                   T.C. Summary Opinion 2006-3



                     UNITED STATES TAX COURT



             MICHAEL DAVON WESTBROOK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8170-04S.             Filed January 3, 2006.


     Michael Davon Westbrook, pro se.

     Frank J. Jackson, for respondent.



     CARLUZZO, Special Trial Judge:     This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.    Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code in effect for 2000.   Rule references are to the Tax

Court Rules of Practice and Procedure.    The decision to be
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entered is not reviewable by any other court, and this opinion

should not be cited as authority.

     Respondent determined a deficiency of $1,760 in petitioner’s

2000 Federal income tax and a $352 accuracy-related penalty under

section 6662(a).

     The issues for decision are:    (1) Whether petitioner is

entitled to various deductions claimed on Schedule A, Itemized

Deductions; and (2) whether the underpayment of tax required to

be shown on petitioner’s 2000 Federal income tax return is due to

negligence or intentional disregard of rules or regulations.

Background

     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 holds a bachelor’s degree from the University of

Idaho.   In 1993 he began employment with Cooper Union School of

Engineering (Cooper Union) as a technician in the chemistry

department.   While employed by Cooper Union, petitioner enrolled

in its graduate program and in 1998, he was awarded a master’s

degree in engineering.

     While working and attending classes at Cooper Union,

petitioner incorporated Suffola, Inc. (Suffola), a corporation

organized under the laws of Idaho.     At all relevant times,

petitioner was the sole owner of all of Suffola’s outstanding
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stock, to the extent that any stock had been issued and was

outstanding.    Suffola generated no income during 2000, and the

corporation did not file a Federal income tax return for that

year.    The record is unclear with respect to the exact services

that petitioner might have provided to Suffola during the year in

issue, but whatever they were, he did not receive a salary or any

other form of compensation as a result.

     Petitioner’s employment with Cooper Union continued

throughout 2000, as did his formal education there.    He took

several courses in pursuit of a doctorate degree that year.

According to petitioner, his education was geared towards

advancing the corporate goals of Suffola, although those goals

are less than clearly stated in the record.    Nevertheless, in

pursuit of his doctorate degree, petitioner incurred tuition

expenses, as well as expenses for books and supplies.    During

2000, petitioner also purchased a laptop computer, a scanner, and

a digital camera.

     During 2000, petitioner contributed financially to the care

and maintenance of his mother, who was ill and cared for by his

sister.

     Petitioner’s 2000 Federal income tax return was timely

filed.    That return includes a Schedule A on which, as relevant
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here, deductions for home mortgage interest of $2,0401,

charitable contributions of $1,300, job expenses of $1,290, and

other miscellaneous itemized deductions of $7,575 are claimed.

     In the notice of deficiency, respondent disallowed the

Schedule A deductions listed above.      Respondent further

determined that petitioner is liable for an accuracy-related

penalty under section 6662(a).    Because allowable itemized

deductions were less than the standard deduction, respondent

disallowed those otherwise allowable itemized deductions and

allowed petitioner the standard deduction.      Respondent also

allowed petitioner a Lifetime Learning Credit of $746.

Discussion

     The issues in this case arise from the disallowance of

itemized deductions claimed on petitioner’s Federal income tax

return.2   As has been noted in countless cases, deductions are a

matter of legislative grace and are allowable only as

specifically provided by statute.    See INDOPCO, Inc. v.



     1
        Petitioner lived in a rented apartment during 2000. The
home mortgage interest deduction claimed on his return consists,
in part, of tuition expenses, books, supplies, and instruments.
Petitioner now concedes that he is not entitled to the deduction.

     2
        Respondent bears the burden of production with respect to
the imposition of the sec. 6662(a) penalty. Sec. 7491(c).
Otherwise, under the circumstances, petitioner bears the burden
of proof on the issues here in dispute. Sec. 7491(a); Rule
142(a).
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Commissioner, 503 U.S. 79, 84 (1992); Interstate Transit Lines v.

Commissioner, 319 U.S. 590, 593 (1943); Deputy v. du Pont, 308

U.S. 488, 493 (1940); New Colonial Ice Co. v. Helvering, 292 U.S.

435, 440 (1934).

Job Expenses and Other Miscellaneous Itemized Deductions

     Section 162(a) provides that a taxpayer may deduct all

ordinary and necessary expenses paid or incurred during the

taxable year in carrying on any trade or business, including the

trade or business of being an employee.       Kurkjian v.

Commissioner, 65 T.C. 862, 869 (1976).       Expenditures for

personal, living, or family expenses are not allowable as

deductions.   See sec. 262(a).

