from_home_overnight for and meal and entertainment_expenses for sec_162 allows a taxpayer to deduct all ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business see sec_162 sec_1_162-1 income_tax regs generally the performance of services as an employee constitutes a trade_or_business 54_tc_374 unreimbursed employee business_expenses are generally deductible under sec_162 subject_to the floor of sec_67 a taxpayer cannot deduct employee business_expenses to the extent he is entitled to reimbursement from his employer for those expenses see 79_tc_1 the taxpayer bears the burden of proving that he is not entitled to reimbursement from his employer for such expenses see 59_tc_696 the taxpayer can prove that he is not entitled to reimbursement by showing for example that he is expected to bear these costs see id pincite an expense for which the taxpayer is entitled to but does not claim reimbursement from his employer is generally not considered necessary and thus is not deductible under sec_162 788_f2d_1406 9th cir aff’g tcmemo_1984_533 24_tc_21 whether an expense is deductible under sec_162 is a question of fact to be decided on the basis of all the relevant facts and circumstances 97_tc_613 citing 320_us_467 under the cohan_rule if the taxpayer establishes that an expense is deductible but is unable to substantiate the precise amount the court may estimate the amount of the deductible expense bearing heavily against the taxpayer whose inexactitude is of his own making see 39_f2d_540 2d cir see also 85_tc_731 in order for the court to estimate the amount of a deductible expense the taxpayer must establish some basis upon which an estimate may be made 939_f2d_874 9th cir aff’g in part rev’g in part tcmemo_1989_390 vanicek v commissioner t c pincite otherwise an allowance would amount to unguided largesse norgaard v commissioner f 2d pincite quoting 245_f2d_559 5th cir the cohan_rule however is superseded--that is estimates are not permitted--for certain expenses specified in sec_274 such as traveling expenses including meals_and_lodging while away from home entertainment_expenses and listed_property including passenger_automobile expenses sec_274 sec_280f sec_1_274-5t temporary income_tax regs fed reg date flush language see 122_tc_305 instead these types of expenses are subject_to strict substantiation rules 50_tc_823 aff’d per curiam 412_f2d_201 2d cir sec_1_274-5t temporary income_tax regs supra these strict substantiation rules generally require the taxpayer to substantiate with adequate_records or by sufficient evidence corroborating the taxpayer’s own statement the amount of the expense the time and place the expense was incurred the business_purpose of the expense and in the case of an entertainment expense the business relationship between the person entertained and the taxpayer balyan v commissioner tcmemo_2017_140 at sec_1_274-5t temporary income_tax regs fed reg date for listed_property expenses including passenger_automobile expenses in addition to the time such expenses were incurred and their business_purpose the taxpayer must establish the amount of the business use and the total use of such property balyan v commissioner at sec_1_274-5t temporary income_tax regs fed reg date generally deductions for meal and entertainment_expenses are subject_to the limitation imposed by sec_274 substantiation by adequate_records requires the taxpayer to maintain an account book diary log statement of expense trip sheet or similar record prepared contemporaneously with the expenditure and documentary_evidence such as receipts or paid bills which together provide each element of an expenditure balyan v commissioner at sec_1_274-5 income_tax regs sec_1_274-5t temporary income_tax regs fed reg date petitioner testified that his employer did not reimburse expenses for travel within his designated geographical territory but it did reimburse for expenses including out of pocket expenses for travel outside of his designated geographical territory as well as expenses for large dinners and educational seminars petitioner did not produce a copy of his employer’s reimbursement policy although he testified that he had a copy of it while we find his testimony credible as to his employer’s reimbursement policy petitioner has failed to substantiate his expenses by adequate_records or by sufficient evidence corroborating his own statement passenger_automobile expenses petitioner claimed deductions for expenses for his mercedes a passenger_automobile using the standard mileage rate of dollar_figure and dollar_figure for and respectively expenses for a passenger_automobile cannot be estimated because they are subject_to the strict substantiation rules of sec_274 see sec_1_274-5 income_tax regs respondent conceded that petitioner was entitled to a deduction of dollar_figure for expenses for his mercedes for on his forms 2106-ez petitioner reported driving his mercedes big_number miles for business zero miles for commuting and big_number miles for other purposes in and big_number miles for business zero miles for commuting and big_number miles for other purposes in petitioner testified that his work with his employer and as an independent_contractor for the medical sales company required him to travel to various medical facilities and hospitals within his designated geographical territory to sell medical equipment petitioner also testified that he traveled the same route from his home_office to the same medical facilities and hospitals for both his employer and the medical sales company because the medical products complemented each other petitioner introduced monthly mileage logs for the years at issue and to substantiate the expenses for his mercedes petitioner testified that the mileage reported in the mileage logs was attributable only to his travel within his designated geographical territory and not to travel outside that territory the record does not indicate whether petitioner maintained the mileage logs contemporaneously even if they were maintained contemporaneously we do not find that petitioner’s mileage logs for the years at issue adequately meet the strict substantiation rules of sec_274 or are credible the monthly mileage logs for the years at issue list four weeks per month from monday to friday without any corresponding dates and list the names of medical facilities or hospitals with a corresponding figure representing an alleged mileage calculation the mileage logs fail to identify a business_purpose for the miles recorded including whether sales were made for his employer or the medical sales company or both at each location according to the mileage logs petitioner drove a total of big_number business miles and big_number business miles in and respectively for his business less than the figures reported on the forms 2106-ez for both years furthermore petitioner’s mileage logs are also contradicted by a maintenance report petitioner introduced for his mercedes according to the maintenance report petitioner’s mercedes was driven big_number total miles between date and date whereas petitioner reported on his mileage logs driving big_number business miles alone between date and date accordingly we sustain respondent’s disallowance of the schedule a deductions for passenger_automobile expenses for in excess of what respondent has already allowed and other business_expenses petitioner also reported other business_expenses of dollar_figure and dollar_figure for and respectively in connection with