                        T.C. Memo. 1996-422



                      UNITED STATES TAX COURT


                 AHSAN MOHIUDDIN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 14274-94, 23021-94.    Filed September 18, 1996.



     Ahsan Mohiuddin, pro se.

     Charles Pillitteri and Robert W. West, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION

     SCOTT, Judge:   Respondent determined deficiencies in

petitioner's Federal income taxes and accuracy-related penalties

for the calendar years 1990, 1991, and 1992 as follows:
                               Accuracy-related penalty
     Year       Deficiency         Sec. 6662(a)1

     1990           $658               $124
     1991         17,246              3,449
     1992          1,517                303


     Some of the issues raised by the pleadings have been

disposed of by agreement of the parties, leaving for decision:

(1) Whether petitioner is entitled to use the filing status of

"head of household" for the taxable years 1990 and 1991, and

whether petitioner is entitled to use the filing status of

"single" for the taxable year 1992; (2) whether petitioner is

entitled to a dependency exemption for his mother for each of the

taxable years 1990 and 1991; (3) whether petitioner is entitled

to deduct on Schedule A the amounts of $5,539, $37,247.73, and

$7,823, or any part thereof, for the taxable years 1990, 1991,

and 1992, respectively; (4) whether petitioner is entitled to

Schedule C business expense deductions in the amounts of $23,505

and $7,250 for the taxable years 1991 and 1992, respectively; and

(5) whether petitioner is liable for an accuracy-related penalty

pursuant to section 6662(a) for each of the taxable years at

issue.2

     1
        All section references are to the Internal Revenue Code
in effect for the years in issue, and all Rule references are to
the Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
     2
        In her Answer to Amended Petition, respondent alleged
that petitioner was liable for an addition to tax pursuant to
sec. 6651(a) for failure to timely file petitioner's Federal
income tax return for the taxable year 1990. In her trial
                                                   (continued...)
                                -3 -

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are found

accordingly.

     At the time of the filing of the petition in this case,

petitioner maintained a legal residence in Huntsville, Alabama.

Petitioner filed his Federal income tax returns for the taxable

years 1990, 1991, and 1992, with the Internal Revenue Service

Center in Memphis, Tennessee.

     Petitioner was married at all times during the taxable years

at issue.   Although petitioner and his wife had lived apart for

some years, they are not and never have been divorced.

Petitioner did not maintain as his home a household that

constituted the principal place of abode of an individual who was

a son, stepson, daughter, or stepdaughter of petitioner during

any part of any of the year 1990, 1991 or 1992.

     In 1986, petitioner's mother and father immigrated from

India to the U.S.   At that time, petitioner's mother received a

resident alien card.   In the fall of 1989, petitioner's mother

and father applied for Government-assisted housing and were

furnished a subsidized-rent duplex in Huntsville, Alabama, in

which to live.

     In October 1990, petitioner's mother began receiving

supplemental income payments from the Social Security

     2
      (...continued)
memorandum, respondent conceded this issue.
                                -4 -

Administration.   For October and November 1990, she received $193

per month in such payments.    Beginning in December 1990, she

received $289.50 per month as supplemental income payments from

the Social Security Administration.     Petitioner's father began

receiving assistance from the Government in the middle of 1989.

Petitioner's father received supplemental income payments from

the Social Security Administration in October and November 1990

in the amount of $386 per month.    Beginning in December 1990, he

received $289.50 per month as such payments.

     In November 1989, petitioner's sister and her husband moved

into petitioner's house at 415 Karter Street, Huntsville, Alabama

(the Karter Street house), and lived there throughout 1990 and

1991.   Petitioner's mother lived for at least part of each of the

years 1990 and 1991 in the Karter Street house.     Petitioner's

sister and her husband took care of petitioner's mother while she

lived in the Karter Street house.      In late 1991 or early 1992,

petitioner's sister and her husband moved to Little Rock,

Arkansas, and petitioner's mother moved with them.

     Petitioner was unemployed during 1990 until November when he

obtained employment in Melbourne, Florida, with Avionics Research

Corp. of Florida (Avionics).    Petitioner moved to Florida in

November 1990 and lived there throughout 1991.     Petitioner worked

for Avionics from November 1990 until October 1991, when his

employment was terminated.    Petitioner remained in Florida,
                               -5 -

receiving unemployment compensation, until June 1992, when he was

no longer eligible to receive unemployment compensation.