     On his 2000 Schedule A, petitioner claimed a job expenses

deduction and other miscellaneous itemized deductions of $1,290

and $7,575, respectively.   These deductions include expenses for

postage, journals, checking account fees, a laptop, a scanner,

and a digital camera incurred by petitioner in connection with

Suffola’s business activity.

     A corporation is treated as a separate entity from its

shareholders for tax purposes.     Moline Props., Inc. v.

Commissioner, 319 U.S. 436 (1943).       The voluntary payment of

corporate expenses by officers, employees, or shareholders may

not be deducted on the taxpayer’s individual return.        Deputy v.

du Pont, supra at 494; Noland v. Commissioner, 269 F.2d 108 (4th
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Cir. 1959), affg. T.C. Memo. 1958-60; Rink v. Commissioner, 51

T.C. 746, 751 (1969).   Accordingly, these expenses are not

deductible by petitioner.

     Petitioner also included educational expenses in the job

expenses deduction and other miscellaneous itemized deductions

claimed on the Schedule A.

     Education expenses may qualify for deduction as a trade or

business expense under section 162(a) if the education (1)

maintains or improves the skills required in the taxpayer’s

employment or other trade or business, or (2) meets the express

requirements of the taxpayer’s employer, or of applicable law or

regulations, imposed as a condition to the retention by the

taxpayer of an established employment relationship, status, or

rate of compensation.   Sec. 1.162-5(a), Income Tax Regs.   There

is nothing in the record that indicates that petitioner’s

educational expenses, including tuition and related expenses,

fell within one of these two categories.   There is no suggestion

that the education maintained or improved skills which petitioner

used in his duties at Suffola, or Cooper Union for that matter,

or that it was required in the context of his established

employment relationship, status, or rate of compensation.

Because the education expenses do not meet the requirements of
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section 1.162-5(a), Income Tax Regs., the expenses are not

deductible under section 162.3

     Respondent’s disallowances of the job expenses deduction and

other miscellaneous itemized deductions are sustained.

Charitable Contributions Deduction

     Section 170(a) allows as a deduction any charitable

contribution which is made within the taxable year.      A charitable

contribution is a contribution or gift to or for the use of an

organization described in section 170(c).

     Petitioner claimed a charitable deduction in the amount of

$1,300, for payments made to his sister to assist in the care of

his ill mother.   While we commend petitioner for contributing to

the support of his ill mother, those contributions do not qualify

for deduction under section 170.     Respondent’s disallowance of

the charitable contribution deduction is sustained.

Section 6662(a) Penalty

     Respondent determined that the underpayment of tax required

to be shown of petitioner’s 2000 return is due to negligence or

disregard of rules or regulations.       See sec. 6662(a) and (b)(1)

and (2).   Negligence is defined to include any failure to make a

reasonable attempt to comply with the provisions of the Internal

Revenue Code.   Sec. 6662(c).    It is further defined as the


     3
        We note that respondent did allow petitioner a Lifetime
Learning Credit under sec. 25A with respect to his qualified
tuition and related expenses for the taxable year 2000.
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failure to do what a reasonable person with ordinary prudence

would do under the same or similar circumstances.    Neely v.

Commissioner, 85 T.C. 934, 947 (1985).    Disregard is defined to

include any careless, reckless, or intentional disregard.    Sec.

6662(c).    An accuracy-related penalty is not imposed with respect

to any portion of the understatement as to which the taxpayer

acted with reasonable cause and in good faith.   Sec. 6664(c)(1).

Whether a taxpayer acts with reasonable cause and in good faith

depends on the relevant facts and circumstances, including the

extent of the taxpayer’s effort to properly assess the tax

liability.   See sec. 1.6664-4(b)(1), Income Tax Regs.

     As noted above, respondent bears the burden of production

with respect to the imposition of the section 6662(a) penalty.

Other than the disallowance of the deductions as discussed above,

nothing in the record suggests that the imposition of the penalty

is appropriate.   As we view the matter, for purposes of the

imposition of the section 6662(a) penalty upon the ground of

negligence, the mere disallowance of a deduction, in and of

itself, is not sufficient to satisfy the burden of production

imposed upon respondent by section 7491(c).   Petitioner is not

liable for the section 6662(a) penalty.

     Reviewed and adopted as the report of the Small Tax

Division.
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To reflect the foregoing,



                                         Decision will be entered

                                    for respondent with respect to

                                    the deficiency and for

                                    petitioner with respect to the

                                    section 6662(a) penalty.
