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NICHOLAS KAVUMA, Petitioner v. COMMISSIONER OF INTERNAL REVENUE,Kavuma v. Comm'rDocket No. 13825-13.
United States Tax Court T.C. Memo 2016-101; 2016 Tax Ct. Memo LEXIS 100;May 23, 2016 FiledDecision will be entered under
Rule 155 .*100 Nicholas Kavuma, Pro se.Sharyn Ortega and Kimberly A. Kazda, for respondent.GALE, Judge.GALEMEMORANDUM FINDINGS OF FACT AND OPINION GALE,
Judge : Respondent determined deficiencies in petitioner's Federal income tax for 2008, 2009, 2010, and 2011 of $27,892, $34,334, $28,532, and $4,747, respectively, additions to tax undersection 6651(a)(1) *102 years of $6,973, $7,471, $5,160, and $373,*101(1) whether petitioner had unreported income for 2008 and 2011 as respondent determined;
(2) whether petitioner is entitled to deductions claimed on Schedules C, Profit or Loss From Business, for expenses for 2008, 2009, 2010, and 2011 in amounts greater than those respondent allowed;
(3) whether petitioner is liable for additions to tax for 2008, 2009, 2010, and 2011; and
(4) whether petitioner is liable for accuracy-related penalties for 2008, 2009, and 2010.
*103 FINDINGS OF FACT Some of the facts have been stipulated and are so found. The stipulation of facts and the accompanying exhibits are incorporated herein by this reference. At the time the petition was filed petitioner resided in California.
Petitioner was a licensed vocational nurse (LVN) during all the years at issue and worked in some instances as an independent contractor. During the years at issue he maintained bank accounts at Bank of America and at Washington Mutual (which was acquired by Chase) where he deposited funds. Petitioner made over $100,000 of deposits into these accounts in 2008 and over $46,000 in 2011.
Petitioner filed Federal income tax returns for*102 2008, 2009, 2010, and 2011. On the returns he reported gross income on Schedules C of $81,048, $93,692, $84,010, and $1,955 for 2008, 2009, 2010, and 2011, respectively, and claimed deductions for Schedule C expenses of $82,134, $99,718, $87,089, and $16,937 for 2008, 2009, 2010, and 2011, respectively.
Respondent subsequently examined each return. Petitioner failed to provide respondent's revenue agent with any records to substantiate the income he reported on his returns or the expenses underlying deductions he claimed. The revenue agent issued summonses to Bank of America and Washington Mutual/Chase for records pertaining to petitioner's bank accounts. The revenue*104 agent performed a bank deposits analysis based on the summoned bank records, and after reviewing the bank records, characterized deposits that petitioner made in 2008 and 2011 as follows:
Category 2008 2011 Other income $6,310 $2,076 Schedule C income 98,527 12,200 Rent 7,641 --- Nontaxable 2,474 5,532 Loan/misc 10,000 400 Wages --- 19,811 Transfers (between accounts) 366 6,207 Total deposits 125,318 46,226 The deposits characterized as rent represented checks made out to petitioner and deposited by him that had the word "rent" entered in the check's*103 memo line.
Bank statements issued by Bank of America and Washington Mutual/Chase during the years at issue are addressed to petitioner at a La Verne, California, address. Petitioner reported a home address in Greenfield, California, on his 2008 and 2009 tax returns and in Delano, California, on his 2010 tax return. Checks in petitioner's bank records issued in 2009 by "Solvere National Medical Registry*105 Inc." and Federal and State tax refund checks issued in 2010 are addressed to the Greenfield address that he used on his 2008 and 2009 returns.
Respondent subsequently issued a notice of deficiency to petitioner for his 2008, 2009, 2010, and 2011 taxable years. Respondent disallowed deductions for all Schedule C expenses reported for all years except a $1,560 expense for 2011. Respondent also determined that petitioner had unreported Schedule C gross receipts or sales of $9,218 and unreported rental income of $7,554 for 2008 and unreported Schedule C gross receipts or sales of $10,245 for 2011. Respondent also determined that petitioner was liable for additions to tax for all these years and accuracy-related penalties for 2008, 2009, and 2010. Respondent also made computational adjustments,*104 including disallowance of a refundable $267 making work pay credit and a refundable $457 earned income credit pertaining to petitioner's 2010 taxable year.