     Beginning in November 1989, petitioner rented the Karter

Street house with an option to buy.   In 1990, petitioner decided

to exercise his option to buy, and between November 1990 and

February 1991, petitioner paid the owner of the Karter Street

house $10,000, which amount represented the owner's equity in the

house.   In February 1991, petitioner assumed the mortgage with

AmSouth Mortgage Co. (AmSouth), which was on the Karter Street

house, and began making mortgage payments to AmSouth.

     In June 1992, petitioner moved back to Huntsville.    In

August 1992, he obtained employment in Huntsville, but, in

December 1992, his employment was terminated.

     Petitioner deducted the following amounts on Schedule A of

his Federal income tax return for the taxable year 1990:

     Deduction                           Amount

     Medical and dental expenses          $225
     Gifts to charity                      400
     Casualty or theft loss                800
     Moving expenses                     4,114
       Total                             5,539



     Respondent determined that petitioner was entitled to no

itemized deductions for 1990 since his tax computed using the

standard deduction for 1990 was less than his tax computed using

the proper amount of itemized deductions.
                               -6 -

     The casualty loss in the amount of $800 claimed by

petitioner for 1990 was for damage to a 1979 Ford Pinto

automobile (the automobile).   Sometime around the end of 1989,

petitioner took the automobile to Mayhall Texaco in Huntsville,

Alabama, for repair of a transmission problem.    In March 1990, it

was discovered that the automobile's engine had cracked due to an

insufficient amount of antifreeze in the automobile.

     On his Federal income tax return for the taxable year 1991,

petitioner deducted on Schedule A the following items in the

amounts shown:

Deduction                                            Amount

Real estate taxes                                     $178
Other taxes                                            321
Home mortgage interest                               3,600
Points                                                 285
Gifts to charity                                       400
Moving expenses                                      2,856
Miscellaneous itemized deductions:
     Unreimbursed employee
        expenses                   11,116
     Legal fees to collect
        taxable income              5,000
     Repayment under claim
       of right                    14,714
       Total                       30,830
     Less 2 percent floor          (1,223)
                                                 29,607.73(sic)

  Total                                          37,247.73


     Respondent in the notice of deficiency disallowed $33,164.73

of these claimed deductions.   The following itemized deductions

for 1991 were not disallowed by respondent:
                                -7 -

            Deduction                          Amount

            Real estate taxes                   $178
            Personal property taxes               20
            Home mortgage interest             3,600
            Points                               285
             Total                             4,083



     Included in the deduction claimed by petitioner for other

taxes for the taxable year 1991 was a deduction for personal

property taxes.    The $20 allowed by respondent as a deduction for

personal property taxes was for petitioner's car registration.

     The $11,116 deduction claimed by petitioner in 1991 as

employee business expenses was in connection with petitioner's

employment by Avionics.    Avionics contracted out petitioner's

work to Northrup Grumman in Melbourne, Florida (Northrup

Grumman).    Petitioner received reimbursement from Northrup

Grumman for his employee business expenses related to a business

trip to Los Angeles.    The policy of Northrup Grumman was to

reimburse persons doing contract labor for any business travel

expenses they incurred.    To the extent petitioner was not

reimbursed for his business travel expenses, it was because he

did not follow the procedure required to receive reimbursement.

Had he followed the required procedure, he would have received

reimbursement.

     Among the itemized deductions claimed by petitioner on

Schedule A of his Federal income tax return for the taxable year

1991 was a deduction in the amount of $14,714 for "repayment
                               -8 -

under a claim of right".   Petitioner's claimed deduction in 1991

of $14,714 for "repayment under a claim of right" related to

litigation, which was resolved in 1991, over child support for

petitioner's daughter.   In resolution of the litigation,

petitioner claimed to have paid approximately $12,000 in child

support, and the remaining $2,000 was claimed to have been paid

for attorney's fees and expenses of litigation.

     The $5,000 petitioner deducted in 1991 for "expenses/legal

fees to collect taxable income" related to litigation instituted

by petitioner regarding the denial to him of unemployment

compensation by the State of Alabama.     Petitioner's claimed

deduction is stated by petitioner to consist of legal fees,

reporters' transcripts, depositions, court fees, Federal Express

mailing, and administrative costs.    Petitioner was unsuccessful

at all stages of the unemployment compensation litigation.

