T.C. Summary Opinion 2006-140



                       UNITED STATES TAX COURT



                   HARRY LEWIS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 19598-05S.            Filed September 13, 2006.



     Harry Lewis, pro se.

     Kathleen K. Raup, for respondent.



     RUWE, Judge:   This case was heard pursuant to section 74631

in effect when the petition was filed.   The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.




     1
       Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the years in issue. Rule
references are to the Tax Court Rules of Practice and Procedure.
                                 - 2 -

     Respondent determined deficiencies in petitioner’s 2002 and

2003 Federal income taxes of $8,501 and $10,356, respectively,

and accuracy-related penalties under section 6662(a) of $1,700.20

and $2,071.20, respectively.    After concessions by respondent,2

the issues for decision are:    (1) Whether petitioner is entitled

to claimed itemized deductions for charitable contributions of

$16,500 for 2002 and $20,000 for 2003 and (2) whether petitioner

is liable for accuracy-related penalties pursuant to section

6662(a) as determined by respondent.

     Some facts have been stipulated and are so found.    The

stipulation of facts and the attached exhibits are incorporated

by this reference.    When the petition was filed, petitioner

resided in Downingtown, Pennsylvania.    Petitioner has a master’s

degree from Penn State University and is a high school principal.

     Petitioner timely filed 2002 and 2003 electronic Federal

income tax returns.    Petitioner’s tax returns for the years in

issue were prepared by Mr. Chester Muhammad.    On these returns,

petitioner claimed charitable contribution deductions of $16,500

for 2002 and $20,000 for 2003.




     2
       Petitioner filed his returns as a head of household and
claimed a dependency exemption deduction for his daughter.
Respondent’s notice of deficiency changed petitioner’s filing
status to single and disallowed the dependency exemptions for
both 2002 and 2003. The parties have since stipulated that
petitioner is entitled to head of household filing status and the
dependency exemptions for both years.
                                   - 3 -

       At trial, petitioner introduced typed documents, which

purport to be lists of his 2002 and 2003 cash contributions

donated to Souls for the Kingdom Fellowship Church (the church).3

The lists indicate contributions of $192 per week in 2002 and

$200 per week in 2003 (totaling $9,984 in 2002 and $10,400 in

2003).       Petitioner admits that he did not prepare the lists until

after he was notified by respondent about the examination of his

returns.       Petitioner also admits that the sums were “not accurate

pertaining to each amount, but * * * accurate in the sum of

money” and, that he “basically somewhat divvied up” the total

sum.       Petitioner did not offer any other documentation to

substantiate his alleged charitable contributions.

                                Discussion

       As a general rule, the Commissioner’s determinations set

forth in a notice of deficiency are presumed correct, and the

taxpayer bears the burden of proving that these determinations

are in error.       Rule 142(a); Welch v. Helvering, 

, 115

(1933).       Pursuant to section 7491(a), the burden of proof as to

factual issues may shift to the Commissioner where the taxpayer

introduces credible evidence and complies with substantiation

requirements, maintains records, and cooperates fully with



       3
       At one point in his testimony petitioner said that he also
gave money to his brother-in-law, another minister, and that he
included this on the lists showing contributions to his brother’s
church.
                                - 4 -

reasonable requests for witnesses, documents, and other

information.    Petitioner has not met the requirements of section

7491(a) because he has not met the substantiation requirements or

introduced credible evidence regarding the deductions at issue.

1.   Charitable Deductions

     Deductions are strictly a matter of legislative grace and

the taxpayer bears the burden of proving entitlement to the

claimed deduction.   Rule 142(a); INDOPCO, Inc. v. Commissioner,

, 84 (1992); New Colonial Ice Co. v. Helvering, 

, 440 (1934).   Section 170(a) allows as a deduction any

charitable contribution the payment of which is made within the

taxable year.   Deductions for charitable contributions are

allowable only if verified under regulations prescribed by the

Secretary.   Sec. 170(a)(1).   In general, the regulations require

a taxpayer to maintain for each contribution one of the

following:   (1) A canceled check; (2) a receipt from the donee;4

or, in the absence of a check or receipt, (3) other reliable

written records.   Sec. 1.170A-13(a)(1), Income Tax Regs.   Section

1.170A-13(a)(2)(i), Income Tax Regs., provides special rules to

determine the reliability of records on the basis of all the

facts and circumstances of the particular case and further

provides factors to consider in making this determination,


     4
       A receipt is required to contain the name of the donee,
the date of the contribution, and the amount of the contribution.
Sec. 1.170A-13(a)(1), Income Tax Regs.
                                - 5 -

including:    (1) Whether the writing that evidences the

contribution was written contemporaneously and (2) whether the

taxpayer keeps regular records of the contributions.