his employment as a medical sales representative respondent conceded that petitioner was entitled to a deduction of dollar_figure for cellular phone services for dollar_figure for storage expenses for each of the years at issue and dollar_figure for various other expenses for at trial petitioner did not testify or produce records to identify and substantiate any other business_expenses for or in excess of what respondent has allowed petitioner has not established that these other expenses were paid_or_incurred or that they were ordinary and necessary accordingly we sustain respondent’s disallowance of the schedule a deductions for other business_expenses for the years at issue in excess of what respondent has already allowed 7the court notes that for petitioner reported expenses of dollar_figure for his mercedes on both his schedule a and schedule c in addition to the conceded schedule a deduction of dollar_figure for expenses for his mercedes for respondent also conceded that petitioner was entitled to a schedule c deduction of dollar_figure for car and truck expenses for his medical sales trade_or_business for for the mercedes travel and meal and entertainment_expenses lastly petitioner reported travel_expenses while away_from_home_overnight of dollar_figure and meal and entertainment_expenses of dollar_figure for travel and meal and entertainment_expenses cannot be estimated because they are subject_to the strict substantiation rules of sec_274 petitioner did not testify or produce documents to identify and substantiate these expenses petitioner thus has not established that these expenses were paid_or_incurred or that they were ordinary and necessary we sustain respondent’s disallowance of the schedule a deductions for travel and meal and entertainment_expenses for b schedule a deductions for tax preparation fees for and and attorney’s and accountant’s fees for petitioner claimed schedule a miscellaneous deductions before application of the floor of sec_67 of dollar_figure and dollar_figure for tax preparation fees for and respectively and dollar_figure for attorney’s and accountant’s fees for petitioner testified that he used tax preparation software to prepare his and tax returns but did not provide any testimony to explain the attorney’s and accountant’s fees for regardless petitioner at trial did not offer any testimony or records or other_sufficient_evidence to substantiate these expenses we sustain respondent’s disallowance of these schedule a miscellaneous deductions for the years at issue c schedule a deduction for charitable_contributions for petitioner claimed a schedule a deduction of dollar_figure for noncash contributions for a taxpayer may deduct charitable_contributions made during the taxable_year sec_170 a charitable_contribution is defined as a contribution or gift to or for_the_use_of a charitable_organization sec_170 however deductions for charitable_contributions are allowed only if the taxpayer satisfies statutory and regulatory substantiation requirements see sec_170 sec_1_170a-13 income_tax regs the required substantiation depends on the size of the contribution and on whether it is a gift of cash or property for any contributions of cash checks or other monetary gifts the taxpayer must substantiate each contribution with a bank record ie canceled check or a written communication ie receipt or letter from the charitable_organization showing the name of the organization the date of the contribution and the amount of the contribution sec_170 for any contributions of property other than money the taxpayer must substantiate each contribution with a receipt eg letter or other written communication from the charitable_organization showing the name of the organization the date and location of the contribution and a description of the property in reasonably sufficient detail though the fair_market_value need not be stated sec_1_170a-13 income_tax regs for any contributions of dollar_figure or more the taxpayer must substantiate the contribution with a contemporaneous written acknowledgment from the charitable_organization sec_170 the written acknowledgment must include the amount of cash and a description but not the value of any property other than cash contributed whether the charitable_organization provided any goods or services in consideration for the contribution and a description and good-faith estimate of the value of any goods or services provided by the charitable_organization or if such goods and services consist solely of intangible religious benefits a statement to that effect sec_170 sec_1_170a-13 income_tax regs the acknowledgment is contemporaneous if the taxpayer obtains it from the charitable_organization on or before the earlier of the date the taxpayer files a tax_return for the year of contribution or the separate contributions of less than dollar_figure are not subject_to the requirements of sec_170 regardless of whether the sum of the contributions made by a taxpayer to a donee organization during a taxable_year equals dollar_figure or more sec_1_170a-13 income_tax regs sec_170 provides an exception to the contemporaneous written acknowledgment requirement petitioner does not assert that this exception applies due_date including extensions for filing that tax_return sec_170 in the absence of a contemporaneous written acknowledgment meeting the statute’s requirements n o deduction shall be allowed sec_170 to substantiate a contribution exceeding dollar_figure the taxpayer is required to maintain additional reliable written records for each item of donated property sec_170 sec_1_170a-13 and income_tax regs these records must include among other things the approximate date the property was acquired and the manner of its acquisition a description of the property in detail reasonable under the circumstances the cost or other basis of the property the fair_market_value of the property at the time it was contributed and the method used in determining its fair_market_value sec_170 sec_1_170a-13 and d i income_tax regs there are also more rigorous substantiation requirements for contributions of property exceeding dollar_figure sec_170 to substantiate a contribution exceeding dollar_figure the taxpayer must also obtain a qualified_appraisal of the items and attach to his tax_return a fully completed appraisal_summary dollar_figure sec_170 and sec_1_170a-13 income_tax regs provide rules governing the requirements for a qualified_appraisal sec_1_170a-13 income_tax regs provides the rules governing the continued sec_170 c sec_1_170a-13 income_tax regs the irs has prescribed form_8283 to be used as the appraisal_summary costello v commissioner tcmemo_2015_87 at jorgenson v commissioner tcmemo_2000_38 tax ct memo lexi sec_38 at s imilar items of property must be aggregated in determining whether gifts exceed the dollar_figure or dollar_figure thresholds sec_170 the term similar items of property is defined as property of the same generic category or type such as clothing furniture electronic equipment household appliances toys and everyday kitchenware sec_1_170a-13 income_tax regs on his form_8283 petitioner reported that on date he donated clothes computers and furniture to the donation center with an aggregate fair_market_value of dollar_figure that the date acquired was various that the contributed items were acquired by purchase that he had a cost or adjusted_basis in the contributed items of dollar_figure and that consignment shop was the method used to