                  T.C. Summary Opinion 2001-166



                     UNITED STATES TAX COURT



   JOHN ARTHUR & PATRICIA MULHOLLAND BEECROFT, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3075-00S.                  Filed October 16, 2001.



     John Arthur and Patricia Mulholland Beecroft, pro sese.

     Andrew J. Wyman, for respondent.



     DINAN, 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,

subsequent section references are to the Internal Revenue Code in

effect for the years in issue.
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     Respondent determined deficiencies in petitioners’ Federal

income taxes of $7,073, $9,985, and $10,193 for the taxable years

1995, 1996, and 1997.

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

entitled to disallowed deductions for charitable contributions;

and (2) whether petitioners are entitled to disallowed deductions

for business expenses.1

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

The stipulations of fact and the attached exhibits are

incorporated herein by this reference.    Petitioners resided in

San Jose, California, on the date the petition was filed in this

case.

     Petitioner husband (petitioner) was employed by Steven

Engineering, Inc., beginning around 1990 and throughout the years

in issue.   Petitioner’s employment with Steven Engineering

involved the sale of electronics and related products.    He earned

wages of $61,879 in 1995 and $63,293 in 1997.    Petitioner wife

was employed by the County of Santa Clara, earning wages of

$8,286 in 1995 and $25,610 in 1997.    Their individual wages in

1996 are not in the record, but petitioners reported combined

taxable wages of $89,546 in that year.    Petitioners filed a joint

Federal income tax return for each of the years in issue.


     1
      Adjustments to petitioners’ medical expense deductions and
miscellaneous itemized deductions are computational and will be
resolved by our holding on the issues in this case.
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       The first issue for decision is whether petitioners are

entitled to disallowed deductions for charitable contributions.

Petitioners claimed charitable contribution deductions of $9,850,

$14,400, and $15,300 in 1995, 1996, and 1997, respectively.

Respondent allowed a deduction of only $250 in each of 1995 and

1996, and $450 in 1997, because petitioners failed to establish

that any more than these amounts met the requirements of section

170.    Respondent allowed petitioners the standard deduction in

1995 and 1996 because their remaining itemized deductions were

less than the standard deduction in each year.

       Section 170(a) allows a deduction for charitable

contributions made during the taxable year to certain listed

types of organizations, if the deductions are verified under

regulations prescribed by the Secretary.     Sec. 170(a)(1).   A

deduction for charitable contributions generally is not allowed

in the absence of written records.      Sec. 1.170A-13, Income Tax

Regs; see also sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.

Specific requirements, which vary according to the type and

amount of the contributions, do not need to be set out in detail

here.

       Petitioners provided no reliable written records to

substantiate the charitable contributions, and we do not find

credible petitioner’s testimony that he donated these large sums

in cash to a single organization, Alcoholics Anonymous.      In the
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absence of any substantiation, we sustain respondent in his

disallowance of the bulk of these deductions.

     The second issue for decision is whether petitioners are

entitled to disallowed deductions for business expenses.

Petitioners filed a Schedule C, Profit or Loss From Business, in

each year in issue, claiming that petitioner was engaged in a

sales business.   The following were reported on these schedules:

                                   1995      1996       1997

       Gross receipts or sales      $918       $550       $500
       Car and truck expenses    (15,862)   (15,314)   (16,506)
       Office expense               (950)       -0-        -0-
       Travel                        -0-     (2,800)    (3,200)
       Meals and entertainment    (5,100)    (2,900)    (3,350)
       Other (telephone)          (3,500)    (2,300)    (2,400)
       Net loss                  (24,494)   (22,764)   (24,956)

No cost of goods sold was reported in any year for this sales

business.   In the notice of deficiency, respondent disallowed the

expenses to the extent they exceed the gross receipts.            The

disallowance was made on several grounds:      Petitioners had not

established that the sales activity was a trade or business which

was entered into for profit within the meaning of section 183 and

which had economic substance other than the avoidance of taxes.

