PURSUANT TO INTERNAL REVENUE CODE SECTION 7463(b), THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY OTHER CASE.
GOLDBERG,
Respondent determined a deficiency of $ 4,970 in petitioner's 2003 Federal income tax and an accuracy-related penalty of $ 994 under
Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. At 2008 Tax Ct. Summary LEXIS 59">*60 the time the petition was filed, petitioner resided in Maryland.
In 2003 petitioner was single and had a minor daughter. Petitioner timely filed a 2003 Federal income tax return.
Petitioner was employed as a sergeant for the Baltimore City Police Department, Western District (the department). Petitioner was required to wear a police uniform. The department provided petitioner one uniform jacket, three pairs of pants, three shirts, a hat, and a sweater. Each week petitioner paid approximately $ 20 to have two of his uniforms dry cleaned. The department required petitioner to come to work in a clean, pressed uniform and black shoes. The department did not provide the shoes. Petitioner bought black Nike boots, and he purchased new boots whenever the old boots wore out. Petitioner purchased three pairs of boots in 2003 at a cost of approximately $ 100 per pair. The department did not reimburse petitioner for his dry cleaning expenses or for the cost of boots. The department does not reimburse petitioner for any dry cleaning or personal equipment purchased to perform police duties.
The department issued petitioner a weapon, ammunition, and four boxes of practice ammunition each year. In 2003 2008 Tax Ct. Summary LEXIS 59">*61 petitioner purchased 10 additional boxes of ammunition for target practice. Petitioner was able to purchase ammunition at the district range at a cost of $ 6.50 per box. Petitioner practiced shooting at the district range, which was free for employees. Petitioner also practiced shooting at other ranges, where he paid approximately $ 7 per half hour and $ 15 for each box of ammunition. In 2003 petitioner practiced shooting at the other ranges approximately five times and used two boxes of ammunition during each visit. The department did not reimburse petitioner for any costs incurred at the other ranges.
Petitioner drove his personal automobile to work each day. At times he was required to appear in court, and on those days he drove as part of his employment as a police officer. On the days he went to court, petitioner drove his personal automobile from home to court. Petitioner paid for parking while at the circuit court and Federal court. Petitioner estimated that his parking expenses were $ 25 per week.
During tax year 2003 petitioner placed used clothing in a yellow bin on the side of the road. Petitioner believed the bin was a repository for charitable donations, but he could not 2008 Tax Ct. Summary LEXIS 59">*62 recall the name of the charity. Petitioner estimated the total cost of the clothing he placed in the bin was $ 120. Petitioner occasionally attended church services. 1
The department provided free medical care to officers who were injured in the line of duty. Additionally, petitioner was enrolled in a health insurance plan with Blue Cross/Blue Shield. Petitioner's daughter was also covered by this health insurance policy, with a copayment of approximately $ 10 for medication. In 2003 all of petitioner's medical and dental expenses were covered by his health insurance policy. There is no evidence that petitioner paid any copayments for his daughter in 2003.
Upon the advice of a coworker, petitioner engaged a return preparer to prepare his income tax return for 2003. Petitioner met with the preparer to have the return completed. When the preparer learned that petitioner was a police officer, the preparer asked petitioner a series of questions regarding petitioner's job expenses, noncash charitable contributions, and medical and dental expenses for tax year 2003. The preparer entered 2008 Tax Ct. Summary LEXIS 59">*63 on the return amounts based on petitioner's answers. Petitioner did not give the preparer any bills or receipts. The preparer showed the completed return to petitioner and discussed the entries. Petitioner did not question the preparer or ask the preparer to explain any of the entries on the return. Petitioner and the preparer each signed the return. On Schedule A, Itemized Deductions, petitioner claimed deductions totaling $ 26,829 comprising $ 13,737 in unreimbursed job-related expenses, $ 6,545 of charitable contributions, $ 3,023 of medical and dental expenses, and $ 3,494 of State and local income taxes.
Respondent issued petitioner a notice of deficiency in November 2005 disallowing all of the claimed itemized deductions. The notice of deficiency allowed petitioner a standard deduction of $ 4,750. 2 Respondent also determined an accuracy-related penalty under
In general, the Commissioner's 2008 Tax Ct. Summary LEXIS 59">*64 determination set forth in a notice of deficiency is presumed correct, and the taxpayer bears the burden of showing that the determination is in error.
Pursuant to
We iterate that petitioner produced no receipts or documentation for any of the itemized deductions claimed. Respondent disallowed the claimed deductions in full because petitioner did not establish that the expenses were paid during tax year 2003 or that the deductions were for ordinary and necessary business expenses.
On his 2003 Federal income tax return, petitioner claimed a net deduction of $ 13,767 for employee and other miscellaneous expenses. At trial petitioner maintained that he is entitled to deductions for the following expenses: (1) Dry cleaning his uniforms and purchasing boots; (2) ammunition and target range fees; and (3) business use of his automobile, including gasoline and parking.
