                        T.C. Memo. 1995-562



                      UNITED STATES TAX COURT



                 JOSEPH J. JAMES, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 25196-92.            Filed November 27, 1995.



     Joseph J. James, pro se.

     Michael D. Baker, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     PARR, Judge:   Respondent determined a deficiency in

petitioner's Federal income tax for 1986 of $8,414 and an

addition to tax for substantial understatement of tax under

section 66611 of $2,104.



1
     All section references are to the Internal Revenue Code in
effect for the taxable year in issue, and all Rule references are
to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated.
                                 - 2 -

        The issues for decision are: (1)    Whether petitioner

substantiated any rental expenses in excess of those allowed by

respondent.     We find that he did to the extent stated herein.

(2) Whether petitioner is entitled to deduct more than 50 percent

of the expenses attributable to two rental properties he held as

a cotenant, where he paid all the expenses.       We hold that he is

not.2    (3) Whether petitioner is liable for additions to tax for

substantial understatement of tax under section 6661.       We hold

that he is to the extent stated herein.

        In the petition, petitioner challenged the disallowance of a

portion of his charitable contribution.       Petitioner did not

address this issue at trial or on brief.       Thus, we find

petitioner has abandoned this claim.       Rule 151(e)(4) and (5);

Petzoldt v. Commissioner, 92 T.C. 661, 683 (1989).

                           FINDINGS OF FACT

        The stipulation of facts and attached exhibits are

incorporated herein by this reference.       At the time the petition

herein was filed, petitioner resided in Richmond, Virginia.

Petitioner is single and filed an individual Federal income tax

return for the year at issue.




2
     Respondent concedes that, if the Court determines that
petitioner is entitled to only 50 percent of the deductions
arising from the properties held in cotenancy, petitioner should
report only 50 percent of the income arising from such
properties.
                               - 3 -

     Petitioner filed his 1986 Federal income tax return on April

20, 1990.

     Petitioner reported all income and deducted all expenses on

six rental properties in Philadelphia, Pennsylvania, all of which

showed a loss.   Petitioner was the sole owner of four of these

properties.

     Petitioner owned 4512 Kingsessing with his mother, Frances

James Moore, as tenants in common.     Petitioner and his sister

Brenda Pitt owned 4514 Kingsessing as tenants in common.     Both

women were on public assistance, and petitioner wanted to provide

a place for them to live.   Petitioner provided the downpayment on

each property and made the mortgage and escrow payments for taxes

and insurance from his own funds.    The mortgagee's records for

4512 Kingsessing are in the names of Frances James Moore or

Joseph J. James.   We assume the mortgage for 4514 Kingsessing

with Brenda Pitt is similar.

     Each of the Kingsessing properties consisted of three units.

Ms. Moore lived in one of the units at 4512, and Ms. Pitt lived

in a unit at 4514.   The remaining units were rented to others and

managed by the two women.   The women kept up the yards,

interviewed tenants, cleaned vacant apartments, collected some of

the rents on petitioner's behalf (some tenants sent their rent

directly to petitioner), paid the bills, caused repairs to be

made, and were accountable to petitioner.     Ms. Moore deposited

the rental income in a special joint checking account in the
                                                 - 4 -

names of herself and petitioner.                        She wrote checks for expenses,

including some checks to "cash".

     During the year in issue, petitioner lived at the West

Hortter property until October 1986, when he moved to Texas.                                      The

property was then converted to rental property.                                     Also in the fall

of 1986, petitioner's mother and sister moved to his property at

10 Church Road, where they continue to reside and to pay rent.

They continued to manage petitioner's properties at Kingsessing

and his other properties as well.

     On his Federal income tax return, petitioner reported all of

the rental income and claimed all of the expenses associated with

the Kingsessing properties.                    Neither Ms. Moore nor Ms. Pitt filed

a Federal income tax return for 1986.