determine the fair_market_value on the form_8283 petitioner also reported that he donated to the foundation new and unopened toys household_items and money with an appraised fair_market_value of dollar_figure and with continued requirements for an appraisal_summary date as the date acquired that the contributed items were acquired by purchase that he had a cost or adjusted_basis in the contributed items of dollar_figure and that their overall physical condition was brand new items unopened at trial petitioner argued that a portion of his noncash contributions also included the value of a vehicle--a mercedes c280w mercedes --he had donated in respondent conceded that petitioner substantiated dollar_figure of noncash charitable_contribution sec_12 and dollar_figure of cash charitable contributions13 for respondent contended that petitioner is entitled neither to a deduction for the remaining amount dollar_figure of noncash contributions to the donation center and the foundation nor to any deduction for the vehicle donation because of lack of substantiation we agree with respondent with respect to the contribution of money to the foundation listed on his form_8283 petitioner did not offer any testimony or records to identify and substantiate this cash contribution 12respondent did not specify whether the conceded amount of dollar_figure was attributable to noncash contributions to the donation center the foundation or both 13petitioner introduced at trial two letters from separate charitable organizations acknowledging receipt of his cash donations of dollar_figure and dollar_figure at trial petitioner introduced three handwritten receipts from the donation center dated march april and date listing various donated items four photographs of toys and individuals collecting the toys an in-kind donation form from the foundation for a donation on date listing the donated items as new toys bicycles blanket with an estimated value of dollar_figure a letter from the foundation dated date acknowledging receipt of petitioner’s generous contribution of holiday gifts and a bill of sale for the mercedes listing the date petitioner purchased the vehicle as date for a cash_value of dollar_figure with respect to the contributions of property we must aggregate similar items to determine what substantiation was required because the aggregate values of the claimed contributions of property exceed dollar_figure the property petitioner allegedly donated may be grouped into the following categories clothing furniture electronic equipment household_items household appliances toys 14the date receipt lists computer monitors dell desktop 6x270 tv office chair desk bags of clothing king bed set hp printers coffee table bag of cookware polaroid camera pair boots dress shirts mini refrigerator--pepsi a portion of the date receipt is cut off including the year because of how the document was copied but respondent did not object to its being admitted on that basis this receipt lists clothing glass dishes christmas the date receipt lists hp desktop computer kitchenware and a vehicle except with respect to the vehicle as discussed below petitioner’s failure to maintain adequate_records makes it impossible to itemize values for each category in order to determine what substantiation was required for each category petitioner testified that the aggregate value of the property donated to the donation center was based on the value assigned by the donation center to similar items for sale at the time of the donation he also testified that the aggregate estimated value he listed in the foundation’s in-kind donation form dollar_figure was based on the actual costs of the items petitioner contended that he had saved the receipts for each item to document his donation but had attached the receipt to the items when they were donated to the foundation petitioner testified that he had kept an itemized list of the donations to the foundation in a notebook where he had written the name of the item and the assigned value but no longer had this notebook even so petitioner failed to satisfy any of the substantiation requirements for the noncash contributions he did not provide respondent or the court with a contemporaneous written acknowledgment from the donation center or the foundation for the donations additionally he did not maintain written records establishing when or how the donated items were acquired or their cost petitioner also did not maintain written records establishing how he calculated the fair market values for the donated items petitioner acknowledged at trial that he did not obtain a qualified_appraisal for any of the donated items petitioner also did not attach a fully completed appraisal_summary to his return his form_8283 lists various for the dates the items donated to the donation center were acquired and fails to contain the signature of petitioner the appraiser or the foundation for the items donated to the foundation see sec_1_170a-13 income_tax regs he therefore failed to satisfy the substantiation requirements for any contributions of property exceeding dollar_figure dollar_figure or dollar_figure in value with respect to the contribution of the vehicle petitioner contended that he donated the mercedes in sec_170 provides that a taxpayer is not entitled to a deduction for a contribution of a qualified_vehicle with a claimed value exceeding dollar_figure unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment16 of the contribution by the charitable_organization petitioner testified that he donated the vehicle to a women’s charity whose name he could not remember he acknowledged he did sec_170 provides rules governing the requirements for a qualified_vehicle sec_170 provides rules governing the requirements for a contemporaneous written acknowledgment to substantiate the contribution of a qualified_vehicle not have a receipt to show to whom and when the vehicle was donated but believed he had valued the vehicle at around dollar_figure using the kelly blue_book petitioner merely provided testimony and not any additional documentation to substantiate the vehicle donation including a contemporaneous written acknowledgment or an appraisal_summary for a donation of property exceeding dollar_figure see sec_170 sec_1_170a-13 income_tax regs we do not doubt that petitioner donated property to the donation center and the foundation in however the code imposes a series of increasingly rigorous substantiation requirements for larger gifts especially when they consist of property rather than cash petitioner did not satisfy the substantiation requirements under sec_170 and the regulations thereunder accordingly we sustain respondent’s disallowance of the schedule a noncash charitable_contribution_deduction for in excess of what respondent has already allowed d schedule e deduction for repairs for petitioner claimed a schedule e deduction of dollar_figure for repairs to the travini property for sec_162 and sec_212 generally permit a taxpayer to deduct ordinary and necessary business_expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business or for the production_of_income the taxpayer may deduct amounts paid for repairs and maintenance to property if the amounts paid are not otherwise required to be capitalized sec_1_162-4 income_tax regs capital expenditures include amounts paid for permanent improvements or betterments made to increase the value of property indopco inc v commissioner u s pincite see sec_263 petitioner