                  T.C. Summary Opinion 2011-30



                     UNITED STATES TAX COURT



                EDWINA S. ETCHINSON, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4110-08S.             Filed March 16, 2011.



     Edwina S. Etchinson, pro se.

     Brianna B. Taylor and Brent Wieand (student), for

respondent.



     CARLUZZO, Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463.1   Pursuant to section



     1
      Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, in effect for the
relevant period. Rule references are to the Tax Court Rules of
Practice and Procedure.
                                 - 2 -

7463(b), the decision to be entered is not reviewable by any

other court, and this opinion shall not be treated as precedent

for any other case.

     In a notice of deficiency dated November 15, 2007,

respondent determined deficiencies in petitioner’s income taxes

and penalties as follows:

                                             Penalty
                 Year       Deficiency     Sec. 6662(a)

                 2004         $3,518            --
                 2005          5,232         $1,034.80
                 2006          8,803          1,760.60

     After concessions, the issues for decision are as follows:

(1) Whether petitioner is entitled to certain itemized deductions

in amounts greater than respondent allowed for each year in

issue; (2) whether petitioner is entitled to a moving expense

deduction for 2005; (3) whether petitioner is entitled to a

dependency exemption deduction for her mother for 2006; (4)

whether petitioner qualifies as a head of household for 2006; and

(5) whether petitioner is liable for section 6662(a) accuracy-

related penalties for 2005 and 2006.

                              Background

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

the time the petition was filed, petitioner resided in Georgia.

     From 1994 until April 2005 petitioner lived in an apartment

in California.   At all times relevant here, she was employed by

Federal Express.   In April 2005 she moved from her apartment in
                                 - 3 -

California into her mother’s home in Georgia to care for her

mother, who was suffering from an undisclosed illness.

Petitioner’s mother owned the house, subject to a mortgage.    The

mortgage payments were about $700 per month, some of which

petitioner might have made while she was living there.    At the

time, petitioner’s mother was receiving approximately $700 to

$900 in monthly Social Security benefits.

     While she was living with her mother, some of petitioner’s

personal belongings were stored at a commercial storage facility.

The storage facility was burglarized in December 2005, and some

of petitioner’s property was stolen as a result.

     In May 2006 petitioner purchased a house in Georgia and

moved from her mother’s house.    She paid mortgage interest

totaling $6,961 that year.

     Petitioner’s 2004, 2005, and 2006 Federal income tax

returns, each prepared by a paid income tax return preparer, were

timely filed.

     As relevant here, on her 2004 return petitioner claimed

itemized deductions totaling $21,276, including:    (1)

Unreimbursed employee business expenses of $9,856;2 (2)

charitable contributions of $2,895, consisting of $1,300 in cash




     2
      Amounts shown as unreimbursed employee business expenses
are before the reduction required by sec. 67.
                               - 4 -

donations and $1,595 in property donations; and (3) a $6,652

deduction for home mortgage interest.

     As relevant here, on her 2005 return petitioner claimed an

$11,000 moving expense deduction and itemized deductions of

$19,177, including:   (1) Unreimbursed employee business expenses

of $7,988; (2) charitable contributions of $2,700 consisting of

$1,200 in cash donations and $1,500 in property donations; and

(3) a $6,587 deduction for home mortgage interest.

     As relevant here, on her 2006 return petitioner claimed head

of household filing status, claimed a dependency exemption

deduction for her mother, and claimed itemized deductions of

$52,829, including:   (1) Unreimbursed employee business expenses

of $10,951; (2) charitable contributions of $7,600 consisting of

$4,400 in cash donations and $3,200 in property donations; and

(3) a $29,226 deduction for home mortgage interest.

