T.C. Memo. 2012-9



                       UNITED STATES TAX COURT



                  GIRISH C. PATEL, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2298-10.                Filed January 10, 2012.



     Girish C. Patel, pro se.

     Lewis A. Booth II, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:    Respondent determined a deficiency of $12,439

in petitioner’s Federal income tax for 2006.     Respondent also

determined, but has now conceded, additions to tax under sections

6651(a) and 6654.    After concessions, the issue for decision is

whether petitioner is entitled to deduct a $3,100 business loss.

Unless otherwise indicated, all section references are to the
                                - 2 -

Internal Revenue Code in effect for the year in issue, and all

Rule references are to the Tax Court Rules of Practice and

Procedure.

                         FINDINGS OF FACT

     None of the facts have been stipulated in writing, but

certain adjustments to the deficiency and some documents were

orally stipulated at the time of trial.     The stipulated

adjustments are incorporated in our findings by this reference.

At the time his petition was filed, petitioner resided in Texas.

     During 2006, petitioner was employed and earned taxable

wages of $76,483.06.   He also “moonlighted” as a building

inspector for the Texas Department of Insurance.     After 4 or 5

months, he lost his inspector’s license.     He had performed a

number of inspections for which he was not paid.

     Petitioner incurred license fees, car and truck expenses,

and other expenses in relation to his building inspection

business, but he did not maintain records of his expenditures.

     On his Form 1040, U.S. Individual Income Tax Return, filed

for 2006, petitioner claimed a $3,100 business loss described as

“Cost; Refunded + no income.   Bankrupt.”

                               OPINION

     Section 162 allows as a deduction “all the ordinary and

necessary expenses paid or incurred during the taxable year in

carrying on any trade or business”.      Taxpayers have the burden of
                               - 3 -

proving they are entitled to deductions claimed.    INDOPCO, Inc.

v. Commissioner, 

, 84 (1992).    In addition, taxpayers

are required to maintain sufficient records to establish the

amounts and purpose of any deductions.    Sec. 6001; Higbee v.

Commissioner, 

, 440 (2001); sec. 1.6001-1(a), (e),

Income Tax Regs.

     Petitioner testified that he incurred various expenses in

relation to his building inspection business, but he did not

produce any corroborating evidence of his claimed expenses before

trial or during trial.   He requested 3 days after trial to

produce missing documentation and was afforded 30 days, but he

failed to produce any substantiation.    Because he failed to

substantiate claimed vehicle and meals expenses as to time,

place, and business purpose, those items must be disallowed under

section 274(d).

     Petitioner testified that he incurred license fees,

including the engineering license related to his employment, that

he attended a class on an unspecified date, and that he purchased

tools and supplies for which he paid cash and did not have

receipts.   He testified that he had the license before 2006, and

he has not clarified or established what expenses were actually

paid or incurred in 2006.   He claims that after receiving $758.96

for an inspection he conducted, he was required by the City of

Alvin to repay the full amount because of the loss of his
                                - 4 -

inspector’s license.   He also claims that another check was

returned in 2006.   There is no evidence that either the $758.96

repaid or the amount of the returned check was ever reported as

income, which is a prerequisite for deducting repayments or bad

checks from customers.   Worthless debts arising from unpaid items

of taxable income are not deductible as bad debts unless the

taxpayer has included the amounts in income for the year for

which the bad debts are deducted or for a prior year.    See

Schnell v. Commissioner, T.C. Memo. 2006-147 (citing Gertz v.

Commissioner, 

, 600 (1975)); sec. 1.166-1(e), Income

Tax Regs.

     Petitioner testified that he did not receive any income from

the inspection business during 2006, and there is no evidence

that he reported or received any income from the business in

prior years.   Although it is unclear from his testimony, it

appears that petitioner estimated his business loss based on what

he expected to receive as income but did not receive.    Income not

received may not be deducted from the wage income received.     A

taxpayer is not allowed to reduce ordinary income actually

received by the amount of income he failed to receive.    See

Ratcliff v. Commissioner, T.C. Memo. 1983-636 (citing Hendricks

v. Commissioner, 

, 272 (5th Cir. 1969), affg. T.C.

Memo. 1967-140).    Given petitioner’s less than coherent testimony
                                - 5 -

and the absence of corroboration, we cannot allow any part of the

business loss that he claims.

     To reflect the concessions of the parties,


                                             Decision will be entered

                                        under Rule 155.