     On Schedule A of his Federal income tax return for the

taxable year 1992, petitioner claimed itemized deductions as

follows:

           Deduction                       Amount

           State and local income taxes     $963
           Real estate taxes                 740
           Auto registration tax              20
           Home mortgage interest          4,070
           Gifts to charity                  500
           Casualty/theft loss               350
           Moving expenses                 1,200
             Total                         7,843
                               -9 -

     Respondent in the notice of deficiency disallowed $3,464 of

the itemized deductions claimed by petitioner for 1991.   The

itemized deductions claimed by petitioner for 1991 which were not

disallowed were:

          Deduction                       Amount

          Real estate taxes                $277
          Personal property taxes            20
          Charitable contributions           12
          Home mortgage interest          4,070
            Total                         4,379


     Petitioner filed a Schedule C with his return for the

taxable year 1991, using the business name "A & M Techservices".

Petitioner reported the address of this business as "1431 S. Oak

St. Room 16, Melbourne, FL   32901".   On the Schedule C petitioner

claimed business expense deductions as follows:

     Expense                              Amount

     Advertising                          $6,150
     Insurance                               240
     Interest                                850
     Legal/professional services           3,550
     Office expense                        7,000
     Equipment lease                       1,900
     Repairs and maintenance                 775
     Supplies                                200
     Travel                                1,500
     Meals and entertainment                  80
     Utilities                               300
     Business Start-up                       960
       Total                              23,505


     Petitioner stated on the Form 2106 attached to his 1991

return that his business was engineering consulting.   Petitioner

was seeking to contract out his services as an independent
                               -10 -

contractor during 1991.   Petitioner did not contract out his

services during the taxable year 1991.   He reported no income on

the Schedule C filed with his return for 1991.

     Respondent in the notice of deficiency to petitioner

disallowed the entire amount of the $23,505 business expense

deduction claimed by petitioner on the Schedule C.

     Petitioner filed a Schedule C with his return for the

taxable year 1992, using the same business name as in 1991.

During that year, petitioner listed on his tax return that his

principal business was "personal and financial

services/collection agency".   Petitioner reported no income on

the Schedule C for 1992, but he earned between $200 and $400

during the year 1992 from his collection business that he did not

report on his tax return.3

     On Schedule C of his Federal income tax return for the

taxable year 1992, petitioner claimed business expense deductions

totaling $7,250.   Respondent in the notice of deficiency

disallowed $4,592 of the business expense deductions claimed by

petitioner for 1992.   The claimed Schedule C business expense

deductions not disallowed by respondent were:




     3
        Petitioner testified to these facts but gave no
explanation for his failure to report the income received.
                               -11 -

          Expense                             Amount

          Advertising                          $200
          Legal and professional services        26
          Office expense                        560
          Rent                                1,650
          Repairs and maintenance               126
          Supplies                               14
          Depreciation                           82
           Total                              2,658


     On his Federal income tax returns for the taxable years 1990

and 1991, petitioner claimed a filing status of "head of

household".   He claimed a dependency exemption for his mother in

the amount of $2,050 for the taxable year 1990, and in the amount

of $2,150 for the taxable year 1991.   In the notice of deficiency

for the taxable years 1990 and 1991, respondent changed

petitioner's filing status to "single" and disallowed the

dependency exemption he claimed for his mother.

     On his Federal income tax return for the taxable year 1992,

petitioner claimed "single" filing status.

     In her Answer to Amended Petition for the years 1990 and

1991, respondent alleged that petitioner's correct filing status

for the taxable years 1990 and 1991 is "married filing separate",

and also alleged that the exemption claimed by petitioner which

was not disallowed should be reduced in accordance with section

151(d)(3), since the threshold amount for reduction of exemptions

for married filing separate is less than for single.   In her

Answer for the year 1992, respondent alleged that petitioner's
                                -12 -

correct filing status for the taxable year 1992 is "married

filing separate".

                               OPINION

     Petitioner contends that he was head of a household during

1990 and 1991 when his mother lived in his house, and, therefore,

is entitled to compute his tax on that basis.    In the notice of

deficiency, respondent determined that petitioner should have

filed as "single".    In her Answer to Amended Petition, respondent

alleged that petitioner was required to file as "married filing

separate".

