                  T.C. Summary Opinion 2005-53



                     UNITED STATES TAX COURT



                  EDWARD C. ROSA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8299-03S.            Filed April 25, 2005.


     Edward C. Rosa, pro se.

     Miriam C. Dillard, for respondent.



     DEAN, 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.   Unless otherwise

indicated, all subsequent section references are to the Internal

Revenue Code in effect for the year in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

The decision to be entered is not reviewable by any other court,

and this opinion should not be cited as authority.
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     Respondent determined a deficiency of $3,104 in petitioner’s

Federal income tax for 2000 and an addition to tax under section

6651(a)(1) of $109.   After petitioner’s concession of unreported

income of $10,881, the issues for decision are whether

petitioner:   (1) Is entitled to itemized deductions of $5,704,

(2) is entitled to deduct business expenses of $8,882, and (3) is

liable for the addition to tax for failure to file timely a

Federal income tax return.

                             Background

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

The stipulation of facts and the exhibits received in evidence

are incorporated herein by reference.     At the time the petition

was filed, petitioner resided in Vega Alta, Puerto Rico.

     Petitioner filed on April 28, 2001, a Federal income tax

return for 2000.   The return failed to report $10,881 of

nonemployee income earned by petitioner in 2000 from “J&S Floor

Covering” (J&S).   After the statutory notice of deficiency in

this case was issued, petitioner submitted to respondent a Form

1040X, Amended U.S. Individual Income Tax Return, reporting the

$10,881 of nonemployee income omitted from his tax return.    The

amended return also reported for the first time on Schedule A,

Itemized Deductions, itemized deductions of $5,704 and on

Schedule C, Profit or Loss From Business, business expense

deductions of $8,882.
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                             Discussion

     Because petitioner failed to meet the requirements of

section 7491(a)(2), the burden of proof does not shift to

respondent in this case on the issues of itemized and business

expense deductions.

1. Itemized deductions

     Tax deductions are a matter of legislative grace with a

taxpayer bearing the burden of proving entitlement to the

deductions claimed.    Rule 142(a)(1); INDOPCO, Inc. v.

Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.

Helvering, 292 U.S. 435, 440 (1934).      Taxpayers bear the burden

of substantiating the amount and purpose of any claimed

deduction.   See Hradesky v. Commissioner, 65 T.C. 87 (1975),

affd. per curiam 540 F.2d 821 (5th Cir. 1976).     Taxpayers are

required to maintain sufficient records to establish the amounts

of income and deductions.   Sec. 6001; Higbee v. Commissioner, 116

T.C. 438, 440 (2001); sec. 1.6001-1(a), Income Tax Regs.

Petitioner, therefore, must produce evidence that he is entitled

to the deductions he claims.

     At trial, petitioner offered no evidence to support his

claim for itemized deductions, mostly unreimbursed employee

expenses.    He stated that he worked for J&S during the tax year

“doing maybe three projects for them to get on my feet.”     He then

found a better job with a service department in upstate New York,
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he said.   Petitioner testified that in moving from New York to

Puerto Rico he lost “nine boxes of documents”.   He testified that

the amounts deducted on the return are estimates.   Petitioner,

however, failed to explain how he arrived at his estimates.

      This Court is not bound to accept a taxpayer’s unverified

and self-serving testimony.   Blodgett v. Commissioner, 394 F.3d

1030, 1036 (8th Cir. 2005), affg. T.C. Memo. 2003-212; Shea v.

Commissioner, 112 T.C. 183, 189 (1999).   Because petitioner has

failed to corroborate his testimony or provide any substantiation

to support his itemized deductions, we sustain respondent’s

position with respect to the itemized deductions.

2. Schedule C Expenses

      Section 162 generally allows a deduction for ordinary and

necessary expenses paid or incurred during the taxable year in

carrying on a trade or business.   Generally, no deduction is

allowed for personal, living, or family expenses.   See sec. 262.

The taxpayer must show, Rule 142(a), that any claimed business

expenses were incurred primarily for business rather than social

reasons, see Walliser v. Commissioner, 72 T.C. 433, 437 (1979).

To show that the expense was not for personal reasons, the

taxpayer must show that the expense was incurred primarily to

benefit his business, and there must have been a proximate

relationship between the claimed expense and the business.    See

id.
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     Where a taxpayer has established that he has incurred a

trade or business expense, failure to prove the exact amount of

the otherwise deductible item may not be dispositive.    Generally,

unless precluded by section 274, the Court may estimate the

amount of such an expense and allow the deduction to that extent.

Finley v. Commissioner, 255 F.2d 128, 133 (10th Cir. 1958), affg.

27 T.C. 413 (1956); Cohan v. Commissioner, 39 F.2d 540, 543-544

(2d Cir. 1930).    In order for the Court to estimate the amount of

an expense, however, there must be some basis upon which an

estimate may be made.    Vanicek v. Commissioner, 85 T.C. 731, 742-

743 (1985).   Without such a basis, an allowance would amount to

unguided largesse.    Williams v. United States, 245 F.2d 559, 560

(5th Cir. 1957).

     In this case, where petitioner presented no evidence in

support of his claimed business expenses, there is an

insufficient basis upon which to estimate whether, and to what

extent, he incurred business expenses.

3. Addition to Tax Under Section 6651(a)(1)

     Respondent bears the burden of production with respect to an

addition to tax.   Sec. 7491(c).   In order to meet this burden,

respondent must produce evidence sufficient to establish that it

is appropriate to impose the addition to tax.    Higbee v.

Commissioner, supra at 446-447.    The parties agree that

petitioner’s tax return was not filed until April 28, 2001.
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Respondent has met his burden of production under section 7491(c)

with respect to imposing the addition to tax under section

6651(a)(1).

     It is then petitioner’s burden to prove that he had

reasonable cause and lacked willful neglect in not filing his

return timely.   See United States v. Boyle, 469 U.S. 241, 245

(1985); Higbee v. Commissioner, supra; sec. 301.6651-1(a)(2),

Proced. & Admin. Regs.   Because petitioner failed to offer any

evidence of reasonable cause and lack of willful neglect for his

failure to file timely, respondent’s determination that he is

liable for the addition to tax under section 6651(a)(1) is

sustained.

     Respondent’s determinations in the notice of deficiency are

in all respects sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                            Decision will be

                                       entered for respondent.
