                          T.C. Memo. 2007-84



                       UNITED STATES TAX COURT



                    SUZANNE Z. ATAKY, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 21337-05.               Filed April 9, 2007.



     Suzanne Z. Ataky, pro se.

     Michelle L. Maniscalco, for respondent.



               MEMORANDUM FINDINGS OF FACT AND OPINION

     SWIFT, Judge:    Respondent determined a $2,629 deficiency in

petitioner’s 2003 Federal income tax.

     Unless otherwise indicated, all section references are to

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

all Rule references are to the Tax Court Rules of Practice and

Procedure.
                               - 2 -
     The issues for decision are whether petitioner is entitled

to ordinary deductions for (1) a $3,050 casualty loss, (2) a

$2,060 business bad debt, (3) a $2,940 business travel expense,

(4) a $3,850 business contract labor expense, and (5) $2,186 more

in depreciation than respondent allowed.1


                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

     At the time the petition was filed, petitioner resided in

New York, New York.

     Petitioner works full time as a respiratory therapist.

     In 2002, petitioner’s car was stolen and recovered.     As a

result of the theft, petitioner’s car was damaged.     The

individual who stole petitioner’s car was not apprehended, and

petitioner’s car insurance policy did not cover the theft damage

to petitioner’s car.

     In 2003, petitioner was involved in a minor 2-car accident,

and again petitioner’s car was damaged.     Petitioner did not

request from the driver of the other car payment for the damage

to petitioner’s car, and petitioner did not repair the damage to

her car.   Petitioner did not obtain an estimate of the fair

market value of her car before and after the accident.




     1
       The $2,186 in disputed depreciation also includes a sec.
179 expense deduction.
                              - 3 -
     In 2003 and prior years, petitioner’s friend, Sege

Yassievich (Sege), purchased from an Internet domain registrar

numerous Internet domain names.   The trial record does not

explain why Sege purchased the Internet domain names or

petitioner’s involvement in Sege’s purchase thereof.

     Sege prepared and petitioner timely filed petitioner’s 2003

individual Federal income tax return on which petitioner

described her business as “Internet Publishing” and on which

petitioner claimed, among other things, ordinary deductions for a

$3,050 casualty loss on the theft of a “notebook” and a “digital

camera”, a $2,060 business bad debt, $2,940 in business travel,

$3,850 in contract labor, and $3,699 in depreciation.   Also on

her 2003 Federal income tax return, petitioner claimed to have

placed in service in 2003 a $2,100 “PC” and $5,640 in other

assets.

     On audit, with the exception of $1,513 of the $3,699 claimed

depreciation expense, respondent disallowed all of the above

deductions claimed by petitioner on her 2003 Federal income tax

return.

     The schedule below summarizes the disputed deductions

claimed by petitioner on her 2003 Federal income tax return and

the deductions allowed by respondent:
                                   - 4 -



                                    Claimed by    Allowed by
              Expense Deduction     Petitioner    Respondent
              Casualty Loss           $3,050          -0-
              Business Bad Debt        2,060          -0-
              Business Travel          2,940          -0-
              Contract Labor           3,850          -0-
              Depreciation             3,699        $1,513


                                  OPINION

     Taxpayers are expected to keep adequate books and records

to substantiate tax deductions claimed.        Sec. 6001; sec. 1.6001-

1(a), (e), Income Tax Regs.       Petitioner, however, has not

maintained appropriate records to substantiate the deductions at

issue, and the burden of proof as to the deductions remains on

petitioner.    Rule 142(a); sec. 7491(a)(1) and (2).

     A taxpayer may be entitled to a deduction for casualty

losses in an amount equal to the lesser of the decline in the

fair market value of the property caused by the casualty or the

taxpayer’s adjusted basis in the property.        Sec. 165(a); sec.

1.165-7(b), Income Tax Regs.

     In calculating a casualty loss, a property’s fair market

value generally must be ascertained by competent appraisal.        Sec.