Petitioner filed a timely petition with the Court seeking redetermination of the deficiencies, additions to tax, and accuracy-related penalties.
At trial petitioner asserted that he had not received respondent's bank deposits analysis before trial. The Court thereupon granted petitioner additional time to review the bank deposits analysis and recalled the case for a second trial setting approximately eight weeks later, at which time petitioner offered no*106 testimony or evidence to dispute respondent's bank deposits analysis. The Court thereupon closed the record.Unreported Income
Overview Section 61(a) provides that gross income includes "all income from whatever source derived".See also Commissioner v. Glenshaw Glass Co. , 348 U.S. 426">348 U.S. 426Generally, a taxpayer bears the burden of proving the Commissioner's determinations incorrect.
Rule 142(a) ;Welch v. Helvering , 290 U.S. 111">290 U.S. 111see sec. 7482(b) , requires that the Commissioner provide a minimal evidentiary foundation connecting the taxpayer with the unreported income before the presumption of correctness attaches to the Commissioner's determination,see Hardy v. Commissioner , 181 F.3d 1002">181 F.3d 1002aff'g T.C. Memo. 1997-97 ;Weimerskirch v. Commissioner , 596 F.2d 358">596 F.2d 358rev'g 67 T.C. 672">67 T.C. 672 (1977);see also Petzoldt v. Commissioner , 92 T.C. 661">92 T.C. 661See Hardy v. Commissioner , 1002">181 F.3d at 1004Respondent offered into evidence a bank deposits analysis, petitioner's bank records that he*106 obtained by summons, and the testimony of the revenue agent who conducted the bank deposits analysis in support of his determination regarding the unreported income. A taxpayer is required to maintain adequate books and records sufficient to establish his or her income.
See sec. 6001 ;DiLeo v. Commissioner , 96 T.C. 858">96 T.C. 858aff'd ,959 F.2d 16">959 F.2d 16 (2d Cir. 1992). When*108 a taxpayer fails to maintain sufficient records to allow the determination of his correct tax liability, the Commissioner may reconstruct the taxpayer's income using any method that clearly reflects the taxpayer's income.See sec. 446 ;Petzoldt v. Commissioner , 92 T.C. at 686-687Petzoldt v. Commissioner , 92 T.C. at 687See DiLeo v. Commissioner , 96 T.C. at 867Estate of Mason v. Commissioner , 64 T.C. 651">64 T.C. 651aff'd ,566 F.2d 2">566 F.2d 2 (6th Cir. 1977). Bank deposits are prima facie evidence of income.DiLeo v. Commissioner , 96 T.C. at 868Id. at 872See id. at 869section 7491(a) . Petitioner failed*107 to do so.Petitioner failed to provide respondent's revenue agent with any records that documented his income. The bank records show that petitioner had over $100,000 of deposits in 2008 and over $46,000 in 2011. We find that it was reasonable for*109 respondent to rely on the bank deposits method to reconstruct petitioner's income in these circumstances.
See id. at 8672008 Unreported Income The revenue agent testified that the bank deposits analysis reflected her conclusions regarding the character of the deposits documented in petitioner's bank records that she obtained. The bank deposits analysis for 2008 consisted of a summary page listing total deposit amounts by category (e.g., Schedule C income) and spreadsheets listing information on each deposit (e.g., date of deposit, payor of check). The summary page of the bank deposits analysis calculated that petitioner had made deposits of Schedule C gross receipts totaling $98,527 during 2008 but had reported Schedule C gross receipts on his 2008 return of only $81,048--suggesting an unreported amount of $17,479. The bank deposits analysis further calculated that petitioner had deposited rent receipts totaling $7,641 during 2008 but had reported no*108 rent receipts on his 2008 return. After adjustments apparently for nontaxable sources, the notice of deficiency determined that petitioner had unreported Schedule C gross receipts of $9,218 and unreported rent receipts of $7,554.
