                  T.C. Summary Opinion 2001-108



                     UNITED STATES TAX COURT



                DOROTHY A. WILSON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3796-00S.                      Filed July 25, 2001.


     Dorothy A. Wilson, pro se.

     Ross M. Greenberg, for respondent.




     PANUTHOS, Chief 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
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Revenue Code in effect for the years in issue, and all Rule

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

     Respondent determined deficiencies in petitioner’s Federal

income taxes in the amounts of $1,339 and $1,744 and accuracy-

related penalties under section 6662(a) of $267.80 and $348.80

for 1996 and 1997, respectively.   After concessions,1 the issues

for decision are: (1) Whether petitioner is entitled to

dependency exemption deductions for her father and brother; (2)

whether petitioner is entitled to a deduction for medical

expenses; (3) whether petitioner is entitled to deductions from

her real property rental activities in excess of the amounts

allowed by respondent; and (4) whether petitioner is liable for

the accuracy-related penalties.

Background

     Some of the facts have been stipulated, and they are so

found.   The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   At the time of filing her

petition, petitioner resided in Lake Wales, Florida.


     1
          For 1996, respondent determined that petitioner
received interest income of $18. Respondent disallowed a
charitable deduction of $1,826 for 1996. Respondent made various
adjustments to petitioner’s depreciation deductions related to
her rental activities. Further, respondent disallowed suspended
losses from previous years and losses generated in 1996 and 1997
as a result of the limitation under sec. 469.

     Petitioner did not present evidence regarding these issues.
As a result, petitioner is deemed to have conceded the items.
Rules 142(a), 149(b); Burris v. Commissioner, T.C. Memo. 2001-49.
                               - 3 -

     In 1994, petitioner’s father, Joe Scott (Mr. Scott),

suffered a stroke.   Around the same period, Mr. Scott’s wife had

a heart attack and was placed into a nursing home.   As a result

of the stroke, Mr. Scott had memory loss and required in-home

care and supervision.   Mr. Scott moved in with petitioner.

Petitioner purchased Mr. Scott’s medication and eventually placed

Mr. Scott in a full-care facility.

     Petitioner’s brother, James Ivey (Mr. Ivey), moved from New

York to Florida, as Mr. Ivey had financial problems.   Mr. Ivey

resided in an apartment paid for by petitioner, and petitioner

paid for some of Mr. Ivey’s food.

     During the period at issue, petitioner purportedly owned and

managed residential properties.   The four properties were (1) a

house at 409 Washington Avenue, Lake Wales, Florida (Washington);

(2) a condominium at 3440 Park Place, Tampa, Florida (Park

Place); (3) a house at 83 Douglas Way, Frostproof, Florida

(Douglas Way); and (4) an unknown structure at 62 Marshall Lane,

Frostproof, Florida (Marshall Lane).

     On her 1996 Federal income tax return, petitioner claimed a

dependency exemption deduction for Mr. Scott and deducted

$18,0052 of medical expenses related to Mr. Scott.   On her 1997




     2
          Petitioner deducted $19,337 less $1,332 (7.5 percent of
adjusted gross income). Sec. 213(a).
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Federal income tax return, petitioner claimed a dependency

exemption deduction for Mr. Ivey.

     For 1997,3 petitioner reported income from rents of $3,720

for the Washington property, $3,000 for the Douglas Way property,

and $1,800 for the Marshall Lane property.   Petitioner did not

report income for the Park Place property.   Petitioner deducted

the following relevant amounts for her various properties for tax

years 1996 and 1997 on Schedules E:

         Property             1996             1997

     Washington:
       Repairs               $2,200           $2,150
       Taxes                    800            4,400
       Utilities                480              ---
       Pest control             ---            1,100
       Yard work                ---              480

     Park Place:
       Rental expenses        5,380            2,381

     Douglas Way:
       Repairs                  650              600
       Legal                  1,000              ---
       Auto                     ---              857
       Interest                 ---            3,900
       Pest control             ---              400
       Yard work                ---            1,000




     3
          The first page of petitioner’s 1996 Federal income tax
return indicates that petitioner reported a net loss of $6,337 on
Schedule E, Supplemental Income and Loss. However, the record
does not contain the Schedule E.
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        Property               1996             1997

     Marshall Lane:
       Repairs                $2,000           $1,000
       Auto                      ---              857
       Interest                  ---            4,500
       Taxes                     ---            4,000
       Yard work                 ---              380


     On February 3, 2000, respondent mailed by certified mail a

notice of deficiency regarding tax years 1996 and 1997.    In his

notice, respondent disallowed the dependency exemption deductions

on the basis that petitioner failed to establish that she

provided more than one-half of the support for each claimed

dependent.   Respondent also disallowed the deduction for medical

expenses based upon a failure to substantiate the expenses.

     Respondent also disallowed all of the above-listed expenses

for 1996 for all of the properties.    Respondent allowed interest

expenses of $6,795 for the Douglas Way property and $3,737 for

the Marshall Lane property.   Petitioner did not claim these

interest deductions on her 1996 Federal income tax return.

     As for 1997, respondent disallowed all of the above-listed

expenses for the Washington and Park Place properties.