testified that he had installed granite countertops in the kitchen carpets in the bedrooms and hardwood floors in the remaining rooms of his rental property the travini property respondent contends that petitioner failed to substantiate that he paid the expenses in or the amounts of the expenses in the alternative respondent argues that even if petitioner did pay and substantiate the expenses he is not entitled to deduct the cost of those repairs because they are capital expenditures we agree with respondent that petitioner failed to substantiate that he had paid the expenses in and therefore do not need to address whether the expenditures are currently deductible or required to be capitalized petitioner testified that he had placed receipts for the repairs in an envelope but could not find them petitioner introduced the following to substantiate the repairs to the travini property an undated real_estate listing that describes the upgrades including real wood flooring and granite countertops in the kitchen a portion of an appraisal dated date listing the flooring as carpet vinyl good a document titled project estimate hardwood install from lowe’s companies inc dated date listing a total estimate of dollar_figure and five undated photographs of hardwood floors and the installation of the countertops while petitioner may have installed new hardwood floors carpets and granite countertops at the travini property he did not produce any documentation establishing that the renovations were paid for in we sustain respondent’s disallowance of the schedule e deduction for repairs for e schedule d deduction for capital_loss for petitioner reported a net_long-term_capital_loss of dollar_figure on hi sec_2010 schedule d derived from the sale of the munder growth and davis ny venture shares which resulted in a dollar_figure deduction after the limitations imposed by sec_1211 sec_165 allows a deduction for any loss sustained during the taxable_year and not_compensated_for_by_insurance_or_otherwise a loss from the sale_or_exchange of a capital_asset is allowed as a deduction only to the extent permitted in sec_1211 and sec_1212 sec_165 sec_1211 allows 17on the basis of petitioner’s testimony at trial the court held the record open for the limited purpose of giving petitioner an opportunity to proffer certain evidence in support of certain claimed deductions one of the proffered documents was this estimate to which respondent reserved an objection on grounds of relevance and authenticity we overrule respondent’s objection noncorporate taxpayers to deduct losses on the sale_or_exchange of capital assets to the extent of the gain from such sales or exchanges plus the lower_of dollar_figure or the excess of such losses over such gains to be entitled to a deduction under sec_165 a taxpayer is required to keep records to establish the deduction to which he is entitled sec_6001 to deduct a sec_165 loss from the sale_or_exchange of a capital_asset the taxpayer must establish among other things his cost or adjusted_basis for purposes of determining the loss he must recognize on a sale of the capital_asset see sec_165 sec_1001 c the loss is equal to the excess of the adjusted_basis over the amount_realized see sec_1001 and b a in certain circumstances we may use the cohan_rule to estimate a taxpayer’s basis in an asset at the time of transfer see grp admin premium servs inc v commissioner tcmemo_1996_451 tax ct memo lexi sec_469 at n for the court to estimate basis the taxpayer must provide some reasonable evidentiary basis for the estimate vanicek v commissioner t c pincite respondent disputes petitioner’s reported adjusted bases of dollar_figure in the munder growth shares and dollar_figure in the davis ny venture shares and in turn the resulting realized long-term_capital_losses of dollar_figure and dollar_figure respectively from the sales of his shares on date respondent conceded that petitioner substantiated a cost_basis of dollar_figure in the davis ny venture shares however respondent contends that petitioner has not substantiated any adjusted_basis in the munder growth shares or an adjusted_basis greater than dollar_figure in the davis ny venture shares on the basis of these contentions respondent argues that rather than capital losses petitioner realized long-term_capital_gains of dollar_figure in the munder growth shares and dollar_figure in the davis ny venture shares in petitioner introduced at trial a ubs paineweber resource management account statement ubs statement for the month of date the month before he acquired the munder growth and davis ny venture shares he sold on date the ubs statement provided a summary of the values of the munder netnet fund class a munder netnet fund shares and the davis ny venture shares among other investments that petitioner already owned in april dollar_figure according to the ubs statement the munder netnet fund shares were valued at dollar_figure per share and the davis ny venture shares were valued at dollar_figure per share in date 18according to the ubs statement petitioner had previously purchased munder netnet fund shares on date and davis ny venture shares on date petitioner had an adjusted_basis of dollar_figure in the davis ny venture shares he had purchased on date we find that petitioner has substantiated an aggregate adjusted_basis in the munder growth shares of dollar_figure per share for a total adjusted_basis of dollar_figure respondent did not dispute in the notice_of_deficiency at trial or on brief that petitioner acquired munder growth shares on date petitioner testified that although hi sec_2010 schedule d lists the shares as munder growth opportunities fund class a the shares he sold were munder netnet fund shares implying that the fund had changed names sometime between the acquisition and sale dates we find credible the implication that the mutual_fund changed names during the course of petitioner’s ownership of its shares under the cohan_rule we find that the ubs statement serves as a reasonable evidentiary basis for an estimate according to the ubs statement the munder growth shares were priced at dollar_figure per share in date about a month before petitioner purchased the shares he sold in we therefore conclude that petitioner has substantiated an aggregate adjusted_basis of dollar_figure shares purchased multiplied by dollar_figure per share in the munder growth shares he purchased on date consequently petitioner realized a long- term capital_gain of dollar_figure dollar_figure sale price over dollar_figure adjusted_basis from the sale of the munder growth shares in petitioner has not however substantiated an adjusted_basis in the davis ny venture shares in excess of the amount respondent has conceded the ubs statement does not support such a finding petitioner is therefore not allowed an additional adjusted_basis in excess of the dollar_figure respondent has concededdollar_figure consequently petitioner realized a long-term_capital_gain of dollar_figure dollar_figure sale price over dollar_figure adjusted_basis from the sale of the davis ny venture shares in accordingly we conclude that petitioner did not realize a net_long-term_capital_loss but instead realized a net_long-term_capital_gain of dollar_figure consisting of a realized long-term_capital_gain of dollar_figure from the sale of the munder growth shares and dollar_figure from the sale of the davis ny venture shares in we sustain respondent’s disallowance of the schedule d