                  T.C. Summary Opinion 2004-148



                      UNITED STATES TAX COURT



                MARVIN B. HUBBARD, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2652-03S.              Filed October 26, 2004.


     Marvin B. Hubbard, pro se.

     Laura A. McKenna, for respondent.




     COUVILLION, Special Trial Judge: This case was heard

pursuant to section 7463.1   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, subsequent section
references are to the Internal Revenue Code in effect for the
years at issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
                                   - 2 -

       Respondent determined deficiencies of $12,055 and $3,329 in

petitioner’s Federal income taxes for the years 2000 and 2001,

respectively, and accuracy-related penalties under section

6662(a) for both years.

       After concessions by respondent,2 the issues for decision

are:       (1) Whether petitioner is entitled to head of household

filing status under section 2(b) for the year 2000; (2) whether

petitioner is entitled to claim a child care credit under section

21 for the year 2000; (3) whether petitioner is entitled to

itemized deductions of $6,766 and $8,100 for home mortgage

interest under section 163 for the years 2000 and 2001,

respectively; (4) whether petitioner is entitled to itemized

deductions of $10,307 and $16,680 for charitable contributions

under section 170 for the years 2000 and 2001, respectively; (5)

whether petitioner is entitled to a trade or business expense

deduction of $10,000 under section 162(a) as a bad debt for the

year 2000; and (6) whether petitioner is entitled to a trade or




       2
          At trial, respondent conceded the following
determinations in the notice of deficiency: (1) The accuracy-
related penalties under sec. 6662(a) for the 2 years at issue;
(2) disallowed Schedule C, Profit or Loss From Business, travel
expenses deduction of $2,000 for the year 2001; (3) disallowed
Schedule C wages deduction of $6,500 for the year 2000; (4)
disallowed Schedule C “other expenses” deduction of $579.44 of
the $3,500 claimed for the year 2000; and (5) the disallowed
child tax credits under sec. 24 for the years 2000 and 2001.
                                - 3 -

business expense deduction of $2,920.56 under section 162(a) as

other expenses for the year 2000.3

     Some of the facts were stipulated.    Those facts, with the

exhibits annexed thereto, are so found and made part hereof.

Petitioner’s legal residence at the time the petition was filed

was Memphis, Tennessee.

     At the time of trial, petitioner was employed by the city of

Memphis as a firefighter.   In addition, petitioner was also

employed by the Memphis Housing Authority during the years 2000

and 2001.   In his position with the Housing Authority, petitioner

patrolled apartments and carried a gun but was unable to make

arrests.    If a problem occurred, petitioner merely detained the

individual or individuals in question and notified the police.

     During the year 2000, petitioner’s niece, Tymiesha

Somerville, moved into his household.     She arrived in February

after being abandoned by her mother.    Although Tymiesha’s

grandmother occasionally brought her gifts, petitioner was


     3
          Generally, the burden of proof is on the taxpayer.
Rule 142(a)(1). The burden of proving facts relevant to the
deficiency may shift to the Commissioner under sec. 7491(a) if
the taxpayer establishes compliance with the requirements of sec.
7491(a)(2)(A) and (B) by substantiating items, maintaining
required records, and fully cooperating with the Secretary’s
reasonable requests. Prior to trial, petitioner did not
cooperate with respondent in producing books and records to
substantiate his expenses. All of the concessions by respondent
were based on documentation produced by petitioner at trial. The
burden of proof, therefore, did not shift to respondent under
sec. 7491(a).
                                - 4 -

Tymiesha’s sole source of support.      During the time Tymiesha

lived with petitioner, she attended daycare daily while

petitioner was employed.    On his Federal income tax return for

the year 2000, petitioner claimed a dependency exemption

deduction for Tymiesha as well as the credit under section 21 for

expenses related to dependent care services and the child tax

credit under section 24.    Tymiesha did not live with petitioner

during 2001, and petitioner claimed no credits or a dependency

exemption deduction for her on his 2001 Federal income tax

return.    In the notice of deficiency, respondent disallowed

petitioner’s dependency exemption deduction for Tymiesha as well

as the section 21 and 24 credits.    Respondent conceded the

section 24 child tax credit at trial.

     In addition to his employment with the city of Memphis and

the Housing Authority during the years at issue, petitioner was

engaged in a security business that provided bodyguards for

various entertainers such as the rapper DMX and singer Missy

Elliott.    During the year 2000, petitioner traveled to Africa

with DMX as a security guard.    Confusion developed in Africa when

the authorities discovered that petitioner and his traveling

entourage had neglected to obtain visas allowing them to stay in

the country.    They were not allowed to remain in the country.