1.165-7(a)(2)(i), Income Tax Regs.         Alternatively, the amount of

a casualty loss may be established by reasonable repair costs
                               - 5 -
paid to restore property to its precasualty condition.   Sec.

1.165-7(a)(2)(ii), Income Tax Regs.

     Generally, a casualty loss may be deducted in the year in

which the loss occurs.   Sec. 1.165-7(a)(1), Income Tax Regs.   A

reasonable prospect for reimbursement of a loss (e.g., by

insurance or lawsuit) will prevent a casualty loss from being

deductible until the year in which the reasonable prospect for

reimbursement no longer exists.   Sec. 1.165-1(d)(2), Income Tax

Regs.

     Petitioner no longer claims that she is entitled to a $3,050

casualty loss deduction for thefts of a notebook and a digital

camera, as claimed on her 2003 Federal income tax return.

Rather, petitioner now argues that the $3,050 claimed casualty

loss deduction is allowable based on theft damage that occurred

to her car in 2002 and accident damage that occurred to her car

in 2003.

     Without a showing that petitioner in 2002 had a reasonable

prospect for reimbursement of the costs of repairing the car

theft damage (deferring any casualty loss deduction relating

thereto until at least 2003) and that petitioner in 2003 had no

such prospect, a casualty loss deduction relating to theft damage

to petitioner’s car is not available to petitioner in 2003.

     As to the accident damage to petitioner’s car, because

petitioner did not repair her car and did not obtain an estimate
                               - 6 -
or appraisal of its preaccident and postaccident fair market

value, we are unable to calculate or even to estimate the amount

of a casualty loss deduction allowable to petitioner.   A repair

estimate that was produced by petitioner did not indicate the

expertise of the individual making the estimate, is addressed to

an individual other than petitioner, lists a license plate number

for the car different from the license plate number listed in the

police accident report, and is dated 6 months after the accident.

     We disallow as unsubstantiated petitioner’s 2003 claimed

$3,050 casualty loss deduction relating to a 2002 car theft and a

2003 car accident.

     Petitioner now argues that the $2,060 claimed bad debt

deduction relates to airline tickets that she purchased in 2003

for a contractor as compensation for the contractor’s future

services.   Petitioner argues that the contractor did not perform

the services, that the contractor refused to refund to petitioner

the cost of the airline tickets, and that as a result petitioner

in 2003 realized a $2,060 bad debt.

     Because petitioner, among other things, did not produce

credible evidence that she purchased airline tickets for a

contractor, petitioner has failed to substantiate the claimed bad

debt deduction.

      We disallow as unsubstantiated petitioner’s $2,060 claimed

bad debt deduction.
                                - 7 -
     Petitioner asserts that in 2003 petitioner and Sege took a

business trip to Russia and incurred $2,940 in airfare and

lodging expense.

     Petitioner did not substantiate the travel expense with

credible evidence.   Vague documentation of travel expense

produced at trial did not relate to a business trip to Russia

and/or lacked completeness.

     We disallow as unsubstantiated petitioner’s $2,940 claimed

business travel deduction.

     To substantiate a $3,850 payment to a contractor, petitioner

produced a canceled check.    The check, however, lists a payee

different from the alleged contractor and was written for an

amount different from the claimed deduction.    The discrepancies

between the check and the $3,850 claimed deduction have not been

explained.

     We disallow as unsubstantiated petitioner’s $3,850 claimed

business expense deduction.

     Petitioner argues that in 2003 she purchased and placed in

service $7,740 of business assets on which she is entitled to

$3,699 in depreciation.   To substantiate her 2003 purchase of

$7,740 in business assets, petitioner offers a printout of a June

11, 2006, online transaction report which lists Sege, not

petitioner, as the purchaser.    Petitioner has not produced

credible evidence that she purchased the assets in question.
                                 - 8 -
      We disallow as unsubstantiated the $2,186 in depreciation

disallowed by respondent.

     Primarily for lack of substantiation, among other reasons,

for 2003 petitioner is not entitled to deductions beyond those

allowed by respondent.

     To reflect the foregoing,

                                              Decision will be entered

                                         for respondent.