In reviewing the bank deposits analysis and the bank records, the Court has found that the bank deposits analysis double counted $6,179 of deposits*110 characterized as Schedule C receipts and understated the value of one of the rental income deposits by $270. These errors do not preclude respondent from satisfying his evidentiary foundation requirement using the bank deposits analysis. With the exceptions just noted, each of the deposits that the bank deposits analysis characterized as Schedule C or rent receipts is documented in the bank records. We find that the bank deposits analysis, supported by the bank records and the revenue agent's testimony, meets the evidentiary foundation requirement.
See Hardy v. Commissioner , 181 F.3d at 1004Clayton v. Commissioner , 102 T.C. 632">102 T.C. 632Petitioner has not met his burden of showing that these deposits were not taxable income,
see Clayton v. Commissioner , 102 T.C. at 645-646see Hardy v. Commissioner , 181 F.3d at 10042011 Unreported Income The bank deposits analysis for 2011 consists of a summary page and a spreadsheet concerning a limited number of deposits. The summary page indicates that petitioner made deposits of Schedule C income totaling $12,200. These deposits are prima facie evidence of income.
See DiLeo v. Commissioner , 96 T.C. at 868see Clayton v. Commissioner , 102 T.C. at 645-646Petitioner claimed (in a status report) that these deposits were nontaxable gifts from Kate Zalwango and Odette Graves. Petitioner did not produce evidence to corroborate this claim or identify deposits in the 2011 bank records that constituted such gifts. Our review of the 2011 bank records revealed three checks*112 from Ms. Zalwango totaling $1,100 (two checks for $500 and one check for $100) but no checks or other payments from Ms. Graves. We will assume that respondent determined that the checks from Ms. Zalwango were Schedule C income in the absence of information in the bank deposits analysis indicating how the revenue agent characterized these deposits.*111 In the absence of evidence indicating other payments from Ms. Zalwango or Ms. Graves or contentions that implicate other deposits, we deem petitioner to have conceded the determined Schedule C income in excess of $1,100.
For the two $500 checks, we find that petitioner has not shown that they were nontaxable gifts. Petitioner did not produce any credible evidence to corroborate his statement that they were nontaxable gifts, and the bank records do not provide any indication of the purpose of these payments, such as a note in either check's memo line. For the $100 check, we find that petitioner has shown that it was a nontaxable gift. A "Christmas gift" notation in the memo line of that check corroborates petitioner's statement. We are satisfied that this deposit was a nontaxable gift to petitioner under
section 102 .*113 We therefore sustain respondent's determination of unreported income for 2011 to the extent of $10,145 ($10,245 less $100 we redetermined to be a gift).
Schedule C Deductions Petitioner claimed deductions for business expenses of $82,134, $99,718, $87,089, and $16,937 for 2008, 2009, 2010, and 2011, respectively. As detailed in the Schedules C attached*112 to his returns, the expenses underlying the deductions he claimed consisted of the amounts in the table below:
Expense 2008 2009 2010 2011 Car and truck $22,988 $18,143 $24,537 $15,377 Legal and professional services 7,121 --- --- --- Repairs and maintenance 7,156 --- --- --- Utilities 3,652 --- --- --- Other 41,217 --- --- --- Contract labor --- 15,988 21,900 --- Rent or lease--vehicles, machinery, and equipment --- 19,443 17,015 1,560 Rent or lease--other business property --- 46,144 23,637 --- Totals 82,134 99,718 87,089 16,937 Respondent disallowed deductions for all of these expenses except for the rent or lease--vehicles, machinery, and equipment entry of $1,560 for 2011. This*114 leaves $82,134, $99,718, $87,089, and $15,377 in dispute for 2008, 2009, 2010, and 2011, respectively.
Deductions are a matter of legislative grace, and the burden of showing entitlement to a claimed deduction is on the taxpayer.