     As a general rule, married individuals must file their

Federal income tax returns using either "married filing separate"

or "married filing joint".    Pursuant to section 2(b)(1), an

unmarried individual may file a return as "head of household" if

that individual:    (1) Maintains as his home a household which

constitutes for more than one-half of his taxable year the

principal place of abode, as a member of such household of an

unmarried son or daughter or stepson or stepdaughter or of any

person who is a dependent of the taxpayer, if the taxpayer is

entitled to a dependency exemption for that person; or (2)

maintains a household which constitutes for such taxable year the

principal place of abode of the father or mother of the taxpayer,

if the taxpayer is entitled to a dependency exemption for that

parent.
                                   -13 -

     Under section 7703,4 certain married individuals living

apart are considered to be unmarried for the purpose of

determining their eligibility to file as "head of household"

under section 2(c).    Petitioner argues that he is entitled to

"head of household" status due to the support he provided to his

mother during 1990 and 1991.       Petitioner testified at trial that

he was married during 1990 and 1991.       However, he argues that

since his wife was declared incompetent by a State court during

those years, he was entitled to "head of household" status for

the care of his mother.     Even if petitioner had offered


     4
         SEC. 7703.   DETERMINATION OF MARITAL STATUS.

           *     *      *      *       *     *     *

          (b) Certain Married Individuals Living Apart.--For
     purposes of those provisions of this title which refer to
     this subsection, if--

                (1) an individual who is married (within the
           meaning of subsection (a)) and who files a separate
           return maintains as his home a household which
           constitutes for more than one-half of the taxable year
           the principal place of abode of a child * * * with
           respect to whom such individual is entitled to a
           deduction for the taxable year under section 151 (or
           would be so entitled but for paragraph (2) or (4) of
           section 152(e)),

                (2) such individual furnishes over one-half of the
           cost of maintaining such household during the taxable
           year, and

                (3) during the last 6 months of the taxable year,
           such individual's spouse is not a member of such
           household,

     such individual shall not be considered as married.
                                -14 -

sufficient evidence to establish his claim that his wife was

incompetent in 1990 and 1991, he would not meet the requirements

of section 7703 for persons who are married to file as head of

household.    One of the requirements of the statute is that a

married taxpayer support either a son, stepson, daughter, or

stepdaughter to file as head of household.    Petitioner makes no

claim that he supported a son or daughter, but claims that he was

head of household because his mother was a member of his

household.    Since petitioner testified that he was married in

1990, 1991, and 1992, we hold that petitioner's correct filing

status in each of these years is "married filing separate".      It

follows that in computing petitioner's income tax, the threshold

amount of married filing separate should be used to determine the

amount of any exemption to which petitioner is entitled.

Petitioner argues that in any event he is entitled to a

dependency exemption for his mother in 1990 and 1991.

       Under section 151, a taxpayer is allowed an exemption for

himself and an exemption for each dependent as defined in section

152:    (1) Whose gross income for the calendar year in which the

taxable year of the taxpayer begins is less than the exemption

amount; or (2) who is a child of the taxpayer and who has not

attained the age of 19 at the close of the calendar year in which

the taxable year of the taxpayer begins, or is a student.    Sec.

152(b) and (c).    Under section 152(a)(4), a "dependent" includes

the father or mother of the taxpayer, if the father or mother
                               -15 -

received from the taxpayer over half of his or her support for

the calendar year in which the taxable year of the taxpayer

begins.

     Petitioner submitted checks made payable to AmSouth

representing mortgage payments for the Karter Street house for

the taxable year 1991 totaling $3,199.83, in support of the

claimed dependency exemption for his mother.   According to

petitioner's tax returns, his mother lived with him 7 months in

1990 and 8 months in 1991.   Petitioner's sister and her husband

also lived in the Karter Street house during those years.     The

record further indicates that petitioner's mother received

Government assistance during 1990 and 1991, including

supplemental Social Security income payments in October and

November 1990 in the amount of $193 per month and in the amount

of $289.50 per month thereafter.   Petitioner's father was also

receiving supplemental Social Security income payments in October

and November 1990 in the amount of $386 per month, and, beginning

in December 1990, he received $289.50 per month.   The record does

not show whether petitioner's sister and her husband provided

support during 1990 and 1991 for petitioner's mother and father.

