We advised petitioner that her arguments were frivolous and warned her that the Court might impose a penalty under section 6673(a)(1) if she continued to assert such arguments.

As a general rule, the taxpayer bears the burden of proving the Commissioner's deficiency determinations incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111">290 U.S. 111, 290 U.S. 111">115, 54 S. Ct. 8">54 S. Ct. 8, 78 L. Ed. 212">78 L. Ed. 212, 1933-2 C.B. 112 (1933). Section 6201(d) provides that if the taxpayer, in a court proceeding, asserts a reasonable dispute with respect to the income reported on an information return and has fully cooperated with the Commissioner, then the Commissioner shall have the burden of producing reasonable and probative information in addition to the information return. In addition, section 7491(a) provides that if the taxpayer introduces credible evidence and meets certain other prerequisites, the Commissioner shall bear the burden of proof with respect to factual issues relating to the taxpayer's liability for a tax imposed under subtitle A or B of the Code.

Petitioner has not raised a reasonable dispute within the meaning of section 6201(d). She has also failed to introduce any credible evidence or substantiate her deductions as required by section 7491(a). Therefore, petitioner bears the burden of proof.

Deductions are a matter of legislative grace, and taxpayers have the burden of showing that they are entitled to any deduction 2010 Tax Ct. Memo LEXIS 205">*210 claimed. Rule 142(a); New Colonial Ice Co. v. Helvering, 292 U.S. 435">292 U.S. 435, 292 U.S. 435">440, 54 S. Ct. 788">54 S. Ct. 788, 78 L. Ed. 1348">78 L. Ed. 1348, 1934-1 C.B. 194 (1934). Taxpayers are required to maintain records that are sufficient to enable the Commissioner to determine their correct tax liability. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. Additionally, taxpayers bear the burden of substantiating the amount and purpose of the item claimed as a deduction. Hradesky v. Commissioner, 65 T.C. 87">65 T.C. 87, 65 T.C. 87">89 (1975), affd. per curiam 540 F.2d 821">540 F.2d 821 (5th Cir. 1976).

Petitioner argues that her compensation from Allstate and First Command is deductible as a miscellaneous itemized deduction because neither Allstate nor First Command is a trade or business. She also claims that she herself is not a trade or business and that she is not an employee of Allstate or First Command.

Petitioner advances shopworn arguments characteristic of tax-protester rhetoric that have been universally rejected by this and other courts. See Stearman v. Commissioner, 436 F.3d 533">436 F.3d 533 (5th Cir. 2006), affg. T.C. Memo. 2005-39. We shall not painstakingly address petitioner's assertions "with somber reasoning and copious citation of precedent; to do so might suggest that these arguments 2010 Tax Ct. Memo LEXIS 205">*211 have some colorable merit." See Crain v. Commissioner, 737 F.2d 1417">737 F.2d 1417, 737 F.2d 1417">1417 (5th Cir. 1984). Accordingly, we sustain respondent's disallowance of the miscellaneous itemized deductions.

Petitioner did not substantiate any of her Schedule C deductions. Accordingly, we sustain respondent's disallowance of the Schedule C deductions.

Generally, a distribution from a qualified retirement plan is includable in the distributee's gross income in the year of the distribution. Sec. 72(a). Section 72(t)(1) imposes a 10-percent additional tax on the taxable amount of an early distribution from a qualified retirement plan (as defined in section 4974(c)) ³ unless an exception applies. A distribution is early if made to an employee who has not attained age 59-1/2. Sec. 72(t)(2)(A)(i).

Petitioner was 48 years old when she received the distribution in 2004. ⁴ Petitioner did not offer any evidence of an applicable exception. We therefore sustain respondent's determinations that the distribution is includable in petitioner's income for 2004 and that she is liable for 2010 Tax Ct. Memo LEXIS 205">*212 the 10-percent additional tax. See Rule 142(a).