Petitioner contends he paid $10,000 in order for his group to

leave the country.    On his Federal income tax return for 2000,
                               - 5 -

petitioner claimed on Schedule C, Profit or Loss From Business,

under expenses a bad debt deduction of $10,000 for the incident.

That deduction was disallowed by respondent in the notice of

deficiency.   Petitioner also deducted Schedule C “other expenses”

of $3,500, which he identified as $1,500 for business meetings

and $2,000 for a cellular telephone.    Both items were disallowed

in the notice of deficiency; however, at trial respondent

conceded $579.44 of the phone expenses, leaving $2,920.56 at

issue.   The deductions were disallowed for lack of

substantiation.

     Finally, in the notice of deficiency, respondent disallowed

Schedule A, Itemized Deductions, amounts claimed by petitioner on

his 2000 and 2001 income tax returns for charitable contributions

of $10,307 and $16,680, respectively.   Additionally, petitioner

claimed itemized deductions for home mortgage interest of $6,766

and $8,100, respectively, for 2000 and 2001.   These deductions

were also disallowed for lack of substantiation.

     With respect to the first issue, the claimed head of

household filing status for the year 2000, section 2(b) defines a

head of household as an individual taxpayer who (1) is not

married at the close of the taxable year and (2) maintains as his

home a household which constitutes the principal place of abode

for more than one-half of the taxable year of a person who is a

dependent of the taxpayer, if the taxpayer is entitled to a
                              - 6 -

deduction for the person under section 151.   Sec. 2(b)(1)(A)(ii).

As noted earlier, respondent conceded petitioner’s entitlement to

the child tax credit under section 24.   That concession satisfied

the second prong listed in section 2(b)(1)(A)(ii), that the child

was petitioner's dependent, for whom he was entitled to a

deduction under section 151, and she was domiciled with

petitioner for at least 6 months of the taxable year.4    The only

remaining requisite for head of household filing status is

section 2(b)(1), which requires that the household provider be

“not married” at the close of the taxable year.    Although

petitioner was married and not divorced at the close of the tax

year in question, under section 7703(b)(3), a taxpayer who

maintains as his home a household which constitutes the principal

place of abode for more than one-half the year a child for whom

he is entitled to a deduction under section 151 is deemed to be

“not married” if, during the last 6 months of the year at issue,

his spouse did not reside with him.   Sec. 2(c).   Petitioner

     4
          On his 2000 Federal income tax return, petitioner
claimed Tymiesha Somerville as a dependent. In the notice of
deficiency respondent disallowed the dependency exemption of
$2,800. Neither party addressed this adjustment at trial;
however, respondent conceded petitioner’s entitlement to the sec.
24 child tax credit for which Tymiesha was the qualifying child.
Since sec. 24 provides that a qualifying child means any
individual who, among other requirements not pertinent here, is a
dependent under sec. 151, respondent’s concession of the sec. 24
credit also constitutes a concession that Tymiesha was a
dependent under sec. 151. Therefore, in addition to the other
concessions in supra note 2, petitioner is entitled to the
dependency exemption deduction for the year 2000. Sec.
24(c)(1)(A).
                               - 7 -

entered into evidence at trial a letter written by his mother

that stated petitioner and his wife, Myrtis, were separated

during the years 2000 and 2001 and concluded that petitioner and

Myrtis had “an on and off relationship.”   The letter was vague as

to the date petitioner and his wife separated and whether she

lived with him the last 6 months of 2000; however, petitioner

testified his wife left soon after his niece, Tymiesha, came to

live with him and that his wife lived elsewhere thereafter.   The

Court accepts that evidence and finds that petitioner was not

married at the close of the year 2000.   Therefore, petitioner

qualifies for head of household filing status for the year 2000.

     Petitioner also claimed a child care expense credit under

section 21 on his 2000 tax return with respect to Tymiesha, who

resided with him for 9 months during the taxable year.   A

taxpayer who maintains a household that includes as a member one

or more qualifying individuals5 may claim as a credit against the

tax a percentage of the child care expenses paid during the

taxable year.   The taxpayer must have incurred the child care

expenses to enable him to be gainfully employed in that taxable




     5
          A “qualifying individual” under sec. 21(b)(1) includes
a dependent of the taxpayer, under age 13, for whom the taxpayer
may claim a dependency deduction under sec. 151(c). As discussed
previously, respondent, through the sec. 24 child tax credit
concession, has accepted Tymiesha as a qualifying individual
within the meaning of sec. 151.
                                - 8 -

year.6   Respondent did not challenge petitioner’s classification

of his niece as a qualifying individual under section 21(b)(1),

or whether petitioner’s payments for child care, if actually

paid, were employment-related under section 21(b)(2).    Respondent

disallowed petitioner’s claim solely for failure to substantiate.