Petitioners also had not (a) established that the expenses were

incurred in such a trade or business for the stated purposes, (b)

established that the expenses were other than nondeductible

personal expenses, and (c) substantiated the amounts of the

expenses and met the recordkeeping requirements of section 274.
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     Expenses which are ordinary and necessary to carrying on a

trade or business generally are allowed as a deduction in the

year in which they are paid.    Sec. 162(a).

     Petitioner testified that he was engaged in a business

activity named John Beecroft Sales.     His testimony concerning

this alleged activity can be summarized as follows.     The

business, started in 1990, involved sales of electronic parts,

primarily computer-related.    He incurred various expenses in

traveling throughout California to deliver parts to customers.

In total, he spent approximately 10 to 15 percent of his time on

this business.   The bulk of the work took place on weekends.      The

business has incurred losses in each year since its inception in

1990.

     We find that petitioner was not engaged in the trade or

business of selling electronics outside his primary employment as

a salesman at Steven Engineering.    We need not address whether

the activity was engaged in for profit under section 183 (or the

other issues raised in the notice of deficiency) because we find

that petitioner was not engaged in the sales activity.

     The primary evidence in the record concerning such an

activity is petitioner’s own testimony.     We do not find his

testimony to be credible, and we therefore do not accept it.       The

only corroborating evidence is in the form of “mileage logs” and

an assortment of receipts.    The mileage logs (actually pages of a
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personal planner) are for the most part filled with brief

notations and numbers which give no indication of their business

nature, and to the extent that they show some business activity

they could just as easily be from petitioner’s primary employment

as from any outside business.   The receipts are for an assortment

of expenses, primarily travel and meals, which show no indication

that they were incurred for any business purpose.   No records

were provided showing purchases of product or inventory by

petitioner, and no sales receipts were provided showing that any

actual sales had been made to customers.   In short, there is

nothing in the record which provides us with a basis for finding

that petitioner was engaged in a sales business.

     Petitioner testified that he subsidized his main employment

income with the sales business income in order to help support

himself and his family.   However, during the 7 years petitioner’s

business allegedly existed before and during the years in issue,

he claims to have incurred substantial losses in each year, and

in the years in issue to have had gross receipts of only $918,

$550, and $500.   We do not believe that petitioner would have for

years invested so much time and effort in an activity which

yielded such poor results, and which provided his family with

negligible income even before expenses.

     Petitioner argues that an IRS employee informed him in a

prior audit that his current method of maintaining records was
                                - 7 -

adequate.   Respondent is not bound by advice given to a taxpayer

which is incorrect as a matter of law.    Dixon v. United States,

381 U.S. 68 (1965); Auto. Club v. Commissioner, 353 U.S. 180

(1957).

     Finally, we turn to several statements made by petitioners

in the petition which have not been addressed.   First,

petitioners state that they were “never allowed an audit” for

1996 and 1997, and that these years were “thrown together” with

1995.   Petitioners also state that respondent failed to enter

into a settlement with them concerning the years in issue.     These

facts, even if true, are not relevant to our decision.    Our role

is to decide the correct amounts of the deficiencies put in issue

by the statutory notice of deficiency, sec. 6213(a), and

respondent’s actions prior to its issuance generally do not

affect what is by law the correct amounts of the deficiencies,

see Greenberg’s Express, Inc. v. Commissioner, 62 T.C. 324, 327-

328 (1974).   Second, petitioners state that they were unaware of

certain laws governing the substantiation of deductions for

charitable contributions, and that “you keep changing the laws.”

This Court does not make the law, we merely apply it as it is

written.    Metzger Trust v. Commissioner, 76 T.C. 42, 59-60

(1981), affd. 693 F.2d 459 (5th Cir. 1982).
                                 - 8 -

     We sustain respondent’s determination that the amounts

claimed by petitioners as business expense deductions were not

expenses incurred in a trade or business.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                         Decision will be entered

                                 for respondent.