Rule 142(a) ;INDOPCO, Inc. v. Commissioner , 503 U.S. 79">503 U.S. 79Section 162(a) generally allows a deduction for the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. To be entitled to a deduction undersection 162(a) , a taxpayer is required to substantiate the deduction*113 through the maintenance of books and records. Where a taxpayer establishes that he paid or incurred a deductible expense but does not establish the amount of the deduction to which he may be entitled, we may in certain circumstances estimate the amount allowable.See Cohan v. Commissioner , 39 F.2d 540">39 F.2d 540Vanicek v. Commissioner , 85 T.C. 731">85 T.C. 731Cohan rule.See, e.g., Van Dusen v. Commissioner , 136 T.C. 515">136 T.C. 515*115 Certain expenses, such as vehicle expenses, are subject to the more stringent substantiation requirements of
section 274(d) , and theCohan rule may not be used.See Sanford v. Commissioner , 50 T.C. 823">50 T.C. 823aff'd per curiam ,412 F.2d 201">412 F.2d 201 (2d Cir. 1969);sec. 1.274-5T(a)(4), Temporary Income Tax Regs. ,50 Fed. Reg. 46014 (Nov. 6, 1985) . To meet these strict substantiation rules, a taxpayer must substantiate by adequate records or by sufficient evidence corroborating the taxpayer's own statement (1) the amount, (2) timing, and (3) business purpose of the expense.Sec. 274(d) . When a taxpayer establishes that his records were lost or destroyed through circumstances beyond his control, the taxpayer may substantiate a deduction through secondary evidence.See Boyd v. Commissioner , 122 T.C. 305">122 T.C. 305Malinowski v. Commissioner , 71 T.C. 1120">71 T.C. 1120Freeman v. Commissioner , T.C. Memo. 2009-213, slip op. at 19-20sec. 1.274-5T(c)(5), Temporary Income Tax Regs. ,50 Fed. Reg. 46022 (Nov. 6, 1985) .Legal and Professional Services, Utilities, and Other Expenses Petitioner did not address the $51,990 of legal and professional expenses, utilities, and other expenses underlying the deduction he claimed*114 for 2008. We accordingly find that he has conceded them and sustain respondent's disallowance thereof.
See Rule 34(b)(4) .*116 Car and Truck, Repairs and Maintenance, Rent or Lease--Vehicles, Machinery, and Equipment Expenses Petitioner claimed deductions for vehicle expenses in multiple categories in the previous table. His testimony indicates that the vehicle expenses were incurred in connection with round trips between residences in La Verne, California, and Lake Elsinore, California, and California State correctional facilities where he claimed that he worked. He testified that these facilities were in three cities: Soledad, Delano, and Tehachapi.*115 He testified that his shifts at these correctional facilities lasted from three to four days, that he lodged overnight near the facilities during his shifts, and that he returned to his residence when he completed his shifts.
His testimony indicates that he claimed deductions for the costs of repairing and maintaining the vehicle used for the round trips in his repair and maintenance entry for 2008 and in his rent or lease--vehicles, machinery, and equipment entries*117 for 2009 and 2010.*118 and other vehicle expenses in dispute total $30,144, $37,586, $41,552, and $15,377*116 2011, respectively.See
sec. 162(a)(2) ;Dean v. Commissioner , 54 T.C. 663">54 T.C. 663see also Henderson v. Commissioner , 143 F.3d 497">143 F.3d 497aff'g T.C. Memo 1995-559">T.C. Memo. 1995-559 . Business use of a passenger automobile is subject*117 to the substantiation requirements ofsection 274(d) because such a vehicle is "listed property" as defined insection 280F(d)(4)(A)(i) . In lieu of calculating expenses using actual expenditures, a taxpayer may use a standard mileage rate as established by the Internal Revenue Service.See Nash v. Commissioner , 60 T.C. 503">60 T.C. 503Larson v. Commissioner , T.C. Memo.*119 2008-187,slip op. at 13-14 ;sec. 1.274-5(j)(2), Income Tax Regs. The amount of mileage can be substantiated by any reasonable means, including by proving that a taxpayer traveled between certain cities and establishing the distance between them.See Smith v. Commissioner , 80 T.C. 1165">80 T.C. 1165Petitioner appears to have claimed deductions for both actual expenses and expenses based on mileage for his vehicle for 2008, 2009, and 2010, but he can claim only deductions for one or the other expense.