     Petitioner claimed the expenses were paid to the service

provider “Prestigious” and attached the required Form 2441, Child

and Dependent Care Expenses, providing identifying information

with respect to it on his 2000 tax return pursuant to section

21(e)(9).    In addition, petitioner testified credibly about the

expense.    Section 1.44A-1(e), Income Tax Regs., allows the

taxpayer to substantiate the child tax credit with “other

sufficient evidence”.    In the absence of adequate written

substantiation, this Court may, if convinced by the evidence,

estimate the amount of deductible expenses incurred.    Cohan v.

Commissioner, 39 F.2d. 540 (2d Cir. 1930).    The Court is

satisfied from the record that petitioner did incur child care

expenses with respect to his niece, Tymiesha, that enabled him to

pursue gainful employment.    On this record, the Court holds that

petitioner is entitled to the child care credit of $480 on his

2000 income tax return under section 21.


     6
          Sec. 21(e) also requires that the taxpayer file either
a joint return, if married, or as a head of household to qualify
for the credit. The Court has found that petitioner qualified
for head of household status in year 2000; therefore, further
discussion as to this requirement is unnecessary.
                                  - 9 -

     With respect to the third issue, petitioner claimed itemized

deductions of $6,766 and $8,100 for home mortgage interest under

section 163 for the years 2000 and 2001, respectively.     Section

163(h) allows a deduction for interest paid on a qualified

residence.   Sec. 163(h)(2)(D).    “Qualified residence” within the

meaning of section 163 may be either the taxpayer’s principal

residence or another residence selected by the taxpayer and used

as a residence.   Sec. 163(h)(4)(A)(i).    Although the petitioner

listed the name of the company to which he paid interest for the

home mortgage interest on his returns, he presented no

substantiation or proof of his interest payments at trial, nor

did he produce either a deed to any property or even a canceled

check to or receipt from any bank or mortgage company.

Therefore, respondent is sustained on this issue and the

deductions are disallowed for 2000 and 2001.

     With respect to the fourth issue, petitioner claimed $10,307

and $16,680 as itemized deductions for charitable contributions

for the years 2000 and 2001, respectively.     Each deduction was

disallowed in its entirety in the notice of deficiency.     A

taxpayer may deduct any charitable contribution made within the

taxable year.   Sec. 170(a)(1).    The deduction, however, is

subject to verification pursuant to applicable regulations.

Where a taxpayer donates an amount in excess of $250, it is

necessary to substantiate the amount contributed with a
                               - 10 -

contemporaneous written acknowledgment from the donee.    Sec.

1.170A-13(f)(1), Income Tax Regs.    This written acknowledgment

must state the amount of cash or description of property the

taxpayer donated and a statement confirming that no consideration

was given to the taxpayer.    Sec. 1.170A-13(f)(2), Income Tax

Regs.

     With respect to the $10,307 claimed for 2000, petitioner

listed on the return $6,239 as gifts by cash or check, $3,200 as

gifts other than by cash or check, and $870 as a carryover from

the prior year.    Petitioner offered into evidence a letter from

his church, St. John Baptist, acknowledging contributions of

$6,239 for the year 2000.    The letter also confirmed that no

goods or services were given to petitioner in exchange for the

contributions.    As to the gifts other than by cash or check,

petitioner offered into evidence a receipt from “AMVETS”

acknowledging receipt of several items of property.7   Petitioner

testified that the representative of the donee, AMVETS, who

received the donation listed the value of the property on the

receipt; however, petitioner did not know the basis upon which

the representative arrived at the value recorded on the receipt.

Although petitioner claimed that much of the property was


     7
          The receipt listed the following: Five boxes and five
bags of clothing, furniture valued at $2,325, four chairs valued
at $275, three tables valued at $825, and one mattress valued at
$250.
                                - 11 -

“practically new”, he offered no purchase invoices,

documentation, or appraisals on the property to corroborate his

contention.

     In the absence of adequate written substantiation, this

Court may, if convinced by the evidence, estimate the amount of

deductible expenses incurred.    Cohan v. Commissioner, supra.    The

Court is satisfied from the record that petitioner did in fact

make various donations to AMVETS but concludes that the items

were grossly overvalued.    Therefore, the Court allows petitioner

a deduction of $750 as a charitable contribution for his

donations to AMVETS.

     With regard to the church contributions of $6,239,

petitioner presented a letter from his church attesting to

contributions for that amount.    While the Court is satisfied that

petitioner made contributions to his church, the statement does

not list the date or dates of contributions or the manner in

which the payments were made, such as in cash or by check.