     Any charitable contribution of more than $250 must further

be substantiated by “a contemporaneous written acknowledgment of

the contribution by the donee organization”.    Sec. 170(f)(8).

“Separate contributions of less than $250 are not subject to the

requirements of section 170(f)(8), regardless of whether the sum

of the contributions made by a taxpayer to a donee organization

during a taxable year equals $250 or more.”    Sec. 1.170A-

13(f)(1), Income Tax Regs.

     Petitioner contends that he gave cash on a regular basis to

the church.    Petitioner testified that his brother is the pastor

of the church and that he, petitioner, is not a churchgoer.

Petitioner testified that he was given a receipt from his

brother’s church for his contributions, but he did not produce

the receipt at trial.    Petitioner kept no contemporaneous records

of his claimed contributions.    Only after receiving notification

of an examination of his 2002 and 2003 returns did petitioner

prepare written lists of cash contributions given to the church.

Petitioner admitted that the lists were not accurate and that he

essentially “divvied up” the sum of his contributions into equal

parts for each week of each year.    Additionally, the deductions

claimed on petitioner’s 2002 and 2003 returns differ greatly
                                - 6 -

compared to the sums he calculated on these lists.5   Petitioner

also testified that he made contributions of approximately $4,000

and $1,000, but produced no written acknowledgments of these

contributions by the donee and offered no reliable evidence of

these alleged contributions, such as canceled checks or receipts.

     We find that petitioner failed to provide reliable evidence

of his purported contributions and failed to meet his burden of

proof.   We hold that respondent’s determinations disallowing

petitioner’s claimed charitable contribution deductions are

sustained.

2.   Section 6662(a)

     With respect to the accuracy-related penalty under section

6662(a), the Commissioner has the burden of production.    Sec.

7491(c).    To prevail, the Commissioner must produce sufficient

evidence that it is appropriate to apply the penalty to the

taxpayer.    Higbee v. Commissioner, 

, 446 (2001).

Once the Commissioner meets his burden of production, the

taxpayer bears the burden of supplying sufficient evidence to

persuade the Court that the Commissioner’s determination is

incorrect.    Id. at 447.




     5
       As we have previously mentioned, petitioner claimed
deductions for charitable contributions of $16,500 for 2002 and
$20,000 for 2003. However, the lists he offered at trial show
contributions totaling only $9,984 in 2002 and $10,400 in 2003.
                                 - 7 -

     Section 6662(a) provides an accuracy-related penalty equal

to 20 percent of the underpayment required to be shown on a

return due to negligence or disregard of rules or regulations.

Sec. 6662(b)(1).    For purposes of section 6662, the term

“negligence” includes “any failure to make a reasonable attempt

to comply with the provisions of * * * [the Code], and the term

‘disregard’ includes any careless, reckless, or intentional

disregard.”    Sec. 6662(c).   “Negligence” also includes any

failure by a taxpayer to keep adequate books and records or to

substantiate items properly.     Sec. 1.6662-3(b), Income Tax Regs.

     An 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.     Sec. 6664(c)(1); see

Higbee v. Commissioner, supra at 448.     This determination is made

based on all the relevant facts and circumstances.     Higbee v.

Commissioner, supra at 448; sec. 1.6664-4(b)(1), Income Tax Regs.

“Relevant factors include the taxpayer’s efforts to assess his

proper tax liability, including the taxpayer’s reasonable and

good faith reliance on the advice of a professional such as an

accountant.”    Higbee v. Commissioner, supra at 448-449.

     Petitioner has failed to keep adequate records or to

substantiate properly the items in question.     Respondent has

provided sufficient evidence to meet his burden of production.

Petitioner has not produced evidence to prove that respondent’s
                                 - 8 -

determination of negligence is incorrect.       We hold that

petitioner is liable for the accuracy-related penalties under

section 6662.

     To reflect the foregoing,

                                              Decision will be entered

                                         under Rule 155.