Pursuant to section 6662(a) and (b)(1) and (2), taxpayers may be liable for a penalty of 20 percent of the portion of an underpayment of tax due to negligence or disregard of rules or regulations or attributable to a substantial understatement of income tax. The term "understatement" means the excess of the amount of tax required to be shown on a return over the amount of tax imposed which is shown on the return, reduced by any rebate (within the meaning of section 6211(b)(2)). Sec. 6662(d)(2)(A). Generally, an understatement is a "substantial understatement" when it exceeds the greater of $5,000 or 10 percent of the amount of tax required to be shown on the return. Sec. 6662(d)(1)(A). In addition, section 6662(c) defines "negligence" as any failure to make 2010 Tax Ct. Memo LEXIS 205">*213 a reasonable attempt to comply with the provisions of the Code, and "disregard" means any careless, reckless, or intentional disregard.

The Commissioner has the burden of production with respect to the accuracy-related penalty. Sec. 7491(c). To meet this burden, the Commissioner must produce sufficient evidence indicating that it is appropriate to impose the penalty. See Higbee v. Commissioner, 116 T.C. 438">116 T.C. 438, 116 T.C. 438">446 (2001). Once the Commissioner meets this burden of production, the taxpayer must come forward with persuasive evidence that the Commissioner's determination is incorrect. Rule 142(a); see 116 T.C. 438">Higbee v. Commissioner, supra at 447.

Whether otherwise applied because of a substantial understatement of income tax or negligence or disregard of rules or regulations, the accuracy-related penalty is not imposed with respect to any portion of the underpayment as to which the taxpayer acted with reasonable cause and in good faith. See sec. 6664(c)(1). The decision as to whether the taxpayer acted with reasonable cause and in good faith depends upon all the pertinent facts and circumstances. See sec. 1.6664-4(b)(1), Income Tax Regs. Relevant factors include the taxpayer's efforts to assess his 2010 Tax Ct. Memo LEXIS 205">*214 proper tax liability, including the taxpayer's reasonable and good faith reliance on the advice of a professional such as an accountant. See id. Further, an honest misunderstanding of fact or law that is reasonable in light of the experience, knowledge, and education of the taxpayer may indicate reasonable cause and good faith. See Remy v. Commissioner, T.C. Memo. 1997-72.

Respondent has satisfied the burden of production. Petitioner's 2003, 2004, and 2005 income tax returns contain understatements of tax greater than $5,000 and greater than 10 percent of the amount of tax required to be shown on the returns. Sec. 6662(d)(1)(A).

Petitioner did not offer any evidence of reasonable cause or good faith. Accordingly, we sustain respondent's determination as to the section 6662(a) accuracy-related penalties for 2003, 2004, and 2005.

Section 6673(a)(1) authorizes the Court to impose a penalty not to exceed $25,000 if the taxpayer took frivolous or groundless positions in the proceeding or instituted the proceeding primarily for delay. A taxpayer's position is "frivolous" if it is "contrary to established law and unsupported by a reasoned, colorable argument for change 2010 Tax Ct. Memo LEXIS 205">*215 in the law." Coleman v. Commissioner, 791 F.2d 68">791 F.2d 68, 791 F.2d 68">71 (7th Cir. 1986).

We warned petitioner that her arguments were frivolous and have been universally rejected by this and other courts. We further advised petitioner that the Court has the discretion to impose a penalty of up to $25,000 if she were to proceed with such arguments.

Although respondent has not moved for a section 6673(a)(1) penalty, and we decline to impose the penalty at this time, we take this opportunity to warn petitioner that we may impose this penalty if she returns to the Court and proceeds in a similar manner in the future. See Pierson v. Commissioner, 115 T.C. 576">115 T.C. 576 (2000).

In reaching all of our holdings herein, we have considered all arguments made by the parties, and to the extent not mentioned above, we conclude they are irrelevant or without merit.

To reflect the foregoing,

Decision will be entered under Rule 155.