Petitioner claimed a business expense deduction for the cost of dry cleaning his uniforms and for the cost of black boots. The cost to purchase and maintain 2008 Tax Ct. Summary LEXIS 59">*66 work clothing and shoes may be deductible under
With respect to the uniform dry cleaning, respondent does not dispute that petitioner has satisfied the legal requirements for deductibility. However, respondent denied the deduction for lack of substantiation. When a taxpayer adequately establishes that he paid or incurred a deductible expense but does not establish the precise amount, the Court may in some circumstances estimate the allowable deduction, bearing heavily against the taxpayer whose inexactitude is of his own making.
The department also required petitioner to wear black footwear as part of his uniform. The record does not indicate that petitioner's black Nike boots were not suitable for general or personal wear or that petitioner wore the boots only at work. No deduction is allowed for personal, living, or family expenses.
Petitioner claimed deductions for the cost of ammunition and for target range fees. Petitioner was required to maintain a certain skill level with his weapon. Petitioner could have used the district gun range at no cost, but he sometimes practiced at private practice ranges. Petitioner failed to explain why he chose to spend money at a private range when he could use a district gun range for free. Petitioner is not entitled to a deduction for fees paid to private target ranges since he has not established that the expense is ordinary and necessary.
The Court 2008 Tax Ct. Summary LEXIS 59">*68 is satisfied that petitioner was required to purchase ammunition as part of his employment as a police officer. Although petitioner failed to provide details as to the exact amount of this expenditure, the Court will allow petitioner $ 65 for this item. 3 See
Petitioner claimed a deduction for the business use of his automobile, including gasoline and parking. Petitioner incurred expenses for gasoline when he drove from his home to work and from his home to court. Expenses relating to the use of an automobile while commuting between the taxpayer's residence and the taxpayer's place of business or employment are not deductible because they are personal and not business expenses.
Petitioner also claimed a deduction for parking expenses incurred when he appeared in court and had to park his automobile at a meter or in a parking garage. Even if petitioner established that the cost of the parking is a properly deductible expense,
In general,
On his 2003 tax return petitioner claimed a deduction of $ 4,995 for cash charitable contributions and $ 1,550 for noncash charitable contributions, all of which respondent disallowed.
Petitioner provided no support for any of the cash charitable contribution deduction of $ 4,995. Respondent's determination on this issue is sustained.
At trial petitioner stated that he donated used clothing by depositing it into a charity bin. On his 2003 tax return petitioner claimed a $ 1,550 deduction for the clothing donated. At trial petitioner estimated the cost of the used clothing at $ 120 but provided no substantiation. In the light of petitioner's inflated claim and the lack of evidence supporting any donation, no deduction is allowed for 2008 Tax Ct. Summary LEXIS 59">*71 noncash charitable contributions. Respondent's determination on this issue is sustained.
Petitioner reported he spent $ 6,985 for medical and dental expenses, and he claimed a deduction of $ 3,023, after the 7.5-percent limitation, which respondent disallowed. Petitioner acknowledged that he had no uncompensated medical expenses in 2003. Further, petitioner is not claiming his daughter as his dependent, nor is he claiming that she incurred any uncompensated medical expenses in 2003. Therefore, petitioner is not entitled to a deduction for medical and dental expenses. Respondent's determination on this issue is sustained.
Petitioner claimed a $ 3,494 deduction for State and local taxes. It is obvious to the Court that this was the amount reported on petitioner's Form W-2, Wage and Tax Statement, as 2008 Tax Ct. Summary LEXIS 59">*72 was the amount of his total income, $ 52,832. Therefore, petitioner is entitled to a $ 3,494 deduction for State and local taxes in 2003. See
The standard deduction respondent allowed in the notice of deficiency for 2003 was $ 4,750. Petitioner's claimed deductions for uniform dry cleaning, ammunition, and State and local income taxes as allowed by this opinion total $ 4,559 and do not exceed the standard deduction amount. Petitioner is therefore entitled to the standard deduction. See
Under
A substantial understatement is an understatement of income tax for any taxable year which exceeds the greater of (a) 10 percent of the tax required to be shown on the return, or (b) $ 5,000.
Negligence includes the failure to exercise due care or do what a reasonable and ordinarily prudent person would do under the circumstances.
Petitioner contends that he is not liable for the penalty because he relied on erroneous expert advice given by his tax preparer. However, petitioner did not take reasonable steps to report the correct tax liability. Petitioner did not provide the preparer with any documents or receipts to substantiate any of his claimed deductions, nor did he scrutinize any of the figures that the preparer reported on the return. Further, petitioner failed to question any of the inflated figures. 2008 Tax Ct. Summary LEXIS 59">*75 Thus, petitioner did not exercise the due care of a reasonable and ordinarily prudent person. The understatement is due to negligence within the meaning of
To reflect the foregoing,
1. The record does not reflect how often or in what amounts petitioner made contributions while attending church.↩
2. To the extent the Court concludes that petitioner is entitled to some itemized deductions, but the amount is less than the standard deduction allowed by respondent, the Court will sustain respondent's determination.↩
3. Petitioner estimated that he purchased 10 boxes of ammunition and fired 2 boxes on each of five trips to the range in 2003. At $ 6.50 per box (the cost to purchase ammunition from the department), this amounts to $ 65.↩
4. In his trial memorandum respondent asserts that petitioner understated the tax by more than 10 percent and therefore