                            T.C. Memo. 1996-54



                          UNITED STATES TAX COURT



                      DAVID E. JACKSON, Petitioner v.
               COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 16441-94.                 Filed February 14, 1996.



        David E. Jackson, pro se.

        Tyrone Montague, for respondent.



                            MEMORANDUM OPINION


        DINAN, Special Trial Judge:     This case was heard pursuant

to the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.1       Respondent determined a deficiency in petitioner's 1992

        1
          Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the taxable year in
                                - 2 -

Federal income tax in the amount of $2,238 and an accuracy-

related penalty pursuant to section 6662(a) in the amount of

$448.

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

entitled to claim head of household filing status; (2) whether

petitioner is entitled to claim a credit in the amount of $560

for child and dependent care expenses; (3) whether petitioner is

entitled to claim an earned income credit in the amount of

$1,597; and (4) whether petitioner is liable for the accuracy-

related penalty under section 6662(a) in the amount of $448.

     Some of the facts have been stipulated and are so found.

The stipulations of fact and attached exhibits are incorporated

herein by this reference.   Petitioner resided in the Bronx, New

York, on the date the petition was filed in this case.

     During the year in issue, petitioner was unmarried and

resided in a two-bedroom apartment with Jewel M. Cleckley, two of

Ms. Cleckley's children, and petitioner's daughter, Fatimah, born

to Ms. Cleckley and petitioner on June 8, 1992.

     The apartment was owned by Ms. Cleckley and petitioner

testified he paid $175 per month for the exclusive use of one

room for himself and Fatimah.   Petitioner testified that the $175

per month was paid in cash pursuant to an oral leasing agreement

between himself and Ms. Cleckley.   In addition to the $175 per


issue. All Rule references are to the Tax Court Rules of
Practice and Procedure.
                               - 3 -

month, petitioner testified he paid everything towards his

daughter's clothing, food, and medical insurance.   However, other

than his self-serving testimony, petitioner presented no evidence

of the amounts expended.

     Furthermore, petitioner testified that during the year in

issue, he made cash payments to Janet Smith for Fatimah's day

care.   Petitioner testified that he transported Fatimah to Ms.

Smith's house by public transportation in the morning and picked

her up in the evening after work.   Petitioner testified that the

payments totaled approximately $550.   However, Form 2441, Child

and Dependent Care Expenses, on petitioner's 1992 Federal return

reflected that petitioner paid Adelaide Moore $2,000 in child

care expenses which resulted in a $560 credit.   Petitioner

offered no explanation as to the inconsistencies between his

testimony and the name and amount claimed on Form 2441.

Moreover, petitioner offered no documentary evidence to support

either his testimony or the amounts claimed on Form 2441.

     Petitioner's 1992 Federal return was professionally prepared

and electronically timely filed based on the information

petitioner provided to the tax preparer.   On petitioner's 1992

Federal return, he claimed head of household filing status,

reported wage income of $10,527, unemployment compensation of

$1,947, adjusted gross income of $12,474, a standard deduction of
                                - 4 -

$5,250,2 personal exemptions for himself and Fatimah, a credit

for child and dependent care expenses in the amount of $560, and

an earned income credit of $1,597.

     In her notice of deficiency, respondent changed petitioner's

filing status from head of household to single, disallowed the

credit for child and dependent care expenses, disallowed the

earned income credit, and assessed a negligence penalty.

     The first issue for decision is whether petitioner qualifies

for head of household filing status.    Petitioner contends that

the room he rented in Ms. Cleckley's apartment constituted a

household.   Respondent contends that petitioner failed to satisfy

the head of household filing requirements.

     We begin by noting that petitioner bears the burden of

proving that respondent's determination is incorrect.    Rule

142(a); Welch v. Helvering, 290 U.S. 111 (1933).    We further

observe that the Court is not bound to accept the unverified,

undocumented testimony of petitioner.    Hradesky v. Commissioner,

65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d 821 (5th Cir.

1976).   Additionally, a taxpayer is required to substantiate the

amounts claimed as deductions, credits, etc., by maintaining the

records needed to establish such entitlement.    Sec. 6001; sec.

1.6001-1(a), Income Tax Regs.



     2
          The 1992 standard deduction for head of household
filing status.
                              - 5 -

     In order to qualify for head of household filing status,

petitioner must satisfy the requirements of section 2(b).

Section 2(b)(1)(A)(i) in pertinent part provides, that a taxpayer

who is not married at the close of the taxable year can qualify

for head of household filing status by maintaining as his home a

household which is, for more than half of the taxable year, the

principal place of abode of a child or other qualifying relative.

For this purpose, a taxpayer is considered to maintain a

household only when: (1) The household constitutes the home of

the taxpayer for the taxpayer's taxable year; and (2) the

taxpayer pays over half of the cost of running the household.

Sec. 2(b)(1); sec. 1.2-2(d), Income Tax Regs.   Section 1.2-2(d),

Income Tax Regs., further provides:

     The cost of maintaining a household shall be the
     expenses incurred for the mutual benefit of the
     occupants thereof by reason of its operation as the
     principal place of abode of such occupants for such
     taxable year. The cost of maintaining a household
     shall not include expenses otherwise incurred. The
     expenses of maintaining a household include property
     taxes, mortgage interest, rent, utility charges, upkeep
     and repairs, property insurance and food consumed on
     the premises. Such expenses do not include the cost of
     clothing, education, medical treatment, vacations, life
     insurance, and transportation. * * *

     Petitioner's position is that the room he maintains in Ms.

Cleckley's two-bedroom apartment constitutes a household.

