                        T.C. Memo. 1995-467



                      UNITED STATES TAX COURT



       JOSEPH D. WILKINS AND MARY WILKINS, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8129-93.                      Filed October 2, 1995.



     Joseph D. Wilkins, pro se.

     Jerome F. Warner, for respondent.



                        MEMORANDUM OPINION


     DAWSON, Judge:   This case was assigned to Special Trial

Judge John J. Pajak pursuant to section 7443A(b)(4) of the Code

and Rules 180, 181, and 183.   Unless otherwise indicated, all

section numbers refer to the Internal Revenue Code for the
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taxable year in issue, and all Rule numbers refer to the Tax

Court Rules of Practice and Procedure.    The Court agrees with and

adopts the Special Trial Judge's opinion, which is set forth

below.

                  OPINION OF THE SPECIAL TRIAL JUDGE

     PAJAK, Special Trial Judge:    Respondent determined a

deficiency in petitioners' 1988 Federal income tax in the amount

of $9,748, and an addition to tax under section 6653(a)(1) in the

amount of $487.    This Court must decide:   (1) Whether petitioners

have substantiated deductions claimed on the Schedule C attached

to their 1988 Federal income tax return in excess of the amounts

allowed by respondent; and (2) whether petitioners are liable for

an addition to tax for negligence under section 6653(a)(1).

     Some of the facts in the case have been stipulated and are

so found.    Petitioners resided in Liverpool, New York, at the

time they filed their petition.

     For clarity and convenience, the findings of fact and

opinion have been combined.

     During 1988, petitioner Joseph D. Wilkins (petitioner)

operated a sole proprietorship known as Golden Rule Furniture,

which dealt in wholesale furniture.     Petitioner claimed there was

a "big loss" in 1988 because Golden Rule Furniture was a "part-

time job".    Petitioner operated the business out of his house,

out of his basement, and out of his garage.    He also testified
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that 1988 was the final year Golden Rule Furniture was in

existence.

     Petitioner claimed the following expenses and deductions for

Golden Rule Furniture on the Schedule C attached to petitioners'

1988 Federal joint tax return:    $35,240 for cost of goods sold;

$5,493 for car and truck (auto expenses); $1,795 for

utilities/telephone expenses; $710 for meals/entertainment

expenses; $6,846 for freight expenses; and $1,979 for

commissions.

     Of the amounts claimed, respondent allowed $8,408 for cost

of goods sold and $4,891 for auto expenses.    Respondent

disallowed the remaining deductions due to lack of verification.

     Petitioners have the burden to prove that respondent's

determinations are incorrect.    Rule 142(a); Welch v. Helvering,

290 U.S. 111 (1933).   Deductions are a matter of legislative

grace.   A taxpayer seeking a deduction must be able to show that

the taxpayer comes within the express provisions of the statute.

New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).

     Respondent disallowed $26,832 of the amount claimed for cost

of goods sold.   At trial, petitioners failed to introduce any

evidence that they are entitled to a larger deduction than the

amount allowed by respondent.    Indeed, petitioner admitted that

"I don't have any evidence."     Consequently, petitioners have not

met their burden of proof.   We sustain respondent on this issue.
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     Respondent disallowed $602 of petitioner's claimed

automobile expenses.    Again, petitioners failed to introduce any

evidence that they are entitled to a larger deduction for

automobile expenses than the amount allowed by respondent.       We

hold for respondent on this issue.

     Petitioner deducted $1,795 for utilities/telephone expenses,

$710 for meals/entertainment expenses, $6,846 for freight

expenses, and $1,979 for commissions in 1988.      Petitioners

produced no evidence to substantiate their claimed expenditures.

Consequently, we uphold respondent's determinations as to the

disallowance of these expenses.

     Respondent also determined that petitioners are liable for

an addition to tax for negligence under section 6653(a)(1) for

1988.   Section 6653(a)(1) provides for an addition to tax in the

amount of 5 percent of the underpayment of tax if any part of the

underpayment is due to negligence or intentional disregard of

rules or regulations.   Negligence is the lack of due care or

failure to do what a reasonable and ordinarily prudent person

would do under the circumstances.       Neely v. Commissioner, 85 T.C.

934, 947 (1985).   Petitioners have the burden of proof to show

that any underpayment was not due to negligence.      Rule 142(a);

Bixby v. Commissioner, 58 T.C. 757, 791-792 (1972).      Based on

this record, we find that petitioners are liable for the addition

to tax for negligence for 1988.
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To reflect the foregoing,

                                    Decision will be entered

                            for respondent.