See Nash v. Commissioner , 60 T.C. at 520Petitioner*118 failed to produce any documentary evidence tending to establish the number of business miles he drove for any of the years at issue. He did not, for example, produce a schedule listing the dates of his round trips between his residence and the correctional facilities and the distances driven or documents substantiating that he had made such trips. Petitioner's testimony on the business*120 miles he drove was vague and unconvincing. Even if his testimony were credible, he could not rely on it without corroborating documentary evidence because he failed to show that his records were lost due to circumstances beyond his control.
See sec. 1.274-5T(c)(5), Temporary Income Tax Regs. ,supra . He testified that the proprietor of the storage facility where he stored all his records confiscated them in 2011 after he failed to pay storage fees. Petitioner did not produce any documents to substantiate either the storage facility rental or the confiscation. Regardless, we are not persuaded that any such loss of records was beyond petitioner's control.The bank records show that petitioner used a debit card for purchases that appear to be in the vicinity of the Delano and Tehachapi facilities in 2008, 2009, and 2010 and for purchases that appear to*119 be in the vicinity of the Solano facility in 2009, 2010, and 2011. This evidence by itself, particularly in the absence of credible evidence offered by petitioner on this issue, is insufficient to establish, for purposes of calculating travel expenses, instances when he worked at a correctional facility.
Additionally, the record contains conflicting evidence regarding the location of petitioner's residence that precludes any showing that he had business mileage from driving between certain cities.
See Smith v. Commissioner , 80 T.C. at 1172*122 In view of the foregoing, petitioner has failed to satisfy
section 274(d) with respect to his reported vehicle-related expenses for any of the years at issue. We sustain respondent's disallowance of deductions for these expenses.See Smith v. Commissioner , 80 T.C. at 1172Rent or Lease--Other Business Property Petitioner's testimony indicates that the deductions he claimed in the rent or lease--other business property entries on his Schedules C for 2009 and 2010 reflected lodging costs he incurred near the correctional facilities where he worked.*121 expenses were $46,144 and $23,637 for 2009 and 2010 respectively, or approximately $4,000 and $2,000 per month.
Lodging expenses relating to business travel are also subject to
section 274(d) substantiation requirements.See sec. 162(a)(2) . Petitioner's only substantiation of these expenses was his own vague and unconvincing testimony. He produced no documentation indicating that he paid for lodging near any of the correctional facilities at which he claimed he worked. He also failed to explain why he may have incurred twice as many lodging expenses in 2009 as in 2010.*123 Evidence in the record indicating that petitioner resided in Greenfield and Delano suggests that he may have stayed at his residence when working at the correctional facilities, given the proximity. Petitioner did not identify any expenditures documented in the bank records that constituted lodging expenses, and the Court will not assume his responsibility and sift through the bank records to match the evidence to respondent's adjustments.
See Hall v. Commissioner , T.C. Memo. 2014-16, at *8See Tokarski v. Commissioner , 87 T.C. 74">87 T.C. 74As petitioner has failed to substantiate these expenses as required by
section 274(d) , we sustain respondent's disallowance of deductions for them.Contract Labor Petitioner testified that he claimed deductions for payments to companies that helped him find work at correctional facilities. Petitioner testified that these companies took a percentage of his compensation from the correctional facilities and then issued him a check for the remainder. As listed in the table
supra p. 13*124 A taxpayer may be entitled to deduct as a business expense payments for placement services.
See Primuth v. Commissioner , 54 T.C. 374">54 T.C. 374See Tokarski v. Commissioner , 87 T.C. at 77Additions to Tax Respondent determined that petitioner is liable for additions to tax for failure to timely file his 2008, 2009, 2010, and 2011 returns.
