                       T.C. Memo. 1997-98



                     UNITED STATES TAX COURT



                SHERIEL L. SEXCIUS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4087-95.                 Filed February 25, 1997.



     Sheriel L. Sexcius, pro se.

     Aretha Jones, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


      COHEN, Chief Judge:   Respondent determined a deficiency of

$8,671 in petitioner's Federal income taxes for 1990 and an

addition to tax of $1,746 under section 6651(a)(1).    In the

answer, respondent asserted that petitioner is liable for a

penalty under section 6662(a), either for negligence under
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section 6662(c) or for substantial understatement under section

6662(d).   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.

     At the beginning of trial, petitioner, by her then counsel,

conceded that petitioner was not entitled to any deductions from

her tutoring activity in excess of the income reported.   In her

opening brief, petitioner conceded that her return was filed late

and offered no explanation; she thus conceded liability for the

addition to tax under section 6651(a).   Although petitioner

attempted to repudiate these concessions in her reply brief, she

has shown no reason why we should allow them to be withdrawn.

The remaining issues are whether petitioner is entitled to a

dependency exemption for her mother, to deductions claimed in

relation to her tutoring activity, or to miscellaneous deductions

claimed on Schedule A of her Federal income tax return; whether

petitioner is liable for a penalty under section 6662(a); and

whether we should impose a penalty under section 6673.

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.   At the

time that she filed her petition, petitioner resided in

Washington, D.C.
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     Petitioner resided with her mother, Dorothy Carter, in a

home titled in her mother's name.    Petitioner's mother received

Social Security payments during 1990 and paid the real property

taxes on the residence.    Petitioner paid some of the expenses of

the home for herself and her mother.

     Petitioner has a bachelor of science degree and a master's

degree and is certified to teach biology at the senior high

school level.    During 1990, she worked full time as a teacher in

the District of Columbia public schools.    Since 1979, petitioner

has operated a tutoring and counseling activity in the evenings

and weekends during the school year and full time during the

summer.    Petitioner reported a loss from her tutoring and

counseling activity on Schedule C for each of her tax returns for

1979 through 1991.

     Petitioner failed to maintain adequate records of her

expenses relating to her tutoring and counseling activity.    For

1990, she claimed total expenses of $18,289, resulting in a loss

of $13,527.    The claimed expenses included car and truck expenses

of $5,938, but petitioner did not keep a record of her business

mileage or other records from which business use of her

automobile could be determined.    She incurred some expense for

supplies, photocopying, and typing, but she failed to keep

records to establish the amount of her deductions for those

items.    When petitioner was asked to produce substantiation for
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her business expenses, she produced copies of canceled checks

that included payments for personal expenses, such as a check

payable to Victoria's Secret, and payments relating to

maintenance of the home she shared with her mother.

     This case is the seventh case commenced in this Court by

petitioner in which she claimed deductions relating to her

tutoring and counseling activity.   The prior cases for the years

indicated were resolved as follows:

        Year                    Disposition

        1979             Issue decided in favor of
                         petitioner in a summary opinion
                         filed Oct. 25, 1983

        1984             Stipulated decision entered
                         (no deficiency) Apr. 25, 1988

     1986 & 1987         Deductions denied and additions
                         to tax sustained, T.C. Memo.
                         1991-162, filed Apr. 9, 1991

        1988             Deductions denied, T.C. Memo.
                         1993-310, filed July 15, 1993

        1989             Deductions denied and additions
                         to tax sustained, T.C. Memo.
                         1996-175, filed Apr. 10, 1996

        1991             Deductions denied and penalties
                         imposed, including award under
                         sec. 6673, in bench opinion
                         rendered June 28, 1995

Petitioner's return for 1990 was filed May 21, 1993.   Attached to

her return was a letter dated May 10, 1993, which stated, among

other things:
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          Note that the referenced form [Form 1040,
     December 31, 1990], which sets forth my circumstances
     and facts, does not take into account the sum of $1,932
     reported by the District of Columbia Government on
     Form 1099-G. The omission is deliberate. The sum in
     question constitutes court-awarded damages for
     defamation of character, not self-employment income.
     The rule is that damages so awarded are not includible
     in gross income.