It does show that both petitioner's mother and petitioner's

sister lived in petitioner's house during part of each of the

years 1990 and 1991.   The mortgage documents are the only

documents petitioner has provided to establish any expenditures

relating to the support of his mother.   These checks merely
                               -16 -

establish that petitioner made mortgage payments and do not prove

that petitioner provided over half the support for his mother

during the years 1990 and 1991.    The mortgage documents fail to

satisfy petitioner's burden of proving that his mother was his

dependent during the years 1990 and 1991.   We sustain

respondent's disallowance of petitioner's claimed dependency

exemption for his mother in both 1990 and 1991.

     The only documents offered by petitioner for the taxable

year 1990 in support of his claimed Schedule A itemized

deductions relate to his claimed casualty loss and his claimed

moving expense deductions.   As evidence of his claimed casualty

loss, petitioner has submitted an affidavit.   As evidence of his

claimed moving expenses, petitioner has submitted 2 car rental

agreements and a hotel receipt.5

     Section 165(h) provides limits set forth therein for the

deduction of personal casualty losses.   Under section 1.165-

7(b)(1), Income Tax Regs., the amount of loss to be taken into

account shall be the lesser of:    (1) The amount that is equal to


     5
        At the conclusion of the trial, the Court requested that
respondent construct a list of each item which petitioner
introduced into evidence in this case and state whether
respondent agreed that the item represented an allowable
deduction and whether that item corresponded to petitioner's
Schedule A or C claimed deductions for that particular year. The
Court also instructed petitioner to list the exhibits in the
record and indicate specifically what each item is alleged to
prove. While respondent followed the Court's instructions in
this regard, petitioner has failed to assist the Court in this
matter.
                               -17 -

the fair market value of the property immediately before the

casualty reduced by the fair market value of the property

immediately after the casualty; or (2) the amount of the adjusted

basis for determining the loss from the sale or other disposition

of the property involved.   A "casualty" is an event due to some

sudden, unexpected, or unusual cause, such as a fire, storm, or

shipwreck.   Durden v. Commissioner, 3 T.C. 1, 3 (1944).

     The only evidence petitioner offered regarding the casualty

loss deduction claimed in 1990 was an affidavit of Tex Mayhall,

in which Mr. Mayhall states that the damage to petitioner's

automobile occurred due to an absence or an insufficient amount

of antifreeze in the automobile.   The affidavit further states

that Mr. Mayhall salvaged the automobile for $50 and notified

petitioner about the salvage approximately 3 months later when

petitioner called to ask about the automobile.   We have long held

that in order for an event to constitute a casualty, the event

must involve the application of a destructive force which must be

the proximate cause of the loss.   See White v. Commissioner, 48

T.C. 430 (1967).   Petitioner's loss, if any, did not embody the

requisite element of "chance, accident, or contingency", see

Powers v. Commissioner, 36 T.C. 1191, 1193 (1961) (quoting

Bachofen von Echt v. Commissioner, 21 B.T.A. 702, 709 (1930)),

and is, therefore, no more than a personal expense to petitioner

as a result of petitioner's neglect.   Further, even if this were

to be considered as a casualty loss, petitioner has offered no
                                 -18 -

evidence whatsoever of the amount of the loss.     We, therefore,

sustain respondent's denial of a deduction for petitioner's

claimed casualty loss in 1990.

     In general, a taxpayer is allowed to deduct moving expenses

paid or incurred during the taxable year in connection with the

commencement of work by the taxpayer as an employee or self-

employed individual at a new principal place of work.     Sec.

217(a).   On his tax return for the taxable year 1990, petitioner

deducted $4,114 for moving expenses.     To substantiate this

deduction, petitioner placed in evidence a car rental receipt in

the amount of $92.06 and a motel receipt from a motel in

Huntsville, Alabama, in the amount of $30.74.     Respondent

concedes that petitioner is entitled to these amounts as a moving

expense deduction for 1990.   Respondent further concedes that

petitioner is entitled to include as a moving expense deduction

in 1990 the amount of $64.54 based on another car rental receipt.