Section 6651(a)(1) provides for an addition to tax when a taxpayer fails to file a return on or before the due date, including extensions. Undersection 7491(c) , the Commissioner has the burden of production with respect to a taxpayer's liability for thesection 6651(a)(1) addition to tax. To meet that burden, the Commissioner must offer sufficient evidence to indicate that it is appropriate to impose the relevant addition.Higbee v. Commissioner , 116 T.C. 438">116 T.C. 438Id. at 446-447To prove that petitioner filed untimely returns, respondent offered IMFOL-T transcripts for petitioner's 2008, 2009, 2010, and 2011 taxable years and the testimony of the revenue agent. The revenue agent testified that the IMFOL-T transcripts were part of respondent's regularly maintained business records for petitioner. She further testified that each transcript recorded the date when respondent received petitioner's return for that year.*124 The dates of receipts recorded on the transcripts for 2008, 2009, 2010, and 2011 are August 10, 2010, August 16, 2010, August 2, 2011, and July 8, 2012, respectively. The revenue agent also testified that the transcripts indicated that petitioner had not been granted any filing extensions because there was no "EXT" notation next to any of the entries indicating the date of receipt. On the basis of the IMFOL-T transcripts and the revenue agent's testimony, we find that respondent has met his burden of production for imposing on petitioner for 2008, 2009, 2010, and 2011,
section 6651(a)(1) additions to tax for untimely filing.Petitioner failed to prove error in respondent's determination. He contended that he had filed each return well before the date of receipt recorded on the transcript, but he produced no evidence to corroborate his contention. The*126 signatures on petitioner's 2009 and 2010 returns are dated March 11, 2010, and May 12, 2011, respectively, but petitioner's entry of those dates on the returns is not evidence of their mailing. Beyond his self-serving testimony, petitioner offered no evidence that he actually mailed the returns timely or that the transcripts contain irregularities. In these*125 circumstances, we decline to accept petitioner's self-serving testimony without corroboration,
see Park v. Commissioner , T.C. Memo 2012-279">T.C. Memo. 2012-279section 6651(a)(1) .Accuracy-Related Penalties Respondent determined accuracy-related penalties under
section 6662(a) for 2008, 2009, and 2010. Respondent contends that petitioner is liable for these penalties on the basis of substantial understatements of income tax.See sec. 6662(b)(2) .Section 6662(a) and(b)(2) imposes a penalty equal to 20% of an underpayment of tax required to be shown on a return that is attributable to a substantial understatement of income tax. An underpayment of tax for this purpose is defined as the excess of the amount of income tax imposed over the*127 sum of the "amount of tax shown as the tax by the taxpayer on his return" and any tax previously assessed (or collected without assessment), less any rebates.Sec. 6664(a) . If refundable credits specified insection 6211(b)(4) reduce the amount of tax shown as the tax by the taxpayer on the return below zero, they are taken into account as negative amounts of tax for purpose of computing the underpayment.See sec. 6664 (flush*126 language).Sec. 6662(d)(2)(A) . An understatement is substantial when it exceeds the greater of 10% of the tax required to be shown on the return or $5,000.Sec. 6662(d)(1)(A) .As with additions to tax under
section 6651(a)(1) , the Commissioner bears the burden of production with respect to a taxpayer's liability for penalties.Sec. 7491(c) ;see Higbee v. Commissioner , 116 T.C. at 446See Higbee v. Commissioner , 116 T.C. at 446Sec. 1.6664-4(b)(1), Income Tax Regs. Generally, the most important factor is the extent of the taxpayer's effort to assess the proper tax liability.Id. Respondent has met his burden of production for substantial understatements of income tax for 2008, 2009, and 2010. Petitioner's unreported income for 2008 and disallowed deductions and credits for 2008, 2009, and 2010, as redetermined by this Court, result in understatements of income tax that exceed both 10% of the tax required to be shown on petitioner's returns for those years and $5,000.*128 Accordingly,*129 petitioner is liable for accuracy-related penalties on his underpayments for 2008, 2009, and 2010.
We have considered all the remaining arguments for results contrary to those reached herein. To the extent not discussed, we conclude those arguments are moot, without merit, or unnecessary to reach.