Petitioner presented no receipts or canceled checks that would

corroborate the statement of the church.     The Court is not

satisfied that petitioner’s contributions to his church amounted

to $6,239 during the 2000 tax year.      This amount constituted 22

percent of petitioner’s adjusted gross income for the year and

amounts to $120 per week.   The record does not satisfy the Court

that petitioner established payments of that amount for the year.
                              - 12 -

Accordingly, pursuant to Cohan v. Commissioner, supra, the Court

allows petitioner $750 as church contributions for 2000.

     With respect to the $870 carryover from prior years,

petitioner offered no evidence to establish the carryover.    That

item, therefore, is disallowed.   Likewise, regarding the $16,680

deducted on his 2001 tax return, petitioner offered neither

testimony nor documentation to substantiate the amount claimed.8

Therefore, the Court sustains respondent on this issue and

disallows the deduction in its entirety.

     The fifth issue is a bad debt deduction of $10,000 claimed

by petitioner as a trade or business expense in connection with

his personal security activity.   As noted earlier, petitioner

contends he incurred this expense when he was hired to provide

security for a rapper, DMX, on a tour of Africa.   Because the

performer and petitioner’s entourage did not have the appropriate

documents to be in Africa, they were permitted to leave the

country only after petitioner paid $10,000.   Petitioner deducted

this payment as a bad debt on his 2000 tax return.   The Court

disagrees that such a payment would constitute a bad debt within

the meaning of section 166.   To the extent, however, that the

payment otherwise constituted an expense incurred in connection


     8
          Petitioner alluded to the existence of a letter from
his church pertaining to his gifts during 2001 when he testified
as to his contributions for year 2000; however, he never offered
the letter into evidence, nor did he address it further.
                               - 13 -

with his trade or business, petitioner presented no documentation

or any other evidence to substantiate the payment in question.

Respondent, therefore, is sustained on this issue.

     Finally, the last issue for decision is whether petitioner

is entitled to deduct certain miscellaneous Schedule C expenses

in excess of amounts allowed by respondent.    In the notice of

deficiency, respondent disallowed $3,500 of Schedule C “other

expenses” petitioner deducted in the year 2000.    On his income

tax return, petitioner claimed $1,500 for business meeting

expenses and $2,000 for telephone expenses.9

     Section 162 allows a taxpayer to deduct ordinary and

necessary expenses that are paid or incurred during the taxable

year in carrying on a trade or business.    Sec. 162(a); Deputy v.

du Pont, 308 U.S. 488, 495 (1940). Furthermore, expenses paid or

incurred by a taxpayer to attend a business meeting may

constitute an ordinary and necessary business expense depending

on the facts and circumstances of each case.    Sec. 1.162-2(d),

Income Tax Regs.   These expenses, however, are subject to certain

substantiation requirements.   Sec. 1.162-2(f), Income Tax Regs.

     In order to substantiate an expense, the taxpayer must keep

such records as will be sufficient to enable the Commissioner to

correctly determine income tax liability.   Furthermore, the


     9
          As noted earlier, see supra note 2, respondent conceded
$579.44, leaving $2,920.56.
                               - 14 -

regulations state:   “it is to the advantage of taxpayers who may

be called upon to substantiate expense account information to

maintain as adequate and detailed records of * * * business

expenses as practical since the burden of proof is upon the

taxpayer”.   Sec. 1.162-17(d)(2), Income Tax Regs.   The

regulations further suggest that the taxpayer keep a diary or

contemporaneous record of expenditures.   Petitioner did neither.

Although he claimed $1,500 in expenses for business meetings,

petitioner offered no testimony or written documentation

substantiating these expenses.   Therefore, the Court sustains

respondent on this issue.

     As to the deduction for telephone expenses, petitioner’s

testimony was vague with respect to his cellular phone bills and

offered only minimal written documentation.10   Cellular phones

are classified as “listed property” and thus subject to strict

substantiation requirements.   Secs. 274(d)(4), 280F(d)(4)(A)(v).

Therefore, in order to deduct use of a cellular phone as a

business expense, the taxpayer must produce adequate records or

other evidence showing (1) the amount of the expenses; (2) the

time and place of the use; (3) the business purpose; and (4) the

business relationship to the property.    Petitioner failed to meet

any of these requirements; therefore, the Court holds for

     10
          Petitioner’s production of a single cellular telephone
bill resulted in respondent's conceding $579.44 of petitioner’s
miscellaneous Schedule C deduction.
                             - 15 -

respondent on this issue and disallows all but the conceded

amount.

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                       Decision will be entered

                                   under Rule 155.