Petitioner argues in his brief that he produced to respondent's

agent receipts for all expenses "he would have reasonably [been]

expected to produce".   However, petitioner offered only the two

receipts at trial and no other information regarding the moving

expenses.   Although the evidence indicates that petitioner did

have some moving expenses in 1990, in addition to those conceded

by respondent, there is no basis for concluding that the amount

of such expenses would cause petitioner's itemized deductions for

1990 to result in his tax computed on the basis of such
                                -19 -

deductions being less than the tax computed on the basis of the

standard deduction.

     Petitioner has conceded that he is not entitled to a medical

expense deduction for 1990, but petitioner has not conceded that

he is not entitled to the deduction he claimed for a charitable

contribution in the amount of $400.     Petitioner has offered no

evidence of any charitable contribution made in 1990, and,

therefore, we sustain the denial of the deduction of $400 claimed

by petitioner for a charitable contribution in 1990.

     Petitioner also deducted various expenses on his Schedule A

for the taxable year 1991 that respondent disallowed.6

Petitioner presented at trial a variety of unorganized checks,

receipts, invoices, and car rental agreements in support of these

claimed deductions.

     Petitioner claimed that the unreimbursed employee business

expenses in the amount of $11,116 claimed on Schedule A of his

1991 tax return consisted of vehicle expenses, parking fees,

travel expenses, meals and entertainment expenses, and other

business expenses.    Most of these claimed expense deductions are

of the type specified in section 274(d) which provides that no

deduction is allowed unless the taxpayer can substantiate by

adequate records or sufficient evidence the amount of the


     6
        Among the items that respondent has allowed is the
deduction of $3,600 for home mortgage interest and $285 for
points petitioner deducted on Schedule A of his 1991 tax return.
                                -20 -

expenditure, the time and place of the expenditure, the business

purpose of the expense, and the business relationship involved.

     Petitioner introduced in evidence documents that he contends

show unreimbursed employee business expenses.   Petitioner

testified that had he applied for reimbursement of these

expenses, his employer would have reimbursed him for the

expenditures.    Not only has petitioner failed to meet his burden

of substantiating these claimed expense deductions by proper

evidence, he has failed to show that they would be deductible

even if substantiated.   These expenditures, if for business

purposes, would have been reimbursed by his employer had he

claimed reimbursement.   See Lucas v. Commissioner, 79 T.C. 1, 6-7

(1982); Fountain v. Commissioner, 59 T.C. 696, 708 (1973).

Petitioner testified that some of these expenses which he claimed

as deductible may have actually been reimbursed by his employer,

and that some were nondeductible personal expenditures.    Based on

this record, petitioner has failed to show that he is entitled to

a deduction for unreimbursed employee business expenses in 1991

in any amount.   We, therefore, sustain respondent's disallowance

of petitioner's claimed deduction in 1991 of unreimbursed

employee business expenses.

     Petitioner claimed a deduction for "repayment under claim of

right" in the amount of $14,714.    Petitioner testified that this

amount related to litigation involving child support for his

daughter, and argued in his brief that this amount was "arrearage
                                -21 -

on child support he paid the state of TN and child's mother

Dorine Furuya, neither of which would provide petr. with

accounting of monies rec'd. despite several written requests from

the petr".    Petitioner testified that approximately $12,000 of

this claimed deduction was for child support payments, and

approximately $2,000 was for attorney's fees and expenses of the

litigation concerning child support payments.     The portion of

this claimed deduction that relates to child support payments is

not deductible.    Secs. 71(c), 215(b).   The portion of this

claimed deduction that relates to the litigation costs concerning

child support payments is not deductible since it is a personal,

living, or family expense which is not deductible under section

262.    United States v. Gilmore, 372 U.S. 39 (1963).   Furthermore,

petitioner has failed to prove that the amounts he claimed as

deductions were expenditures he actually made in 1991.     We hold

that petitioner is not entitled to deduct the amount he claims to

be deductible as a "repayment under claim of right".

       Petitioner deducted $5,000 in legal fees for the year 1991

that he testified related to his unsuccessful attempt to obtain

unemployment compensation through litigation.     Section 212

allows, in the case of individual taxpayers, a deduction for all

the ordinary and necessary expenses paid or incurred during the

taxable year for the production or collection of income.

Respondent does not argue that legal fees to collect unemployment

compensation are not deductible if paid.     See United States. v.
                               -22 -

Gilmore, supra; Caruso v. United States, 236 F. Supp. 88 (D.N.J.