The petition in this case was filed March 15, 1995.   Although

petitioner was advised by earlier opinions of the Court of the

lack of merit in her positions with respect to losses from her

tutoring activity and of the necessity of producing records to

substantiate deductions, she made no attempt to comply with the

applicable rules.   These proceedings have been instituted or

maintained by petitioner primarily for delay.

                              OPINION

     By the time of trial in this case, petitioner had lost four

consecutive cases in this Court with respect to her tutoring and

counseling activity.   In those cases, deductions were denied

because she had failed to establish that the activity was

conducted with an actual and honest profit objective and because

she failed to maintain adequate records of her deductible

expenses.   In one of those cases, the Court had imposed an award

under section 6673 against petitioner because of her persistence

in litigating the same issue previously decided against her

without any change in facts or applicable law.
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     At the beginning of trial in this case, faced with

respondent's request for another penalty under section 6673,

petitioner's then counsel conceded that petitioner was not

entitled to deductions in excess of the income received from the

tutoring and counseling activity and indicated that petitioner's

intention was to substantiate deductions up to the amount of that

income.   Notwithstanding the experience of six prior cases in the

Court, petitioner failed to present adequate records.    The

documents that were presented established that petitioner was

claiming deductions for some personal expenses and failed to

establish the business purpose of other expenditures.

     Similarly, with respect to her claim that she is entitled to

a dependency exemption for her mother, petitioner's proof is

totally inadequate.   She could not provide the amount of her

mother's earnings for 1990 and did not know whether her mother

had filed a Federal income tax return for that year claiming an

exemption for herself.   Petitioner's only evidence with respect

to this issue consisted of receipts for expenditures for the

house that she shared with her mother.   There was some indication

that some of these expenses were paid by her mother.    Thus,

petitioner has not satisfied the requirements of section

151(c)(1), relating to earnings of a dependent, or section

151(d)(2), relating to dependents for whom exemptions are claimed

on returns filed by another taxpayer.    We cannot conclude on this
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record that petitioner provided over one-half of her mother's

support, as required by section 152(a).   She is not entitled to a

dependency exemption in 1990.

     Petitioner claimed on Schedule A of her return for 1990

certain allegedly job-related expenses.   The largest of those

expenses was for legal fees incurred in a lawsuit brought by

petitioner.   Petitioner acknowledged that she was subsequently

reimbursed for these fees.   Although petitioner presented copies

of checks that she claims represented the attorney's fees that

she incurred, she presented neither bills nor corroborating

testimony explaining the nature of the litigation, the nature of

the services provided, or the status of her right to

reimbursement during 1990.   If, as suggested by the attachment to

her 1990 Form 1040, the litigation related to "damages for

defamation of character" that "are not includible in gross

income", attorney's fees in securing such damages would not be

deductible.   Sec. 265(a)(1); Bent v. Commissioner, 87 T.C. 236,

251 (1986), affd. 835 F.2d 67 (3d Cir. 1987).   Petitioner has

provided neither a factual nor a legal predicate for deduction of

the attorney's fees, and no deduction may be allowed.

     Petitioner admits that she claimed deductions for personal

expenses relating to her home, asserting:

     Petitioner, as head of household with a dependent
     mother, is allowed to deduct household expenses such as
     insurance on petitioner's mother's home, repairs on the
     shed and roof of the house due to decay and leakage as
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     well as security service on the home * * * and the
     installation of five new doors for increased security.
     * * *

Petitioner's assertion is contrary to well-established law.

