                          T.C. Summary Opinion 2016-3



                         UNITED STATES TAX COURT



     HOWARD BERNSTEIN AND LORRAINE F. BRITTO-BERNSTEIN,
                         Petitioners v.
        COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 17398-14S.                         Filed January 20, 2016.



      Howard Bernstein and Lorraine F. Britto-Bernstein, pro sese.

      Peter N. Scharff and Gerard Mackey, for respondent.



                              SUMMARY OPINION


      JACOBS, Judge: This case was heard pursuant to the provisions of section

7463 of the Internal Revenue Code in effect when the petition was filed. Pursuant

to section 7463(b), the decision to be entered is not reviewable by any other court,

and this opinion shall not be treated as precedent for any other case.
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      Respondent determined a deficiency of $3,722 in petitioners’ 2011 Federal

income tax. Petitioners timely filed a petition for redetermination in this Court.

After concessions,1 the issues remaining for decision are: (1) whether petitioners

are entitled to their claimed deduction for cash charitable contributions of $2,375

claimed on Schedule A, Itemized Deductions, of their joint Form 1040, U.S.

Individual Income Tax Return, and (2) whether petitioners are entitled to their

deduction for unreimbursed employee expenses of $27,395 also claimed on

Schedule A. Unless otherwise indicated, all section references are to the Internal

Revenue Code (Code) in effect for the year at issue, and all Rule references are to

the Tax Court Rules of Practice and Procedure.

                                    Background

      Some of the facts are stipulated and are so found. The stipulated facts and

the accompanying exhibits are incorporated herein by this reference. At the time

petitioners filed their petition, they resided in New York.

      Petitioners are husband and wife. In 2011 petitioner husband, a

psychologist, was employed by the State of New York and by CHE Senior

Psychological Services. Petitioner wife was employed as a consultant by the New

      1
       At trial respondent conceded that petitioners were entitled to deduct tax
preparation fees of $125, and petitioners conceded that they improperly deducted
attorney’s and accountant’s fees totaling $4,975.
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York City Health & Hospitals Corp. Petitioners timely filed a joint Form 1040 for

2011 on which they claimed itemized deductions on Schedule A, including

deductions for charitable contributions and unreimbursed employee expenses.

I.    Charitable Contributions

      During 2011 petitioners made cash donations to various charities and

deducted $2,375 on Schedule A. Petitioners documented $126 of these donations.

Petitioners also made noncash donations (clothing and accessories, a computer, a

record player, and other items) to charities which they valued at $1,149. They did

not claim a deduction for these donations. However, during the Internal Revenue

Service (IRS) tax examination, petitioners provided the IRS with receipts

documenting these noncash donations. Consequently, respondent concedes that

petitioners may deduct $1,275 in charitable donations ($126 in cash donations and

$1,149 in noncash donations) for 2011. Thus, the amount of the deduction for

charitable contributions for 2011 now in dispute is $1,100 ($2,375 - ($1,149 +

$126)).2




      2
       At trial petitioners did not assert that they are entitled to an additional
charitable contribution deduction for the $1,149 of noncash donations that
respondent conceded. We therefore treat respondent’s concession as merely
reducing the disputed amount of petitioners’ charitable contribution deduction.
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II.   Unreimbursed Employee Expenses

      Petitioner wife’s job as a consultant involved preparing statistical analyses

with respect to various hospital inpatient facilities. Petitioners claimed that

petitioner wife’s performing a “lot” of her statistical analytic work at home

required them to purchase computers, statistical programs, printers, paper, and

reference books. Petitioners claimed a deduction of $27,395 with respect to: (1)

the purchase of these items, (2) expenses incurred with regard to petitioner wife’s

taking an online course in statistics from Penn State University, (3) travel

expenses incurred by petitioners in connection with their respective employments,

and (4) gifts. Petitioners did not provide documentation to substantiate these

deductions.

                                     Discussion

      Generally, the Commissioner’s determination set forth in the notice of

deficiency is presumed correct, and the taxpayer bears the burden of showing that

the Commissioner’s determination is in error. Rule 142(a); Welch v. Helvering,

290 U.S. 111, 115 (1933). However, in certain circumstances the burden of proof

with respect to factual matters may shift to the Commissioner. Sec. 7491(a).

Petitioners did not argue that section 7491(a) applies herein, nor did they show
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that they meet its requirements to shift the burden of proof. Consequently, the

burden of proof remains with petitioners.

I.    Charitable Contributions

      In general, section 170(a) allows a deduction for charitable contributions.

Charitable contributions are deductible only if verified as set forth in regulations

prescribed by the Secretary. Sec. 170(a)(1); Hewitt v. Commissioner, 109 T.C.

258, 261 (1997), aff’d without published opinion, 166 F.3d 332 (4th Cir. 1998).

Section 1.170A-13(a), Income Tax Regs., provides that if a taxpayer makes a

charitable contribution of money, he/she must maintain for each contribution one

of the following: (i) a canceled check; (ii) a receipt from the donee; or (iii) other

reliable written records showing the name of the donee, the date of the

contribution, and the amount of the contribution. With respect to the amount of

the charitable contribution deduction in dispute, $1,100, petitioners assert that the

entire amount relates to cash donations. Petitioners provided no documentation to

substantiate their entitlement to a deduction for all or any part of the disputed

amount. Because petitioners failed to meet their burden of proof to show error in

respondent’s determination, we sustain respondent’s disallowance of the $1,100

deduction in dispute.
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II.   Unreimbursed Employee Expenses

      Taxpayers are generally allowed deductions for ordinary and necessary

expenses paid or incurred in carrying on a trade or business during the tax year.

Sec. 162(a). The performance of services as an employee constitutes the carrying

on of a trade or business for purposes of section 162. Thus, taxpayers may deduct

expenses that are ordinary and necessary for their employment, provided the

taxpayer was an employee and could not have been (and was not) reimbursed by

his/her employer for such expenses. Rehman v. Commissioner, T.C. Memo. 2013-

71.

      Petitioners provided no documentation regarding their expenses other than

copies of their credit card statements. The credit card statements are insufficient

to enable us to determine, with any degree of certainty, whether the items

purchased were for business or personal use. Consequently, the credit card

statements do not substantiate the expenses underlying petitioners’ deduction.

Without some cogent evidence, any relief granted to petitioners would be

unguided largesse. See Williams v. United States, 245 F.2d 559 (5th Cir. 1957);

see also sec. 274(d) (requiring heightened substantiation for travel expenses and

listed property).
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      Petitioner husband acknowledged that he and his wife estimated their

unreimbursed employee expenses (gifts, travel, and purchases) when they filled

out their tax return. He asserts that it would be unreasonable to require petitioners

to provide receipts from 2011 given that they had a toddler “running around” in

their apartment and that respondent’s examination lasted for a long time.

      We recognize that petitioners may have encountered difficulties in

maintaining records as required by the Code and the regulations. But the law

requires that records be maintained. See sec. 6001; Meneguzzo v. Commissioner,

43 T.C. 824, 831-832 (1965); sec. 1.6001-1(a), Income Tax Regs. Deductions and

credits are matters of legislative grace, and the taxpayer bears the burden of

proving entitlement to any deduction or credit claimed on a return. INDOPCO,

Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering,

292 U.S. 435, 440 (1934).

      In sum, we hold that petitioners failed to meet their burden of proof to show

respondent’s disallowance of the deduction petitioners claimed for unreimbursed

employee expenses to be in error.
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To reflect the foregoing and to give effect to the parties’ concessions,


                                        Decision will be entered

                                 under Rule 155.