Respondent disallowed $514 of the auto expense and the remaining

above-listed expenses for the Douglas Way property.     Respondent

also disallowed $514 of auto expenses, $3,284 of taxes, and the

remaining above-listed expenses for the Marshall Lane property.

Respondent allowed an additional interest deduction of $1,070 for
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the Douglas Way property and an additional insurance deduction of

$250 for the Marshall Lane property.

     As to the Park Place property, respondent argues that

petitioner did not own or manage the property in 1996 and 1997.

As to the other properties, respondent contends that petitioner

did not substantiate the remaining deductions.

Discussion

     1. Dependency Exemption Deductions

     A taxpayer is permitted to claim as a deduction an exemption

amount for certain dependents.    Sec. 151(a), (c)(1).   A

taxpayer’s father and brother qualify as dependents so long as

the taxpayer provided more than half of the support to each

dependent.   Sec. 152(a)(3) and (4); sec. 1.152-1(a)(1), Income

Tax Regs.

     The level of support is determined by the support test, in

which the total amount of support from all sources is compared

with the amount of support actually provided by a taxpayer.    The

taxpayer must initially demonstrate, by competent evidence, the

total amount of the support furnished by all sources for the

taxable years at issue.    Turay v. Commissioner, T.C. Memo. 1999-

315; Keegan v. Commissioner, T.C. Memo. 1997-511; sec. 1.152-

1(a)(2)(i), Income Tax Regs.   If the total amount of support is

not established, then it is generally not possible to conclude

that the taxpayer provided more than half of the support to the
                                 - 7 -

claimed dependent.     Blanco v. Commissioner, 56 T.C. 512, 514-515

(1971); Batson v. Commissioner, T.C. Memo. 2000-172; Butler v.

Commissioner, T.C. Memo. 1998-355; Smith v. Commissioner, T.C.

Memo. 1997-544.

     While petitioner provided some aid to her father and

brother, we cannot conclude that petitioner provided more than

one-half of the support for either of them.    We are unsure as to

the total amount of support her father and brother received from

all sources.   The record is also silent as to the amount of

support each received from petitioner.    Therefore, respondent’s

determination is sustained.

     2. Medical Expenses

     A taxpayer may deduct expenses incurred for medical and

dental expenses of a dependent (as defined in section 152) to the

extent that the expenses exceed 7.5 percent of the taxpayer’s

adjusted gross income.     Sec. 213(a).

     Petitioner deducted medical expenses of $18,005 relating to

the medical care of her father.     For the reasons set forth above,

petitioner’s father does not qualify as her dependent pursuant to

section 152.   Petitioner is not entitled to deduct her father’s

medical expenses.    Even if petitioner’s father qualified as a

dependent, petitioner failed to satisfy the substantiation

requirements of section 1.213-1(h), Income Tax Regs.

Accordingly, we sustain respondent’s determination.
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     3. Schedule E Deductions

     Section 212 provides a deduction for all ordinary and

necessary expenses paid or incurred with respect to management,

conservation, and maintenance of property held for production of

income, including real property.   Sec. 1.212-1(h), Income Tax

Regs.

     A taxpayer is required to maintain records sufficient to

establish the amount of his income and deductions.   Sec. 6001;

sec. 1.6001-1(a), (e), Income Tax Regs.   A taxpayer must

substantiate his deductions by maintaining sufficient books and

records to be entitled to a deduction under section 212.

     When a taxpayer establishes that he has incurred a

deductible expense, but is unable to substantiate the exact

amount, we are, in some circumstances, permitted to estimate the

deductible amount.    Cohan v. Commissioner, 39 F.2d 540, 543-544

(2d Cir. 1930).   We can estimate the amount of the deductible

expense only when the taxpayer provides evidence sufficient to

establish a rational basis upon which the estimate can be made.

Vanicek v. Commissioner, 85 T.C. 731, 743 (1985).

     The record is void of adequate receipts, records, or other

evidence that would provide a rational basis upon which an

estimate could be made.   Therefore, petitioner is not entitled to

deductions in excess of the amounts permitted by respondent.
                                - 9 -

     4. Accuracy-Related Penalty

     Respondent determined that petitioner is liable for

accuracy-related penalties under section 6662(a) for 1996 and

1997.   The accuracy-related penalty is 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.        Sec.

6662(c).   “Disregard” consists of any careless, reckless, or

intentional disregard.   Id.

     An exception applies to the accuracy-related penalty when

the taxpayer demonstrates (1) there was reasonable cause for the

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

respect to such 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.      Section

1.6664-4(b)(1), Income Tax Regs., specifically provides:

“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,
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including the experience, knowledge, and education of the

taxpayer.”    Neely v. Commissioner, 85 T.C. 934 (1985).

     It is the taxpayer’s responsibility to establish that he is

not liable for the accuracy-related penalty imposed by section

6662(a).     Rule 142(a); Tweeddale v. Commissioner, 92 T.C. 501,

505 (1989).

     On the basis of the entire record, we conclude petitioner

has not established that the underpayment was due to reasonable

cause or that petitioner acted in good faith.   Accordingly, we

hold petitioner is liable for the accuracy-related penalties.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                          Decision will be entered

                                     for respondent.