Petitioner cited no authority for his position.   Petitioner

testified that he rented one room in the two-bedroom apartment

for himself and Fatimah for $175 a month.   Petitioner testified
                               - 6 -

that he could not use the telephone or kitchen without

permission.   Other than the $175 per month allegedly paid,

petitioner incurred no additional expenditures for utilities,

repairs or any other household expenses.   We find that the one

room allegedly lived in by petitioner and Fatimah in the two-

bedroom apartment owned by Fatimah's mother, without use of a

kitchen or telephone, does not constitute a separate household.

     Additionally, petitioner failed to prove that he paid $175 a

month or, if paid, that it constituted more than half the cost of

maintaining a household as his home.   Sec. 6001; sec. 1.6001-

1(a), Income Tax Regs.   Ms. Cleckley, Fatimah's mother, was the

owner of the two-bedroom apartment.    Ms. Cleckley apparently paid

all expenses of maintaining the household to which petitioner

allegedly contributed only $175 per month.

     Based on the record, we find that petitioner has failed to

satisfy his burden of proof.   Rule 142(a).   We are unconvinced

that petitioner provided more than half of the cost of

maintaining a principal place of abode for his daughter.

Accordingly respondent is sustained on this issue.

     The second issue for decision is whether petitioner is

entitled to a credit for child and dependent care in the amount

of $560.

     On petitioner's 1992 Federal return, he claimed a credit

under section 21 for child and dependent care expenses in the

amount of $560.   Pursuant to section 21(a)(1), petitioner is
                               - 7 -

entitled to a credit for such expense if he "maintains a

household which includes as a member one or more qualifying

individuals".   As relevant herein, the term "qualifying

individual" is defined in section 21(b)(1) as a dependent who is

under the age of 13 and with respect to whom the taxpayer is

entitled to an exemption.   The Court's previous determination

that petitioner did not maintain a household for his daughter

precludes petitioner from claiming a credit for child and

dependent care expenses for 1992.   Accordingly, respondent is

sustained on this issue.

     Thirdly, we must consider whether petitioner is entitled to

an earned income credit in the amount of $1,597.

     Pursuant to section 32, certain low-income individuals with

a child residing in the taxpayer's household may qualify for the

earned income credit.   Section 32(c)(1)(A)(i) provides that to

qualify for the earned income credit an "eligible individual" is

an individual who has a "qualifying child" for the taxable year.

A "qualifying child" is defined as the taxpayer's child, under

the age of 19, who has the same principal place of abode as the

taxpayer for more than one-half of the taxable year.

Additionally, the taxpayer must identify the child by name, age,

and Social Security number.   Sec. 32(c)(3).   However, if more

than one individual constitutes an "eligible individual" with

respect to the same "qualifying child" for the same taxable year,

then only the individual with the highest adjusted gross income
                                - 8 -

for such taxable year shall be treated as an "eligible

individual" for purposes of the earned income credit.    Sec.

32(c)(1)(C).

     The record reflects that Ms. Cleckley, Fatimah's mother,

also constitutes an "eligible individual" for purposes of the

earned income credit.    Furthermore, Ms. Cleckley's adjusted gross

income for the taxable year in issue is $16,205 and higher than

petitioner's adjusted gross income.3    Accordingly, petitioner is

not entitled to the earned income credit, and respondent is

sustained on this issues.

     Finally, we must consider whether petitioner is liable for

the section 6662(a) accuracy-related penalty in the amount of

$448.    Section 6662(a) imposes a 20-percent penalty on the

portion of the underpayment attributable to negligence.

Respondent determined that petitioner is liable for the accuracy-

related penalty imposed by section 6662(a), and that the entire

underpayment of tax was due to negligence.    "Negligence" includes

a failure to make a reasonable attempt to comply with the

provisions of the Internal Revenue laws or to exercise ordinary

and reasonable care in the preparation of a tax return.    Sec.

6662(c); sec. 1.6662-3(b)(1), Income Tax Regs.    "Disregard"

includes any careless, reckless, or intentional disregard of




     3
            Petitioner's 1992 adjusted gross income is $12,474.
                                - 9 -

rules or regulations.   Sec. 6662(c); sec. 1.6662-3(b)(2), Income

Tax Regs.

      However, section 6664(c)(1) provides that the penalty under

section 6662(a) shall not apply to any portion of an

underpayment, if it is shown that there was reasonable cause for

the taxpayer's position with respect to that portion and that the

taxpayer acted in good faith with respect to that portion.   Sec.

6664(c)(1).   The determination of whether a taxpayer acted with

reasonable cause and in good faith within the meaning of section

6664(c)(1) is made on a case-by-case basis, taking into account

all the pertinent facts and circumstances.   Sec. 1.6664-4(b)(1),

Income Tax Regs.   The most important factor is the extent of the

taxpayer's effort to assess his proper tax liability for the

year.   Id.   Reliance by the taxpayer on the advice of a qualified

adviser will constitute reasonable cause and good faith, if,

under all of the facts and circumstances, the reliance by the

taxpayer was reasonable and the taxpayer acted in good faith.

Id.

      Petitioner had his 1992 Federal return prepared by a paid

tax preparer and electronically timely filed based on information

provided by petitioner.   There is no evidence before us that

petitioner's negligence was a result of his reasonable reliance

on a qualified adviser.   At trial, petitioner made no attempt to

substantiate the amounts disallowed as required by section 6001.

Furthermore, petitioner's testimony was vague and inconsistent.
                              - 10 -

Based on the record, we find that petitioner failed to make a

reasonable attempt to comply with the provisions of the Internal

Revenue laws.   Petitioners's lack of substantiation and the

unexplained inconsistency in his testimony about the child care

expenses claimed compel us to find petitioner liable for the

accuracy-related penalty.   Accordingly, respondent will be

sustained on this issue.

     To reflect the foregoing,

                                         Decision will be entered

                                         for respondent.