     For 2004 respondent disallowed all of the itemized

deductions listed above, with the exception of $400 for

charitable contributions.   For 2005 respondent disallowed the

$11,000 moving expense deduction, and in effect, all of the

itemized deductions listed above.   For 2006 respondent:   (1)

Disallowed the dependency exemption deduction claimed for

petitioner’s mother; (2) changed petitioner’s filing status from

head of household to single; (3) disallowed all but $6,961 of the

mortgage interest expense deduction; (4) disallowed the entire
                                - 5 -

deduction claimed for unreimbursed employee business expenses;

and (5) disallowed a portion of the deduction for charitable

contributions.3   For 2005 and 2006 respondent imposed a section

6662(a) accuracy-related penalty upon the ground that the

underpayment of tax required to be shown on petitioner’s return

for each of those years is attributable to a substantial

understatement of income tax.

                            Discussion

I. Disputed Deductions

     As we have observed in countless opinions, deductions are a

matter of legislative grace, and the taxpayer bears the burden of

proof to establish entitlement to any claimed deduction.4   Rule

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

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

This burden requires the taxpayer to substantiate deductions

claimed by keeping and producing adequate records that enable the

Commissioner to determine the taxpayer’s correct tax liability.

Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 90 (1975), affd.

per curiam 540 F.2d 821 (5th Cir. 1976); Meneguzzo v.

Commissioner, 43 T.C. 824, 831-832 (1965).



     3
      Because of an inconsistency in the notice of deficiency,
the amount respondent allowed/disallowed as a charitable
contribution deduction for 2006 is unclear.
     4
      Petitioner does not claim that the provisions of sec.
7491(a) are applicable, and we proceed as though they are not.
                                - 6 -

     Petitioner has failed to produce any substantiating

documents to support any of the deductions here in dispute.

According to petitioner, her records were stolen from a storage

facility in December 2005.    In situations where the taxpayer’s

records are unavailable through no fault of the taxpayer, the

Court expects the taxpayer to make some attempt to reconstruct

those records, especially when it is reasonable to assume that

third-party records exist, as, for example, for the amount of

mortgage interest paid.   Gizzi v. Commissioner, 65 T.C. 342,

345-346 (1975).

     Set against these fundamental principles, we turn our

attention first to the specific deductions here in dispute.

     A.   Moving Expense Deduction and Itemized Deductions

     If properly substantiated, and subject to certain conditions

and limitations, (1) moving expenses are deductible under section

217, (2) unreimbursed employee business expenses are deductible

under section 162(a), (3) charitable contributions are deductible

under section 170, and (4) home mortgage interest is deductible

under section 163(h)(2)(D).

     According to petitioner her tax records were stolen in

December 2005 from a storage unit, and she does not have any

substantiating documents for any of the deductions for any of the

years in issue.   Petitioner further claims that she provided her
                              - 7 -

tax records, including records to support the deductions claimed

on the returns, to her income tax return preparer, who relied on

those records to complete the return for each year here in issue.

     Petitioner’s explanation for her complete lack of records

based upon a theft that occurred in December of 2005 says nothing

at all about her lack of records for 2006 and otherwise leaves

some important questions unanswered for 2005.   Obviously, records

for 2006 would not have existed as of the date of the theft.

Furthermore, to the extent records for 2005 were available to her

return preparer when her 2005 return was prepared in 2006, those

records could not have been among the items stolen from her

storage unit in 2005.

     As it stands, the only evidence supporting the moving

expense deduction and the itemized deductions here in dispute

consists of the returns themselves, which in no way substantiate

any of the deductions claimed on them, and petitioner’s vague

testimony, which we are neither required nor inclined to accept.

See Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).

     All things considered, we find that petitioner is not

entitled to the moving expense deduction claimed on her 2005

return, and she is not entitled to itemized deductions in excess

of the amounts respondent already allowed for any item for any of

the years in issue.
                                - 8 -

     B. Dependency Exemption Deduction

     Petitioner claimed a dependency exemption deduction for her

mother for 2006.    Respondent disallowed the deduction.

     In general, a taxpayer is entitled to an additional

exemption deduction for each of the taxpayer’s dependents.      Sec.

