                  T.C. Summary Opinion 2002-72



                     UNITED STATES TAX COURT



            THELDON AND MARY PARRETT, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 11502-01S.                 Filed June 12, 2002.


     Mary Parrett, pro se.

     Douglas S. Polsky, for respondent.



     COUVILLION, Special Trial Judge:     This case was heard

pursuant to section 7463 of the Internal Revenue Code in effect

at the time the petition was filed.1    The decision to be entered

is not reviewable by any other court, and this opinion should not

be cited as authority.



     1
          Unless otherwise indicated, subsequent section
references are to the Internal Revenue Code in effect for the
years at issue. All Rule references are to the Tax Court Rules
of Practice and Procedure.
                                - 2 -


     Respondent determined deficiencies of $5,561 and $5,818 in

petitioners' Federal income taxes, respectively, for 1998 and

1999 and corresponding penalties under section 6662(a) in the

amounts of $1,112 and $1,164.

     Some of the facts were stipulated, and those facts, with the

annexed exhibits, are so found and are incorporated herein by

reference.    At the time the petition was filed, petitioners'

legal residence was Jemez Pueblo, New Mexico.

     For each of the years in question, petitioners claimed

itemized deductions on a Schedule A, Itemized Deductions, of

their Federal income tax return.    For 1998, petitioners claimed

itemized deductions totaling $28,346, of which $19,861 was

disallowed by respondent.    For 1999, petitioners deducted

$28,263, of which $20,757 was disallowed by respondent.

Petitioners, nevertheless, were allowed itemized deductions for

both years, since the total of their other claimed and allowed

deductions exceeded the standard deduction under section 63(c).

For the 2 years at issue, the disallowed deductions consisted of

charitable contributions, job expenses, and other miscellaneous

deductions.

     The issues for decision are: (1) Whether petitioners are

entitled to the disallowed itemized deductions for charitable

contributions, job expenses, and other miscellaneous deductions,

and (2) whether petitioners are liable for the penalties under
                                - 3 -


section 6662(a).    In addition, the Court considers the

applicability of section 6673(a) to the facts of this case.

     Petitioners were both employed during the 2 years in

question.    Mr. Parrett was a construction supervisor, and Mrs.

Parrett was a floor supervisor and a dealer at a casino.    They

reported combined wages of $88,220 and $82,787, respectively, for

1998 and 1999.

     Prior to the years at issue, petitioners either prepared

their Federal income tax returns themselves or had them prepared

by a friend.    For the 2 years in question, however, petitioners'

returns were prepared by Robin Beltran.    The record does not

reflect the circumstances surrounding their employment of Mr.

Beltran.2   Mr. Beltran prepared petitioners' returns for 3 years,

1998, 1999, and 2000.    For the initial year, 1998, petitioners

presented to Mr. Beltran the same type documentation petitioners

maintained for the years in which petitioners prepared their own

returns.    That documentation appeared to be for charitable

contributions but not for the miscellaneous deductions at issue.

Mr. Beltran advised petitioners that such records were not

necessary and could be disregarded because, irrespective of




     2
          The Court notes that this case is one of numerous cases
heard by the Court involving tax returns prepared by Mr. Beltran,
which essentially involve the same deductions at issue here.
                               - 4 -


records, a taxpayer, under the law, was "allowed" deductions for

such expenses pursuant to a "formula".

     The disallowed deductions consisted of the following:



                                           1998           1999

   Charitable contributions              $ 7,159     $ 6,725
   Unreimbursed employee expenses
    (before the sec. 67(a)
    limitation)                           14,472      15,701


     Petitioners acknowledged at trial that their actual

charitable contributions were considerably less than the amounts

claimed on their returns.   Mrs. Parrett estimated that

petitioners actually contributed to charity approximately 33

percent of the amount claimed on their 1998 return and

approximately 24 percent of the amount claimed on their 1999

return.

     The unreimbursed employee expenses shown above represented

the commuting expenses of petitioners to and from their residence

with respect to their respective places of employment.     Mr.

Beltran advised petitioners that such expenses were deductible,

even though it appears that petitioners had never previously

claimed such expenses as deductions on their returns for prior

years.

     With respect to the first issue regarding petitioners'

entitlement to deductions for charitable contributions and
                               - 5 -


unreimbursed employee business expenses, the Court notes that

commuting expenses incurred by a taxpayer to and from the

taxpayer's place of employment are personal expenses and are not

deductible.   Sec. 262; Commissioner v. Flowers, 326 U.S. 465

(1946).   Petitioners presented no argument and cited no authority

to the contrary.   Petitioners contended at trial that they had

incurred expenses for tax preparation and for special clothing

required by Mrs. Parrett in her employment.   The Court holds

that, to the extent any expenses of this nature were incurred,

the amounts would not exceed 2 percent of petitioners' adjusted

gross income each year, and, therefore, under section 67(a),

petitioners are not entitled to deductions for those items.

     With respect to charitable contributions, petitioners

produced no documentary evidence to substantiate their

contributions for the 2 years at issue.   Petitioners testified

that their records were destroyed in the flooding of their home.

Even though their records were destroyed, petitioners made no

attempt to reconstruct evidence of their contributions for the 2

years in question.   However, it appears to the Court that

petitioners did make qualifying charitable contributions during

the years at issue and, therefore, under the Court's

discretionary authority pursuant to Cohan v. Commissioner, 39

F.2d 540, 543-544 (2d Cir. 1930), allows petitioners charitable

contribution deductions of $300 for each year at issue.
                               - 6 -


     The second issue is whether petitioners should be held

liable for the section 6662(a) penalties.    Petitioners contend

they should be absolved of liability for such penalties because

they relied on the representations of their return preparer, Mr.