1964).   Respondent, however, argues that petitioner has not

substantiated the entire amount of the claimed deduction.

     Petitioner introduced into evidence 24 checks that he

claimed represent legal fees and expenses relating to

unemployment compensation litigation.   Respondent concedes that

20 of the checks represent deductible amounts totaling $4,396.75.

One of the remaining checks received in evidence is in the amount

of $300 payable to "Richard Stegman Esq." for "consultation", and

two of such checks are payable to "Neil Paulson" in the total

amount of $830.   Petitioner offered no evidence that either Mr.

Stegman or Mr. Paulson worked on the unemployment compensation

litigation, and neither person appeared on any court documents

relating to this litigation.   The fourth check received in

evidence is a check in the amount of $15 payable to Accurate

Professional Typists.   Petitioner could not remember whether this

check was related to the unemployment compensation litigation.

There were also received in evidence two airline passenger

receipts that petitioner claims relate to the unemployment

compensation litigation.   The travel represented by the airline

receipts was to Huntsville, Alabama, and occurred over weekends

and holidays.   There is a strong indication from these facts that

the travel was for personal purposes.   Petitioner claims that car

rental agreements received in evidence represent expenses related

to the unemployment compensation litigation.   Petitioner has not
                                -23 -

explained how the amounts paid under the car rental agreements

relate to the unemployment compensation litigation.    We,

therefore, hold that petitioner has failed to establish that he

had any deductible expenses relating to the unemployment

compensation litigation other than the $4,396.75 conceded by

respondent.

     In support of a claimed deduction for 1991 for taxes on his

car registration, petitioner submitted a copy of a canceled check

payable to Emmett Sanders in the amount of $32.37.    In the notice

of deficiency, respondent did not disallow $20 of the deduction

claimed by petitioner for taxes on his car registration.

Petitioner has failed to show that the entire amount of the check

to Emmett Sanders was for taxes on his car registration.     We

therefore uphold respondent's determination with respect to the

disallowance of a portion of the amount claimed by petitioner as

taxes on his car registration in 1991.    The other taxes deducted

by petitioner in 1991 are utility taxes and tax on petitioner's

telephone bill.    These items are nondeductible, and we sustain

respondent's disallowance of these claimed deductions.    Sec. 164;

see Fife v. Commissioner, 73 T.C. 621 (1980).

     Petitioner has offered no evidence to substantiate the

charitable contribution deduction claimed on Schedule A of his

1991 tax return.    Since petitioner has not substantiated this

claimed deduction, we sustain respondent's disallowance of the

claimed deduction.
                                 -24 -

     Petitioner deducted $2,856 in moving expenses in 1991 which

respondent disallowed in her notice of deficiency.    Petitioner

testified that he moved from Huntsville, Alabama, to Melbourne,

Florida, in November 1990.    Petitioner testified that he incurred

expenses in connection with his move from Huntsville to Melbourne

through June 1991.    While in Melbourne, he worked for Avionics

until October 1991.    Petitioner then remained in Melbourne to

receive unemployment benefits.    Petitioner has offered no

evidence that the expenses of his move to Melbourne in 1990

continued through 1991, nor has he offered any substantiation of

this claimed deduction.    We therefore sustain respondent's

disallowance of this claimed deduction for moving expenses in

1991.

     Respondent disallowed all of the amounts claimed as

deductions by petitioner on Schedule A for 1992 for lack of

substantiation.   The following are Schedule A claimed deductions

in dispute for the year 1992:

     Deduction                            Amount

     State and local income taxes         $963
     Real estate taxes                     463
     Charitable contributions              488
     Casualty/theft loss                   350
     Moving expenses                     1,200


     Petitioner has failed to provide any substantiation

whatsoever for these claimed deductions, and, accordingly, we
                                -25 -

sustain respondent's disallowance of the claimed deductions for

1992.

     For the years 1991 and 1992 petitioner claimed to have

incurred business expenses relating to "A & M Techservices".      He

claimed these deductions on Schedule C.   Respondent denied all of

these claimed business deductions for 1991 on the basis that

petitioner had not established that he was carrying on a trade or

business to which the expenses related.

     Section 162(a) provides that there is allowed as a deduction

all ordinary and necessary business expenses incurred during the

taxable year.    Generally, a trade or business is an activity that

is pursued in good faith, with continuity and regularity, and for

the production of income.    Commissioner v. Groetzinger, 480 U.S.