151(a).   As applicable here, the term “dependent” includes a

taxpayer’s qualifying relative.    See sec. 152(a)(2).   In addition

to other requirements, an individual fits within the definition

of a taxpayer’s qualifying relative for any given year only if

the taxpayer provides over one-half of the individual’s support

during that year.    Sec. 152(d)(1)(C).

     In order to support a finding that she provided more than

one-half of her mother’s total support during 2006, petitioner

must establish:    (1) The total amount of support her mother

received from all sources during 2006; and, of that amount (2)

the amount petitioner provided.    The evidence petitioner offered

on these points is insufficient to establish either.

     Petitioner has failed to establish that her mother was her

qualifying relative for 2006.    It follows that petitioner is not

entitled to a dependency exemption deduction for her mother for

that year.   Respondent’s disallowance of that deduction is

sustained.
                               - 9 -

II. Filing Status

     The income tax liability shown on petitioner’s 2006 return

is computed as though petitioner qualifies as a head of household

for that year.   According to respondent, her proper filing status

for that year was as a single taxpayer.

     Section 1(b) provides a special income tax rate for an

individual who qualifies as a head of household.   As relevant

here and among other requirements, an unmarried individual “shall

be considered a head of a household” if that individual

“maintains a household which constitutes for such taxable year

the principal place of abode of the father or mother of the

taxpayer, if the taxpayer is entitled to a deduction for the

taxable year for such father or mother under section 151.”    Sec.

2(b)(1).

     Because petitioner is not entitled to a dependency exemption

deduction for her mother for 2006, she does not qualify as a head

of household for that year.   Respondent’s adjustments resulting

from the change of her filing status from head of household to

single are sustained.

III. Section 6662(a) Accuracy-Related Penalty

     Lastly, we consider whether petitioner is liable for section

6662(a) accuracy-related penalties.    For 2005 and 2006 respondent

has determined that she is.
                                - 10 -

     Section 6662(a) imposes an accuracy-related penalty of 20

percent of any portion of an underpayment of tax, if among other

reasons, the underpayment is attributable to a substantial

understatement of income tax.    Sec. 6662(b)(2), (d).   An

understatement of income tax is a substantial understatement of

income tax if it exceeds the greater of $5,000 or 10 percent of

the tax required to be shown on the taxpayer’s return.      Sec.

6662(d)(1)(A).   Ignoring conditions not relevant here, for

purposes of section 6662 an understatement is defined as the

excess of the amount of the tax required to be shown on the

taxpayer’s return over the amount of the tax which is shown on

the return.   Sec. 6662(d)(2)(A).    In this case the understatement

of income tax for each year is computed in the same manner as,

and is equal to, the deficiency as redetermined taking into

account the foregoing.    That amount will exceed $5,000.     See

secs. 6211, 6662(d)(2).

     Respondent bears the burden of production with respect to

the accuracy-related penalties.     See sec. 7491(c).   To meet this

burden of production, respondent must produce sufficient evidence

that it is appropriate to impose the accuracy-related penalties.

Once respondent has done so, the burden of proof is upon

petitioner.   See Higbee v. Commissioner, 116 T.C. 438, 449

(2001).   For 2005 and 2006 we have sustained respondent’s

adjustments that, as best we can tell, will give rise to an
                              - 11 -

underpayment that will exceed $5,000 for each of those years.

Consequently, respondent’s burden of production has been

satisfied.

     The section 6662(a) accuracy-related penalty does not apply

to any portion of an underpayment of tax if the taxpayer shows

reasonable cause for, and the taxpayer acted in good faith with

respect to, that portion.   See sec. 6664(c)(1); Higbee v.

Commissioner, supra at 446-447.   The determination of whether a

taxpayer acted in good faith 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 taxpayer bears the

burden of proving the existence of reasonable cause and that he

or she acted in good faith with respect to the underpayment.     See

Higbee v. Commissioner, supra at 449.   This petitioner has failed

to do.   Respondent’s imposition of the section 6662(a) accuracy-

related penalties for 2005 and 2006 is sustained.

     To reflect the foregoing,


                                         Decision will be entered

                                    under Rule 155.
