                  T.C. Summary Opinion 2002-98



                     UNITED STATES TAX COURT



                   WILLIE BANKS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 19186-99S.             Filed July 29, 2002.



     Justin Jones (specially recognized), for petitioner.

     Nhi T. Luu Sanders, for respondent.



     PAJAK, 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.   The decision to be

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

should not be cited as authority.   Unless otherwise indicated,
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subsequent section references are to the Internal Revenue Code in

effect for the years in issue.

     Respondent determined deficiencies in petitioner’s 1996 and

1997 Federal income taxes of $3,704 and $1,294, respectively, and

additions to tax under section 6651(a) of $926 and $323.50,

respectively.   After concessions by petitioner of additional

amounts of income, the issues we must decide are whether

petitioner is entitled to any deductions in addition to those

allowed by respondent and whether petitioner is liable for the

additions to tax under section 6651(a).

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

Petitioner resided in Portland, Oregon, at the time he filed his

petition.

     During the taxable years 1996 and 1997, petitioner was in

the real estate rental and/or investment business.   At the end of

1997, a tax consultant prepared petitioner’s joint 1996 Federal

income tax return based on a spread sheet of rental income and

expenses and some other papers which were provided to her by

petitioner.   At the end of 1998, the tax consultant also prepared

petitioner’s joint 1997 Federal income tax return based on

information petitioner provided to her.   Each year, the tax

consultant provided petitioner with a copy of these returns.

Neither petitioner nor his wife ever signed these returns, and

they did not file these returns.
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     During the course of the investigation of petitioner’s

income tax filing obligations, respondent obtained the unsigned

copies of the joint 1996 and 1997 Federal income tax returns,

Forms 1040 and accompanying schedules (the draft returns), from

the tax consultant hired by petitioner to prepare the 1996 and

1997 Federal income tax returns.   Respondent also obtained copies

of the work papers used by petitioner’s tax consultant to prepare

the draft returns.

     During the course of respondent’s examination, on or about

April 14, 1999, petitioner and his wife Earnestine submitted to

respondent signed joint Forms 1040X, Amended U.S. Individual

Income Tax Return, for the taxable years 1996 and 1997.   The

amended returns claimed deductions in addition to those reflected

on the draft returns.   Respondent processed the amended returns

as original returns for 1996 and 1997 and assessed the tax as

shown thereon.

     Respondent issued the notice of deficiency to petitioner and

his wife for both taxable years in issue and disallowed the

additional deductions claimed on the amended returns.   Respondent

disallowed these additional deductions because petitioner did not

substantiate any of these deductions.   Respondent did not

question any of the substantial deductions claimed on the draft

returns which were the basis for the amended returns.   In effect,

respondent accepted the draft returns on behalf of petitioner and
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his wife.   Petitioner’s wife did not join in the petition to this

Court.

     As we discuss below, petitioner refers to the fact that his

19 year old son, Willie Banks, Jr., was murdered in a drive-by

shooting.

     Deductions are strictly a matter of legislative grace.

INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New

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

Taxpayers must substantiate claimed deductions.     Hradesky v.

Commissioner, 65 T.C. 87, 89 (1975), affd. per curiam 540 F.2d

821 (5th Cir. 1976).   Section 7491 does not change the burden of

proof where a taxpayer has failed to substantiate deductions.

Higbee v. Commissioner, 116 T.C. 438 (2001).    Moreover, taxpayers

must keep sufficient records to establish the amounts of the

deductions.   Meneguzzo v. Commissioner, 43 T.C. 824, 831 (1965);

sec. 1.6001-1(a), Income Tax Regs.

     Generally, except as otherwise provided by section 274(d)

which is not applicable in this case, when evidence shows that a

taxpayer incurred a deductible expense, but the exact amount

cannot be determined, the Court may approximate the amount,

bearing heavily if it chooses against the taxpayer whose

inexactitude is of his own making.     Cohan v. Commissioner, 39

F.2d 540, 543-544 (2d Cir. 1930).    The Court, however, must have
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some basis upon which an estimate can be made.      Vanicek v.

Commissioner, 85 T.C. 731, 742-743 (1985).

     In this case, there is no basis upon which an estimate can

be made.   Petitioner had 14 real estate properties during the

taxable years in issue.   Petitioner had no books and records, or

any evidence of the expenditures in issue.     For trial, petitioner

had no reconstructed records to support his claimed additional

deductions on the amended returns.      Petitioner said his wife was

saddened over the death of her son, which is understandable.

Petitioner claims this made her so upset that she selectively

destroyed all the financial records around the time for preparing

the 1996 return, again around the time for preparing the 1997

return, and again after petitioner reconstructed records to

prepare the amended returns.   As we noted, petitioner’s wife

signed the amended returns.    It is not believable that she would

destroy business records pertaining to her own returns on the

convenient occasions mentioned by petitioner.

     We are not required to accept petitioner’s generalized

statements and decline to do so here without supporting evidence.

Geiger v. Commissioner, 440 F.2d 688 (9th Cir. 1971), affg. per

curiam T.C. Memo. 1969-159.    We also are not required to accept

the self-serving statements of petitioner as correct.      Tokarski

v. Commissioner, 87 T.C. 74, 77 (1986).      On this record, we
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sustain respondent’s disallowance of the additional deductions

claimed on the amended returns.

     For 1991, petitioner untimely filed his Federal income tax

return, Form 1040, on January 19, 1993.   For 1992, petitioner

untimely filed his Federal income tax return, Form 1040, on

November 14, 1994.   For 1993, petitioner untimely filed his

Federal income tax return on December 13, 1994.   For 1994,

petitioner untimely filed his Federal income tax return, Form

1040, on November 21, 1997.   For 1995, petitioner untimely filed

his Federal income tax return, Form 1040, on November 21, 1997.

For 1998, petitioner untimely filed his Federal income tax return

on September 23, 1999.   For 1999, petitioner received an

extension within which to file his return to August 15, 2000, and

petitioner untimely filed his Federal income tax return on

January 2, 2001.

     For 1996 and 1997, petitioner untimely filed the Federal

income tax returns on April 14, 1999.   Petitioner claims the

untimeliness of these particular returns should be excused

because he was distraught over the death of his son in November

1996.   As we said in Tabbi v. Commissioner, T.C. Memo. 1995-463,

a taxpayer’s selective inability to meet his tax obligations when

he can conduct normal business activities does not excuse his

late filing.   The late filings in question are part of a 9-year

pattern which began long before the death of petitioner’s son.
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Respondent’s determination of the addition to tax for 1996 and

1997 is sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                           Decision will be entered

                                      for respondent.