23, 35 (1987).   Whether a taxpayer is engaged in a trade or

business is a question of fact.    Walliser v. Commissioner, 72

T.C. 433, 437 (1979).

     Petitioner reported on his tax return for 1991 that the name

of his business was "A & M Techservices".    At trial, petitioner

claimed he was an engineering consultant, seeking to contract out

his services as an independent contractor.   He reported no gross

income in 1991 from this business, but claimed deductible

expenses totaling $23,505.   Petitioner has placed in evidence

numerous canceled checks and other documentation in purported

support of these claimed deductions.    These checks relate to rent

payments, utility and phone bills, mailboxes, credit card
                                -26 -

payments, airline tickets, and automobile expenses.       Petitioner

has not shown that the expenses for which these checks were given

relate to a business rather than being personal expenses.

     Petitioner has offered no evidence other than his vague

testimony that he was engaged in a trade or business other than

his full-time job with Avionics during the year 1991.

Petitioner reported no income in 1991 from any business other

than his employment by Avionics.    The nature of the expenses

petitioner claimed as deductible in 1991 strongly suggests that

they were nondeductible personal household expenses.       Petitioner

deducted power, phone, and rent for an apartment address, which

he claims was his business address, at 1431 South Oak Street,

Room 16.    This same address appeared on the Forms W-2 issued by

Avionics to petitioner for the years 1990 and 1991.       This is also

the address that petitioner used on his checking account.

Petitioner also used this address on the automobile repair

invoices and on all of the car rental agreements that are in

evidence.   Petitioner further admitted that the South Oak Street

apartment is a residential apartment.       At trial, when petitioner

was asked where his residential address was during that year, he

was vague and unspecific, claiming that at the time he lived in

another person's house.   He had difficulty remembering the name

of the person, the street address, or the telephone number, but

could immediately recall the address that he claimed was the

address for his claimed business.       We conclude that petitioner
                                -27 -

has not met his burden of proving that he was engaged in a bona

fide business during 1991 other than his employment and sustain

respondent's disallowance of petitioner's claimed business

expenses relating to A & M Techservices.

     Respondent allowed some of the Schedule C business expense

deductions claimed by petitioner relating to A & M Techservices

for the year 1992.    According to petitioner, this business was a

"personal & financial services/collection agency".    At trial,

petitioner failed to offer proof of any amount of deductions in

excess of those allowed by respondent.   Accordingly, we sustain

respondent's determinations with regard to petitioner's claimed

Schedule C deductible expenses for the year 1992.

     Section 6662(a) imposes an accuracy-related penalty of 20

percent on any portion of an underpayment of tax that is

attributable to items set forth in section 6662(b).    Respondent

contends that petitioner is liable for this penalty for either

negligence or substantial understatement of tax under section

6662(b)(1) and (2).

     Negligence includes any careless, reckless, or intentional

disregard of rules or regulations, any failure to make a

reasonable attempt to comply with the provisions of the law, and

any failure to exercise ordinary and reasonable care in the

preparation of a tax return.   See Zmuda v. Commissioner, 731 F.2d

1417, 1422 (9th Cir. 1984), affg. 79 T.C. 714 (1982).
                               -28 -

     Section 6664(c)(1) provides that the penalty should not be

imposed on any portion of an underpayment if the taxpayer shows

reasonable cause for such portion of the underpayment and that

the taxpayer acted in good faith with respect to such portion.

Reliance on the advice of a professional such as an accountant

may constitute a showing of reasonable cause if, under all the

circumstances, such reliance was reasonable and the taxpayer

acted in good faith.   Sec. 1.6661-6(b), Income Tax Regs.

     Petitioner has failed to show that he was not negligent.

There is no evidence that petitioner made a reasonable attempt to

comply with the statutes or regulations in filing his Federal

income tax returns for any of the years at issue.     Had petitioner

consulted either the relevant statutes or a competent tax adviser

he would have discovered that many of the deductions he claimed

were not proper.   It is clear from the facts in this case, and

from petitioner's brief, that petitioner claimed these deductions

and expenses without regard to the applicable law.     Therefore, we

sustain the accuracy-related penalty for each year as determined

by respondent.

                                                 Decisions will be

                                       entered under Rule 155.