Section 262 specifically precludes deductions for personal,

living, or family expenses.   Section 1.262-1(b), Income Tax

Regs., lists examples of disallowed expenses, including the types

claimed by petitioner.   To the extent that petitioner also claims

that the home is "an alternative office", she has not satisfied

any of the requirements of section 280A(c).

     Petitioner's demonstrated penchant for claiming

nondeductible personal expenses as business expenses undermines

the reliability of her assertions with respect to supplies and

other expenses that normally would be deductible.    She asks that

the Court estimate such expenses under the doctrine of Cohan v.

Commissioner, 39 F.2d 540 (2d Cir. 1930).     That case suggests

that we make an allowance "bearing heavily * * * upon the

taxpayer whose inexactitude is of * * * [her] own making."     Id.

at 544.   We conclude that petitioner is entitled to deduct $500

on Schedule C for supplies and services relating to her tutoring

and counseling activity.   There is no basis for making any

estimate of deductions on Schedule A not allowed by respondent.

     Our discussion of the lack of evidence substantiating

petitioner's right to the deductions that she claimed on her

return leads also to the conclusion that petitioner underpaid her
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taxes for 1990 due to negligence.     Respondent has the burden of

proof on this issue because negligence was first asserted in the

answer.   Rule 142(a).   Nonetheless, the evidence compels the

conclusion that petitioner failed to maintain books and records

to substantiate deductions to which she might have been entitled

and that she claimed deductions to which she clearly was not

entitled.    The penalty under section 6662(a) will be sustained.

     Section 6673(a)(1) provides:

            SEC. 6673(a).   Tax Court Proceedings.--

                 (1) Procedures instituted primarily for
            delay, etc.--Whenever it appears to the Tax Court
            that--

                      (A) proceedings before it have been
                 instituted or maintained by the taxpayer
                 primarily for delay,

                      (B) the taxpayer's position in such
                 proceeding is frivolous or groundless, or

                      (C) the taxpayer unreasonably failed to
                 pursue available administrative remedies,

            the Tax Court, in its decision, may require the
            taxpayer to pay to the United States a penalty not
            in excess of $25,000.

Respondent seeks a penalty under section 6673 against petitioner

on the ground that petitioner has litigated and lost the same

issue, to wit, the deductibility of losses allegedly sustained in

her tutoring and counseling activity, repeatedly without a

showing of changed facts justifying a different result.      Although

petitioner, through her counsel, conceded that she was not
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entitled to deduct expenses in excess of income, thereby

conceding the section 183 issue originally involved in this case,

she continued to claim expenses that either were not

substantiated or clearly were personal nondeductible expenses.

She contends that this case is different than her prior cases

because of her concession and because respondent disallowed all

of her deductions in this case and thus made substantiation an

issue for the first time.   In T.C. Memo. 1993-310, however, the

Court explained the difference between the first year that

petitioner litigated here, which she won, and the later years, in

which her manner of conducting the activity demonstrated lack of

profit objective.   In T.C. Memo. 1996-175, moreover, petitioner's

deductions were disallowed for lack of substantiation.   In that

opinion, we stated:

          Petitioner failed to produce at trial any
     substantiating evidence with respect to the deductions
     she claimed on her Schedules A and C. Given her prior
     experiences in this Court, she was no doubt aware that
     the production of such evidence was expected and
     necessary to support her claimed entitlement to the
     deductions in dispute. We can only conclude that her
     failure to produce such substantiating evidence results
     from her failure to have maintained adequate books and
     records as required by section 6001 and the
     corresponding regulation. * * *

To the extent that petitioner is claiming deductions for personal

expenses, her claims are groundless.   Although we found that she

is entitled to some deductions, on the entire record we infer

that petitioner has instituted or maintained this proceeding
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primarily for delay.   See Sloan v. Commissioner, 102 T.C. 137,

148-149 (1994), affd. 53 F.3d 799 (7th Cir. 1995).    We award a

penalty to the United States in the amount of $3,500.

                                         Decision will be entered

                                    under Rule 155.