     In the notice of deficiency, respondent allowed all the

amounts claimed for the property on North Walnut Street.                                    She

disallowed 50 percent of the expenses claimed on the Kingsessing

Avenue properties, on the theory that petitioner had only a 50-

percent interest.            Some other expenses for those and the

remaining properties were disallowed for lack of substantiation.

Respondent made concessions in the stipulation and on brief, with

regard to items substantiated by petitioner close to or at time

of trial.

     The chart below reflects total substantiated expenses:
     Description       4512          4514      400 West    Week 17      10 Church
           Kingsessing   Kingsessing   Hortter     Unit 316      Road

     Auto Expense      --           --           --         --            --
                                          - 5 -
     Clean & Maint.     $83      $45      --       $229     --
     Insurance          776      198      $72       --     $130
     Interest         3,373    6,380      330       600   2,309
     Repairs            198      355      391        --     200
     Taxes              601      601       84        --     429
     Utilities           --      187       13        --      --
     PMI                 67      266       --        --     126
     Other               70       30       87        --      24
     sub-total        5,168    8,062      977       829   3,218

     Depreciation       449    2,209       365      461   3,625
     Total            5,617   10,271     1,342    1,290   6,843




                                         OPINION

     As a general rule, herein applicable, the taxpayer has the

burden of proving that the Commissioner erred in her

determinations.           Rule 142(a).

Substantiation of Rental Expenses

     In the stipulation of facts and in respondent's brief,

respondent conceded numerous deductions.

     In addition, petitioner submitted a number of illegible

receipts and slips of paper with handwritten itemizations and

totals but without supporting documents.                  Other documents

submitted were duplications of amounts that had already been

allowed or stipulated.            Some were undated receipts, were for

years not in issue, or did not reveal for which property work was

done or what work was done.            However, based upon the testimony of

witnesses and some documents, we find that petitioner has

substantiated these additional items:

     4512 Kingsessing - Repairs of $198, consisting of paint

($40) and window guards ($158); and "other" of $70, consisting of
                               - 6 -

a certificate of occupancy fee ($30) and newspaper advertising

($40).

     4514 Kingsessing - Repairs of $355.    We estimate this amount

based on testimony and some written records.    See Cohan v.

Commissioner, 39 F.2d 540 (2d Cir. 1930).    We also allow

utilities of $187, based on electric bills for public lighting

for the common area.   We disregard other electric bills at this

address, because they pertain to Ms. Pitt's personal living

quarters.

     10 Church Road - Repairs of $200.    See id.

     400 W. Hortter - Repairs of $391, consisting of expenses for

a refrigerator.   Although the receipt was in the tenant's name,

we are satisfied by the testimony, and by the fact that the

receipt was in petitioner's possession, that it was a legitimate

rental expense.

     We sustain respondent's determinations as to depreciation.

Ownership of Rental Properties--4512 and 4514 Kingsessing

     Although the amounts set out above have been substantiated,

respondent contends that petitioner's deductions pertaining

thereto should be limited to 50 percent.    The properties at 4512

and 4514 Kingsessing are owned by petitioner and his mother and

sister, respectively, as cotenants.    Petitioner argues that,

since he purchased the properties with his own funds and paid all

the expenses connected therewith, he should be entitled to claim
                                - 7 -

all of the deductions.   For the reasons set out below, we agree

with respondent.

     In Estate of Boyd v. Commissioner, 28 T.C. 564 (1957), the

issue presented was whether the taxpayer could deduct 100 percent

of the repair expenses arising from property that he owned as a

cotenant with a trust, when he paid 100 percent of such expenses.

We found that it was a fundamental rule of New Jersey State

property law that "co-owners share necessary expenses of the

repair of the common property in proportion to their ownership.

A tenant in common, who makes necessary repairs on the common

property, is entitled to reimbursement from other co-tenants."

Id. at 565-566 (citations omitted).     Accordingly, we found that,

under Federal tax law, "one-half of the repair bill is not the

'ordinary and necessary expenses' of the co-tenant who paid the

entire bill."   Id.   Thus, we held that "Each cotenant owned

separate property interests in the common property that produced

separate income to each, and the separate expenses that are

deductible by each is the portion of the entire expenses which

each separate interest bears to the whole, and no more."     Id. at

566; see also Conte v. Commissioner, T.C. Memo. 1981-571.