net_long-term_capital_loss deduction v credits credits like deductions are a matter of legislative grace and a taxpayer bears the burden of proving that he is entitled to any credit claimed see rule 19respondent did not explain how he arrived at the conceded adjusted_basis of dollar_figure in petitioner’s davis ny venture shares that amount perhaps coincidentally corresponds to petitioner’s adjusted_basis in the davis ny venture shares he purchased on date as reported on the ubs statement see supra note a 308_us_488 new colonial ice co v helvering u s pincite 89_tc_816 a energy credits for and petitioner claimed a residential_energy_efficient_property_credit of dollar_figure for and a nonbusiness_energy_property_credit of dollar_figure for related to the bimini property sec_25d allows a taxpayer a residential_energy_efficient_property_credit sec_25d credit against tax in an amount equal to the sum of the following expenditures made by the taxpayer during the year of qualified solar electric property expenditures of qualified_solar_water_heating_property_expenditures of qualified_fuel_cell_property expenditures of qualified_small_wind_energy_property_expenditures and of qualified_geothermal_heat_pump_property expendituresdollar_figure sec_25c allows the taxpayer a nonbusiness_energy_property_credit sec_25c credit against tax in an amount equal to of the sum of the following expenditures by the taxpayer during the year the amount_paid for qualified_energy_efficiency_improvements and the amount_paid for residential energy sec_25d defines each type of expenditure property expendituresdollar_figure the sec_25c credits allowed for and under sec_25c cannot exceed dollar_figure in the aggregate sec_25c according to his form_5695 petitioner claimed a sec_25d credit of or dollar_figure based on qualified_geothermal_heat_pump_property costs of dollar_figure qualified_geothermal_heat_pump_property is any equipment that uses the ground or ground water as a thermal energy source to heat the taxpayer’s residence or as a thermal energy sink to cool the taxpayer’s residence and meets the requirements of the energy star program in effect at the time the expenditure was made sec_25d petitioner argues that the sec_25d credit was based on his purchases of an air conditioning system and four solar-powered vent fans in the parties agree that petitioner substantiated the purchase of an air conditioning system for dollar_figure for however respondent contends that petitioner is entitled to a sec_25c credit not a sec_25d credit because the air conditioning system does not meet any of the definitions of the property qualifying for a sec_25d credit under that premise respondent conceded that petitioner is entitled to a sec_25c credit equal to of the cost of the air sec_25c and d defines a qualified_energy_efficiency_improvements and residential_energy_property_expenditures respectively conditioning unit or dollar_figure but that the amount is limited to dollar_figure pursuant to sec_25c petitioner introduced at trial an invoice from crums climate control inc invoice dated date and a certificate of product ratings by the air-conditioning heating and refrigeration institute ahri certificate dated date the invoice among other things describes the air conditioning system as an a c condenser ton heatpump york speed 140a and lists five components of the air conditioning system with a model number for each component the ahri certificate is for a product listed as split system heat pump with remote outdoor unit-air-source consisting of an outdoor and an indoor component the model numbers for these two components match the model numbers of two out of the five components listed in the invoice the ahri certificate states this combination qualifies for a federal energy efficiency tax_credit when placed_in_service between feb and dec petitioner argues that the ahri certificate certifies his eligibility for the sec_25d credit respondent argues that neither the invoice nor the ahri certificate mentions the words solar fuel cell wind or geothermal the irs issued notice_2009_41 2009_19_irb_933 to provide interim guidance for the procedures that manufacturers could follow to certify property as eligible for the sec_25d credit and the conditions under which a taxpayer claiming the sec_25d credit could rely on the manufacturer’s certification the notice states taxpayer reliance a taxpayer may rely on a manufacturer’s certification in determining whether property is eligible for the credit under sec_25d a taxpayer is not required to attach the certification statement to the return on which the credit is claimed however sec_1_6001-1 a of the income_tax regulations requires that taxpayers maintain such books_and_records as are sufficient to establish the entitlement to and amount of any credit claimed by the taxpayer accordingly a taxpayer claiming a credit for residential energy efficient property should retain the certification statement as part of the taxpayer’s records for purposes of sec_1 a notice_2009_41 sec_3 i r b pincite however the ahri certificate is not a manufacturer’s certificate because it specifically lists the manufacturers for the outdoor and indoor components as york unitary products group and advanced distributor products respectively further the ahri certificate does not contain the required content to constitute a valid manufacturer’s certificate statementdollar_figure id sec_3 petitioner did not present 22the irs notice requires that the manufacturer’s certification statement contain the following the name and address of the manufacturer identification of the property as a solar electric property solar water heating property fuel cell property small wind_energy_property or geothermal heat pump property the make model number and any other appropriate identifiers of the property and a declaration signed by an authorized person notice_2009_41 continued any other additional documentation to support his claim for a sec_25d credit for the air conditioning system expenditures with respect to the solar-powered vent fans petitioner testified that he purchased four fans for dollar_figure each in petitioner introduced at trial five undated photographs of the installed solar-powered vent fans and an amazon com printout dated date of a dc house 25w solar powered attic ventilator gable roof vent fan with 30w foldable solar panel petitioner argues that the photographs demonstrate he purchased the solar-powered vent fans and that the amazon com printout demonstrates the price he paid however neither the photographs nor the printout establishes that the expenditures were made in we therefore do not need to decide whether the solar-powered vent fans qualified for the sec_25d credit for according to hi sec_2010 form_5695 petitioner claimed a sec_25c credit of or dollar_figure based on a qualified natural_gas propane or oil furnace or hot water boiler petitioner presented at trial four undated photographs of the installation of a tankless electric water heater and an undated one-page advertisement for tempra whole house tankless electric water heaters here continued sec_3 2009_19_irb_933 too neither the photographs nor the advertisement establishes that the expenditures were made in we therefore do not need to decide whether the water heater qualified for the sec_25c credit for even if petitioner had substantiated the expenditures_for the water heater for he had already reached the dollar_figure limitation for alone and therefore under sec_25c