To reflect the foregoing,
Decision will be entered under .Rule 155 Footnotes
1. All section references are to the Internal Revenue Code of 1986, as in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. All dollar amounts are rounded to the nearest dollar.↩
2. The cover page of the notice of deficiency indicates that respondent determined a $373 accuracy-related penalty instead of an addition to tax in that amount for 2011. But the contents of the notice of deficiency indicate that respondent determined an addition to tax rather than an accuracy-related penalty, and that was respondent's position at trial.↩
3. Respondent also made computational adjustments to petitioner's self-employment tax for each year,
sec. 36A credits for 2009 and 2010, andsec. 32 ↩ credits for 2010 and 2011.4. Petitioner subsequently sought to add certain documents to the record by mailing them to the Court, but these documents were not admitted.↩
5. Had the revenue agent characterized the checks as "other income", for example, this would not affect the Schedule C income shown in the bank deposits analysis. Because respondent neglected to attach this information to the bank deposits analysis that he introduced into evidence, we will give petitioner the benefit of the doubt.
6. Petitioner has not claimed or shown entitlement to any shift in the burden of proof pursuant to
sec. 7491(a) ↩.7. Petitioner did not identify these facilities by name, but the California Department of Corrections and Rehabilitation Web site facilities locator,
available at http://www.cdcr.ca.gov/Facilities_Locator/index.html (last visited May 18, 2016), shows a facility in each city--in Soledad, both the Correctional Training Facility and Salinas Valley State Prison; in Delano, the Kern Valley State Prison; in Tehachapi, the California Correctional Institution.8. Petitioner did not address the rent or lease--vehicles, machinery, and equipment entry for 2010, but we will assume it has the same character as the 2009 entry.↩
9.
Rev. Proc. 2008-72 ,sec. 2.01 ,50 I.R.B. 1286">2008-50 I.R.B. 1286 , 1286 (2009 rate);Rev. Proc. 2009-54 ,sec. 2.01 ,2009-51 I.R.B. 930↩, 930 (2010 rate).10.
Announcement 2011-40, 29 I.R.B. 56">2011-29 I.R.B. 56 ;Notice 2010-88 ,sec. 2 ,51 I.R.B. 882">2010-51 I.R.B. 882↩ , 882.11. As noted, respondent allowed the $1,560 claimed in the rent or lease--vehicles, machinery, and equipment entry for 2011.↩
12. Petitioner also testified that he incurred rental car expenses, but he did not address either the amounts of these expenses or where he reported them on his return. His testimony indicated that he may have used such rental cars for personal purposes. We thus have no basis for considering the extent to which rental car expenses may have been included in the amounts petitioner listed under the rent or lease--vehicles, machinery, and equipment entries.↩
13. Stated distances between cities were calculated using Bing Maps.
See↩ http://www.bing.com/maps .14. Petitioner addressed only the amount for 2010, but we will assume that the 2009 amount reflects similar expenses.↩
15.
Sec. 6664 was amended by the Consolidated Appropriations Act, 2016 (CAA),Pub. L. No. 114-113 , div. Q,sec. 209(a), 129 Stat. at 3084 , to so provide, effective for returns filed after December 18, 2015, or returns filed on or before that date if the period specified insec. 6501 for assessment of the taxes to which such return relates has not expired as of such date.CAA sec. 209(a) effectively overruled the holding inRand v. Commissioner , 141 T.C. 376">141 T.C. 376sec. 6664(a) ↩, refundable credits reduce the amount of tax shown on the return but not below zero.16. The
sec. 36A andsec. 32 ↩ credits that petitioner claimed for 2010 reduced the amount of tax shown on his return below zero.17. Indeed, petitioner provided no records to corroborate that he even incurred any portion of the expenses for which he claimed deductions. The expenses amount to $268,941 for these three years. Because we sustain the
sec. 6662(a) penalties on the basis that the underpayments were attributable to substantial understatements of income tax, we do not address whether the underpayments were also attributable to negligence.
Document Info
Docket Number： Docket No. 13825-13.
Citation Numbers： 111 T.C.M. 1437, 2016 Tax Ct. Memo LEXIS 100, 2016 T.C. Memo. 101
Filed Date： 5/23/2016
Precedential Status： Non-Precedential
Modified Date： 11/20/2020