     Since petitioner's cotenants could be required to reimburse

him for his payment of a nonproportionate share of the repair

expenses arising from the properties held in cotenancy,

petitioner is not entitled to deduct more than his proportionate
                               - 8 -

share of such expenses.3   Estate of Boyd v. Commissioner, supra;

see In re Sivak's Estate, 359 Pa. 194, 58 A.2d 456 (1948).

     The expenses at issue in Boyd involved only repairs; here,

we must also deal with the deductibility of interest and taxes.

We addressed the deductibility of a cotenant's nonproportionate

payment of interest and taxes in the case of Cothran v.

Commissioner, 57 T.C. 296 (1971).   In Cothran, we held that a

cotenant who paid 100 percent of the interest and taxes arising

from property held in cotenancy was allowed to claim only 50

percent of such payment as deductible interest and taxes.    Id. at

301; see also Rev. Rul. 62-39, 1962-1 C.B. 17.4

     Based on the foregoing, we hold that petitioner is entitled

to deduct only his proportionate share of the expenses arising


3
     We note that, in fact, petitioner did receive significant
contribution from his cotenants, since he received their share of
the rental income.
4
     Compare Conroy v. Commissioner, T.C. Memo. 1958-6 and Powell
v. Commissioner, T.C. Memo. 1967-32, where we held that a
cotenant may deduct more than his proportionate share of interest
and taxes arising from property held in cotenancy, where the
cotenant paid such expenses to avoid personal liability or to
preserve his interest in cotenancy property. Petitioner had no
legal obligation to pay more than his share of the taxes under
Pennsylvania law, and Pennsylvania law would not divest
petitioner of his cotenancy interest for his cotenants' failure
to pay their proportionate share of the taxes. 72 Pa. Cons.
Stat. Ann. secs. 5968 and 5969 (1995). Moreover, Pennsylvania
law provides that a cotenant who pays more than his proportionate
share of mortgage interest is entitled to reimbursement for the
payments in excess of his proportionate share. Weiskircher v.
Connelly, 248 Pa. 327, 93 A. 1068 (1915). In fact, petitioner
did receive contribution from his cotenants, see supra note 3.
Accordingly, the cases of Conroy and Powell are distinguishable.
                                 - 9 -

from the property held in cotenancy, even though he paid the full

amount of such expenses.5

Additions to Tax--Substantial Understatement

     Section 6661(a) provides that if there is a substantial

understatement of income tax for any taxable year, there shall be

added to the tax an amount equal to 25 percent of the amount of

any underpayment attributable to such understatement.        Pallottini

v. Commissioner, 90 T.C. 498 (1988).     The amount of the

understatement is equal to the excess of the amount of tax

required to be shown on the return for the tax year, less the

amount of the tax shown on the return.     Woods v. Commissioner, 91

T.C. 88, 94 (1988).   An understatement is substantial if it

exceeds the greater of 10 percent of the tax required to be shown

on the return for the taxable year, or $5,000.    Sec. 6661(b)(1).

     Petitioner has not shown that he comes within any exception

to section 6661.   If, under a Rule 155 computation, the

recomputed deficiency satisfies the statutory percentage or

amount, petitioner will be liable for this addition to tax.

     To reflect the foregoing,



5
     Petitioner's satisfaction of the full amount of the expenses
associated with the cotenancy properties no doubt conferred a
benefit on his cotenants in the nature of either income, a loan,
repayment of a loan, or a gift. See Old Colony Trust Co. v.
Commissioner, 279 U.S. 716 (1929); Rev. Rul. 62-39, 1962-1 C.B.
17. However, the record is void of any evidence that would
enable us to decide which of the above classifications pertains
to the case before us, nor is such a decision necessary.
- 10 -

     Decision will be entered

under Rule 155.