he would not be allowed any credit for qualified_property for in sum we sustain respondent’s disallowance of the sec_25d credit for and petitioner is entitled a sec_25c credit of dollar_figure as respondent conceded we also sustain respondent’s disallowance of the sec_25c credit for b first-time_homebuyer credit for petitioner claimed a first-time_homebuyer credit fthb credit of dollar_figure for sec_36 allows a first-time_homebuyer of a principal_residence a credit against tax of of the purchase_price of the principal_residence for purposes of this section the term principal_residence has the same meaning as in sec_121 sec_36 a first-time_homebuyer is any individual who has had no present ownership_interest in a principal_residence during the three-year period ending on the date of the purchase of the principal_residence in question sec_36 sec_36 expands the scope of the fthb credit by making it available to long-time residents in the case of an individual who has owned and used the same residence as such individual’s principal_residence for any consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal_residence such individual shall be treated as a first-time_homebuyer for purposes of this section with respect to the purchase of such residence the fthb credit is available only for a principal_residence purchased on or after date and before date sec_36 where the taxpayer enters into a written binding contract before date the purchase deadline is extended to date sec_36 the parties at trial and respondent on brief contended that petitioner claimed the fthb credit for the mcleod property even though petitioner’ sec_2010 form_5405 listed the marathon property as the home qualifying for the fthb creditdollar_figure regardless of the property purchased petitioner does not qualify for the first-time_homebuyer credit because he failed to prove he entered into a written binding contract for the purchase before date 23line a of the form_5405 states address of the home qualifying for the credit if different from the address shown on page of form_1040 or form 1040x petitioner’ sec_2010 return listed the mcleod property as his home address on his form_5405 petitioner reported that he purchased the residence on date and at trial testified that he purchased the residence in june or date petitioner therefore fails to meet the purchase deadline--date-- under sec_36 to qualify for the extended purchase deadline--date--under sec_36 petitioner must establish that he entered into a written binding contract before date petitioner did not offer any testimony or documentation on when he entered into a written binding contract for either property we sustain respondent’s disallowance of the first-time_homebuyer credit for vi additions to tax finally we address whether petitioner is liable for additions to tax under sec_6651 for failure to timely file his returns for the years at issue sec_6651 imposes an addition_to_tax for a taxpayer’s failure_to_file a required federal_income_tax return on or before the specified filing_date including extensions as noted supra p the commissioner bears the burden of production with respect to any addition_to_tax sec_7491 the commissioner satisfies his burden of production by providing sufficient evidence to show that the taxpayer filed his federal_income_tax return late 127_tc_200 aff’d 521_f3d_1289 10th cir higbee v commissioner t c pincite the record includes petitioner’s returns for and which were required to be filed by date and date respectively see sec_1_6072-1 income_tax regs but were filed past these specified filing dates on date and date respectively respondent has therefore met his burden of production with respect to the additions to tax under sec_6651 for the years at issue application of the sec_6651 addition_to_tax may be avoided if the taxpayer shows that the failure to timely file was due to reasonable_cause and not due to willful neglect if the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time then the delay is due to a reasonable_cause sec_301_6651-1 proced admin regs the taxpayer can show that he did not act with willful neglect if he can prove that the late filing did not result from a ‘conscious intentional failure or reckless indifference ’ 99_tc_202 quoting 469_us_241 the 24the parties stipulated that petitioner’ sec_2010 return was filed late without an extension burden of showing reasonable_cause under sec_6651 remains with petitioner see higbee v commissioner t c pincite petitioner argues that he filed his returns for the years at issue late because he did not have some of the information necessary to complete these returns by the filing deadlines and he believed an extension was required only if the return resulted in a tax_liability not a refund such a belief does not establish reasonable_cause or a lack of willful neglect see 135_tc_26 finding that the taxpayers’ belief that they would be entitled to a refund established neither reasonable_cause nor the absence of willful neglect aff’d 691_f3d_1315 11th cir petitioner also argues that his health was not good in the years at issue he testified that he suffered and continues to suffer from a medical_condition that required him to have continuous blood and other lab work petitioner also testified that he suffered with sleep problems low energy levels and depression and that he was on medication during and respondent argues that petitioner did not introduce any evidence showing that he was incapacitated when his returns for and were due or how his health problems prevented him from timely filing these returns we agree with respondent although we are sympathetic to petitioner’s health problems a taxpayer’s selective inability to perform his or her tax obligations while performing his regular business and personal activities does not excuse his failure_to_file see godwin v commissioner tcmemo_2003_289 tax ct memo lexis at despite his health problems petitioner engaged in many normal activities including being gainfully_employed driving throughout his designated geographical territory each week for work managing his rental property purchasing a third home and engaging in charitable endeavors on the basis of the record before us we find that petitioner did not have reasonable_cause for failing to timely file his returns for the years at issue and we sustain the additions to tax under sec_6651 for the years at issue we have considered all of the arguments made by the parties and to the extent they are not addressed herein we find them to be moot irrelevant or without merit to reflect the foregoing decision will be entered under rule