Beltran.

     Section 6662(a) provides for an accuracy-related penalty

equal to 20 percent of any portion of an underpayment of tax

required to be shown on the return that is attributable to the

taxpayer's negligence or disregard of rules or regulations.    Sec.

6662(a) and (b)(1).   Negligence consists of any failure to make a

reasonable attempt to comply with the provisions of the Internal

Revenue Code and disregard consists of any careless, reckless, or

intentional disregard.   Sec. 6662(c).   The courts have refined

the Code definition of negligence as a lack of due care or

failure to do what a reasonable and prudent person would do under

similar circumstances.   Allen v. Commissioner, 925 F.2d 348, 353

(9th Cir. 1991), affg. 92 T.C. 1 (1989).    Section 1.6662-3(b)(1),

Income Tax Regs., provides that "Negligence is strongly indicated

where * * * a taxpayer fails to make a reasonable attempt to

ascertain the correctness of a deduction * * * on a return which

would seem to a reasonable and prudent person to be 'too good to

be true' under the circumstances".     An exception applies when the

taxpayer demonstrates (1) there was reasonable cause for the

underpayment, and (2) the taxpayer acted in good faith with
                               - 7 -


respect to the underpayment.   Sec. 6664(c).   Whether the taxpayer

acted with reasonable cause and in good faith is determined by

the relevant facts and circumstances.    The most important factor

is the extent of the taxpayer's effort to assess the proper tax

liability.   Stubblefield v. Commissioner, T.C. Memo. 1996-537;

sec. 1.6664-4(b)(1), Income Tax Regs.    Under section 1.6664-

4(b)(1), Income Tax Regs., "Circumstances that may indicate

reasonable cause and good faith include an honest

misunderstanding of fact or law that is reasonable in light of

all of the facts and circumstances, including the experience,

knowledge, and education of the taxpayer."     Moreover, a taxpayer

is generally charged with knowledge of the law.     Niedringhaus v.

Commissioner, 99 T.C. 202, 222 (1992).    Although a taxpayer is

not subject to the addition to tax for negligence where the

taxpayer makes honest mistakes in complex matters, the taxpayer

must take reasonable steps to determine the law and to comply

with it.   Id.

     Under certain circumstances, a taxpayer may avoid the

accuracy-related penalty for negligence where the taxpayer

reasonably relied on the advice of a competent professional.

Sec. 1.6664-4(b)(1), Income Tax Regs.; see sec. 6664(c); Freytag

v. Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011

(5th Cir. 1990), affd. 501 U.S. 868 (1991).    Reliance on a

professional adviser, standing alone, is not an absolute defense
                                - 8 -


to negligence; it is only one factor to be considered.    In order

for reliance on a professional adviser to relieve a taxpayer from

the negligence penalty, the taxpayer must establish that the

professional adviser on whom he or she relied had the expertise

and knowledge of the relevant facts to provide informed advice on

the subject matter.    Freytag v. Commissioner, supra at 888.

     Petitioners made no effort to ascertain the professional

background and qualifications of their return preparer.   They did

not examine the returns prepared by Mr. Beltran, except perhaps

to ascertain the amount of the refunds they would receive.      The

record does not show that petitioners looked beyond that.    The

Court is satisfied that petitioners knew that they could only

claim deductions on their returns that could be substantiated,

and, even if they did not know that, at the very least, the

representations that the deductible amount of such deductions was

based on a formula should have prompted them to verify the

accuracy of such a representation with a qualified preparer.

Moreover, the amounts claimed for unreimbursed employee expenses

were clearly disproportionate to petitioners' wages, which also

merited further inquiry.   These facts demonstrate to the Court

that petitioners made no reasonable effort to ascertain their

correct tax liability for the years at issue.    Stubblefield v.

Commissioner, supra.   Additionally, when petitioners were

contacted by respondent with respect to their returns,
                               - 9 -


petitioners referred all correspondence to Mr. Beltran, who had

promised to "take care" of the problem, which he failed to do.

On this record, the Court sustains respondent on the section

6662(a) accuracy-related penalties for the 2 years at issue.

     Section 6673(a) authorizes the Court to require a taxpayer

to pay to the United States a penalty not exceeding $25,000 when,

in the Court's judgment, proceedings have been instituted or

maintained by the taxpayer primarily for delay or where the

taxpayer's position in the proceeding is frivolous or groundless.

The Court considers petitioners' claim that they should not be

liable for the deficiencies and penalties to be frivolous and

groundless.   Petitioners knew, or should have known, that a

substantial portion of the itemized deductions at issue was false

and could not be sustained.   Other circumstances noted above need

not be repeated here.

     The function of this Court is to provide a forum to decide

issues relating to liability for Federal taxes.   Any reasonable

and prudent person, under the facts presented to the Court,

should have known that the claimed deductions could not have been

sustained, and the Court is satisfied that petitioners knew that.

We do not and should not countenance the use of this Court as a

vehicle for a disgruntled litigant to proclaim the wrongdoing of

another, his return preparer, as a basis for relief from a

penalty that was determined by respondent on facts that clearly
                              - 10 -


are not sustainable.   Golub v. Commissioner, T.C. Memo. 1999-288.

Petitioners, therefore, have interfered with the Court's function

to the detriment of other parties having cases with legitimate

issues for the Court to consider.   Petitioners have caused

needless expense and wasted resources, not only for the Court,

but for its personnel, respondent, and respondent's counsel.

Under these circumstances, the penalty under section 6673 is

warranted, and petitioners will be ordered to pay a penalty of

$500 to the United States under section 6673(a).

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                    Decision will be entered

                               under Rule 155.
