                        T.C. Memo. 2010-108



                      UNITED STATES TAX COURT



            JOSE J. & MARY D. RAMIREZ, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 24262-08.               Filed May 17, 2010.



     Jose J. & Mary D. Ramirez, pro sese.

     Aely K. Ullrich, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:   Respondent determined a deficiency of $9,995

in petitioners’ Federal income tax for 2007 and an accuracy-

related penalty of $1,999 under section 6662.   The issues for

decision are whether petitioners are entitled to claimed capital

loss deductions and deductions on Schedule A, Itemized

Deductions, and whether they are liable for the penalty.      All
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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.

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioners resided in California at the time that they filed

their petition.

     During 2007, petitioner Jose J. Ramirez was employed as a

lineman for Southern California Edison Co., and petitioner Mary

D. Ramirez was employed as a care provider.   They received

combined wage income of $147,159 during 2007.

     On their Federal income tax return for 2007, petitioners

claimed a long-term capital loss carryover of $8,000 and a short-

term capital loss of $393; $3,000 was deducted on their return.

They claimed Schedule A deductions totaling $53,649.   Respondent

disallowed for lack of substantiation $14,463 in employee

expenses, $2,615 in charitable contributions, and $33,977 in

medical expenses.   Petitioners failed to maintain or produce

records to substantiate the deductions.

                              OPINION

     This case was set for trial with 5 months’ notice.   Along

with the notice setting case for trial was the Court’s standing

pretrial order, which, among other things, required the parties
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to stipulate in accordance with Rule 91 and to exchange documents

that they intended to use at trial at least 14 days before the

first day of the trial session.   The only documents petitioners

produced in a timely manner were attached to the stipulation.

Petitioners presented purported receipts for noncash

contributions that did not list or provide detailed information

about the items contributed, medical information related to their

daughter that did not identify actual medical expenses during

2007, a purchase contract for a 2006 Toyota Sequoia, a “mileage

log” that appeared to reflect primarily nondeductible commuting

expenses, and a 2009 bill for cellular telephone service.

     At the time of trial, petitioners could not explain the

amounts claimed on the tax return and in dispute in this case.

They presented no testimony about medical expenses or any

business use of the 2006 Toyota or business mileage reflected in

the log.   Petitioners claim to have relied on their paid return

preparer, who advised them not to send their substantiating

documents to respondent.

     Mr. Ramirez testified that he deducted the base amount of

his monthly cell phone expenses because he was required by his

employer to carry a cell phone.   He claimed that cash

contributions were deducted from his paycheck, but he did not

have any records to substantiate that claim.   Otherwise he

testified that he gave the information to the return preparer.
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He acknowledged that he may have made a mistake in depending on

someone whom he did not know and following her advice instead of

complying with the Court’s standing pretrial order.

     Petitioners are required to keep records and have the burden

of proving that they are entitled to deductions.    See, e.g.,

Rockwell v. Commissioner, 512 F.2d 882, 886 (9th Cir. 1975),

affg. T.C. Memo. 1972-133.   Although the burden of proof may

sometimes shift to the Commissioner under section 7491(a), it has

not done so here because of the absence of substantiation, the

failure to maintain records or to cooperate with reasonable

requests for information, and the absence of credible testimony

with respect to the specific factual issues in dispute.

     Petitioners have not complied with the requirements

applicable to deductions of charitable contributions under

section 170(f)(16) and (17), relating to contributions of

household items and recordkeeping for monetary contributions.

They have not complied with the requirements of section 274(d)

with respect to business use of their passenger automobile or

cellular telephone.   See sec. 280F(d)(4).   They have totally

failed to prove the amounts claimed and disallowed as capital

losses on their return and on their Schedule A.    We cannot

conclude that they are entitled to any of the deductions in

dispute.
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     Respondent has the burden of going forward with respect to

the accuracy-related penalty under section 6662(a), applicable

to, among other things, underpayments attributable to negligence

or disregard of rules or regulations.    See sec. 7491(c).   The

evidence of erroneous deductions in this case satisfies

respondent’s burden.   Upon due consideration of the entire

record,


                                        Decision will be entered

                                 for respondent.