internal_revenue_service number release date index number -------------------------- ---------------- -------------------------- --------------------------------- in re - x ---------------- ----------------------- department of the treasury washington dc person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 - plr-139426-03 date date ---------------- ------------------ ----------------------------------------------------------------------------------------- country entity ------------------------------------------------------------------------------------------------------- date date dear --------------- requesting a ruling that x be granted an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts this letter responds to a letter dated date written on behalf of x -------------------- according to the information submitted x is a country entity formed on date x intended to elect to be treated as a disregarded_entity for federal tax purposes effective date however the form_8832 entity classification election inadvertently was not timely filed x represents that it is an entity that is eligible to elect under sec_301_7701-3 to be a disregarded_entity for federal_income_tax purposes law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if a foreign eligible_entity has one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 if a foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date on which the form is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose deadline is prescribed by a regulation published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic_extension of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301 a conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file form_8832 with the appropriate service_center and elect to be treated as a disregarded_entity for federal tax purposes effective date a copy of this letter should be attached to the election except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transactions described above under any other provision of the code this ruling is directed only to the taxpayer on whose behalf it was requested sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative s heather c maloy sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc ---------------------------------- -----


internal_revenue_service number release date index number --------------------------- --------------------------------------- ------------------------------------ ----------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ----------------- telephone number --------------------- refer reply to cc psi b03 plr-144321-10 date date legend x parent --------------------------------------------------------------------------------------------------- ----------------------- --------------------------------------------------------------------------------------------------- ----------------------- country ---------------------- date ------------------ dear ----------------- this letter responds to your letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representatives requesting a ruling under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to file an election to be disregarded as an entity separate from its owner under sec_301_7701-3 facts x was formed under the laws of country on date x is wholly-owned by parent parent intended that x be treated as disregarded as an entity separate from its owner effective date however x inadvertently failed to timely file a form_8832 entity classification election law and analysis plr-144321-10 sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with a single owner can elect to be classified as an association and thus a corporation under sec_301_7701-2 or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that unless it elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that for purposes of sec_301_7701-3 a member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides that an election made under sec_301 c i will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the plr-144321-10 taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file form_8832 with the appropriate service_center and to elect to be classified as a disregarded_entity for federal tax purposes effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representatives the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries by _______________ s ___________________ james a quinn senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


id office uilc cca_2009091510524554 -------------- number release date from -------------------------- sent tuesday date am to -------------------- cc ----------------------------------------- subject re carryover adj the service can now rely on a partner's sec_6501 statute in all cases see curr-spec partners l p v comm'r wl 5th cir the unambiguous language of irc a and sec_6501 mandates our conclusion that sec_6501 creates a three-year limitations_period within which the commissioner must assess any_tax on individual partners--a period which irc a can never shorten regardless of the length of time that might have elapsed between the filing of the partnership's informational return and the commissioner's issuance of an fpaa rather irc a establishes only the minimum time period that when necessary extends ie supercedes the general three-year limitations_period of sec_6501 note though that a form_872 that does not reference partnership items will not extend the partner's sec_6501 period for partnership items see 127_tc_75


t c summary opinion united_states tax_court manuel ayala jr and carol a ayala petitioners v commissioner of internal revenue respondent docket no 5395-06s filed date manuel ayala jr pro_se derek w kaczmarek for respondent armen special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any unless otherwise indicated all subsequent section references are to the internal_revenue_code in effect for the taxable years in issue other court and this opinion shall not be treated as precedent for any other case manuel ayala jr and carol a ayala collectively petitioners received a notice_of_deficiency in which respondent determined deficiencies in income taxes for and of dollar_figure dollar_figure and dollar_figure respectively and accuracy-related_penalties under sec_6662 for negligence or intentional disregard of rules or regulations of dollar_figure dollar_figure and dollar_figure respectively the basis for the deficiency determination was the denial of deductions claimed by petitioners for travel_expenses under sec_162 we are asked to decide whether petitioners may deduct those expenses this requires that we decide whether petitioners were away from home when they incurred the expenses if we sustain respondent’s determination we are also asked to decide whether petitioners are liable for the accuracy-related_penalties background some of the facts have been stipulated and they are so found we incorporate by reference the parties’ stipulation of facts and accompanying exhibits petitioners listed their mailing address on their petition as las vegas nevada mr ayala testified at trial that petitioners’ permanent mailing address is rocklin california mr ayala is employed by sheehan pipeline construction company sheehan as a project safety coordinator and he travels from one project to another all over the country ensuring compliance with health and safety regulations when one project is completed he is usually assigned a new project immediately projects can last anywhere from a few months to a couple of years during the years at issue mr ayala worked on several back- to-back projects during this period petitioners lived in a travel trailer and they traveled together from one job site to the next in their own words they were gypsies although mr ayala was paid a per_diem while working onsite it did not completely cover the travel_expenses that were actually incurred petitioners bought their home on wheels the travel trailer in nevada they registered the vehicle there out of convenience because they moved frequently and had to receive their mail somewhere petitioners used a mail service in las vegas that provided them with a mailing address they obtained nevada licenses and later when they purchased a truck they registered the truck in nevada as petitioners do not own a residence for their own use aside from the travel trailer they consider mr ayala’s ancestral home in vallejo california to be their real home the ancestral home in vallejo was purchased by mr ayala’s father in and it is both the home in which mr ayala grew up and the home in which his disabled sister has resided for a number of years mr ayala and his siblings own the home petitioners have other ties to california they grew up in vallejo and their son was born there in addition their daughter and grandchildren live in the sacramento area when petitioners are not on the road for sheehan they visit california setting up their trailer near sacramento and commuting back and forth to vallejo as needed to assist with the care of mr ayala’s disabled sister however petitioners do not file california state_income_tax returns or pay california state_income_tax unless mr ayala has had california-source income from his employment with sheehan in addition petitioners do not vote in california petitioners financially assist with the support of mr ayala’s disabled sister sometimes petitioners pay her water and trash collection bills and sometimes they pay the property taxes on the home in vallejo so that mr ayala’s sister might continue during these periods mrs ayala usually stays in the trailer to care for petitioners’ pets and mr ayala tries to stay in the house in vallejo with his disabled sister petitioners also do not vote in nevada as they are not considered legal residents for voting purposes to live there without interruption of services or imposition of property-tax liens petitioners and respondent primarily disagree on whether the house in vallejo california is petitioners’ tax_home and consequently whether petitioners’ expenses_incurred while working onsite for sheehan are deductible under sec_162 as expenses_incurred in pursuit of a trade_or_business while away from home a sec_162 discussion4 generally outlays for food and shelter are considered personal expenses and are not deductible sec_262 however sec_162 allows a deduction for traveling expenses including amounts expended for meals_and_lodging if the expenses are ordinary and necessary incurred while away from home and incurred in pursuit of a trade_or_business see 67_tc_824 respondent contends that petitioners were not away from home when they incurred the expenses and thus that petitioners do not satisfy given the manner in which these issues were presented to the court we make our decision as to both the deficiencies and additions to tax without regard to the various burdens of proof under sec_7491 the second factor for deductibility of the expenses claimed on their returns for the years in issue as a general_rule a taxpayer’s principal place of employment is the taxpayer’s tax_home 49_tc_557 an employee without a principal_place_of_business may treat a permanent place of residence at which the employee incurs substantial continuing living_expenses as his or her tax_home 29_tc_16 where the taxpayer has neither a principal_place_of_business nor a permanent residence he has no tax_home from which he can be away his home is wherever he happens to be 85_tc_462 affd without published opinion 807_f2d_177 9th cir although the subjective intent of a taxpayer is to be considered in determining whether the taxpayer has a tax_home for purposes of sec_162 this court and others have consistently focused more on objective criteria sec_162 is intended to mitigate the burden of a taxpayer who because of the travel requirements of his or her trade or during the years in issue only mr ayala was employed by sheehan so only his travel_expenses are potentially deductible as business_expenses under sec_162 however given the nature of the substantive issue presented by respondent’s deficiency determination and the manner in which we decide that issue we need not consider any allocation of expense between mr and mrs ayala accordingly for convenience our discussion is generally cast in terms of petitioners’ tax_home rather than just mr ayala’s business must maintain two places of abode and therefore incur additional living_expenses 513_f2d_697 6th cir affg tcmemo_1974_160 kroll v commissioner supra pincite in other words sec_162 is intended to provide relief to a taxpayer who incurs substantial continuing expenses of a home that are duplicated by business travel see 308_f2d_204 9th cir kroll v commissioner supra pincite when a taxpayer continuously travels for work and does not have substantial duplicative continuous living_expenses for a permanent home maintained for some business reason the taxpayer has no tax_home 143_f3d_497 9th cir affg tcmemo_1995_559 james v united_states supra most significantly in this case petitioners bore no expenses in maintaining a home in addition to their travel trailer notwithstanding their very real ties to california petitioners bore no duplicative living_expenses they did not make mortgage payments pay regular utilities costs or regularly pay for running a household other than the one in which they resided the travel trailer in other words expenses_incurred in respect of the ancestral home in vallejo were incurred for the benefit of mr ayala’s sister and not because of the exigencies of mr ayala’s business travel make no mistake petitioners’ financial support of mr ayala’s sister was extremely laudable however those financial outlays were not of the type considered to be costs of maintaining a home such that the expenses related to petitioners’ life on the road for sheehan would be redundant petitioners were not away from home within the intent and meaning of sec_162 for the taxable years at issue because they had no home to be away from barone v commissioner supra pincite 61_tc_855 in short petitioners’ tax_home was wherever they happened to be see brandl v commissioner supra accordingly petitioners are not entitled to deduct the expenses claimed on their returns for the years at issue b sec_6662 sec_6662 imposes a penalty equal to percent of the amount of any underpayment attributable to negligence or disregard of the rules or regulations sec_6662 ‘ n egligence’ includes any failure to make a reasonable attempt to comply with the internal_revenue_code and the term ‘disregard’ includes any careless reckless or intentional disregard sec_6662 in view of the factual uncertainties presented in this case as well as mr ayala’s forthright and very credible testimony we are convinced that petitioners operated in good_faith and that the reasonable_cause and good_faith provisions of sec_6664 are applicable here we therefore decide in favor of petitioners on this issue c conclusion in closing we think it appropriate to observe that we found petitioners to be very conscientious taxpayers who take their tax responsibilities seriously mr ayala’s testimony was straightforward and credible the tax_court however is a court of limited jurisdiction and lacks general equitable powers 484_us_3 40_tc_436 affd 331_f2d_422 7th cir consequently our jurisdiction to grant equitable relief is limited 92_tc_776 73_tc_1014 therefore we must find that petitioners’ ancestral home in vallejo was not their tax_home for federal tax purposes during the years in issue rather their tax_home was wherever petitioners happened to be and consequently they had no home from which to be away for purposes of claiming deductions for travel_expenses under sec_162 to reflect our disposition of the disputed issues decision will be entered for respondent as to the deficiencies in income taxes and for petitioners as to the accuracy- related penalties