                            T.C. Memo. 2011-49



                          UNITED STATES TAX COURT



WILLIE ANDREW WHIPPLE, JR., AND MARY ANGELA WHIPPLE, Petitioners
         v. COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 30100-08.                  Filed March 1, 2011.



     Willie Andrew Whipple, Jr., and Mary Angela Whipple, pro

sese.

     Kristen I. Nygren, for respondent.



                MEMORANDUM FINDINGS OF FACT AND OPINION


        CHIECHI, Judge:    Respondent determined the following defi-

ciencies in, addition under section 6651(a)(1)1 to, and accuracy-



     1
      All section references are to the Internal Revenue Code
(Code) in effect for the years at issue. All Rule references are
to the Tax Court Rules of Practice and Procedure.
                                - 2 -

related penalties under section 6662(a) on petitioners’ Federal

income tax (tax):

                               Addition to Tax    Accuracy-Related
                                  Under Sec.           Penalty
      Year      Deficiency        6651(a)(1)     Under Sec. 6662(a)
      2004      $18,958.00            --              $3,791.60
      2005       32,345.15         $904.75             6,469.03
      2006       32,089.00            --               6,417.80
      2007      106,881.00            --              21,376.20

      We must decide whether we should sustain respondent’s

determinations in the notices of deficiency that respondent has

not conceded.   We hold that we should.

                           FINDINGS OF FACT

      Some of the facts have been stipulated by petitioner Willie

Andrew Whipple, Jr. (Mr. Whipple),2 and respondent and are so

found.

      At the time petitioners filed the petition in this case,

they resided in Georgia.

      On December 4, 2006, respondent received petitioners’ tax

return for their taxable year 2004 (2004 return).    Petitioners

included with the 2004 return Schedule C, Profit or Loss From

Business (Schedule C), for their taxable year 2004 (2004 Schedule

C).   In the 2004 Schedule C, petitioners claimed a loss of



      2
      Respondent filed a motion to dismiss for lack of prosecu-
tion as to petitioner Mary Angela Whipple (Ms. Whipple). We
shall grant that motion and shall enter the same decision with
respect to Ms. Whipple that we shall enter with respect to Mr.
Whipple.
                               - 3 -

$55,419.   In calculating that 2004 Schedule C loss, petitioners

claimed, inter alia, cost of goods sold of $6,622 and deprecia-

tion and section 179 expense of $39,115.    Petitioners also

included with the 2004 return Schedule E, Supplemental Income and

Loss (Schedule E), for their taxable year 2004 (2004 Schedule E).

In the 2004 Schedule E, petitioners claimed a total rental real

estate loss of $20,043.

     On November 29, 2006, respondent received via facsimile

petitioners’ tax return for their taxable year 2005 (2005 re-

turn).   Petitioners included with the 2005 return Schedule C for

their taxable year 2005 (2005 Schedule C).    In the 2005 Schedule

C, petitioners claimed a loss of $90,838.    In calculating that

2005 Schedule C loss, petitioners claimed, inter alia, cost of

goods sold of $16,444; expenses for commissions and fees of

$8,406, contract labor of $25,778, meals and entertainment of

$4,083, and travel of $6,776; and other expenses of $30,668.3

Petitioners also included with the 2005 return Schedule E for

their taxable year 2005 (2005 Schedule E).    In the 2005 Schedule

E, petitioners claimed a total rental real estate loss of $6,280.

     On April 17, 2007, petitioners filed electronically their

tax return for their taxable year 2006 (2006 return).    Petition-



     3
      The other expenses that petitioners claimed in the 2005
Schedule C consisted of vehicle fuel assistance for sales repre-
sentatives of $4,988 and telemarketing of $25,680.
                                - 4 -

ers included with the 2006 return Schedule C for their taxable

year 2006 (2006 Schedule C).    In the 2006 Schedule C, petitioners

claimed a loss of $94,459.    In calculating that 2006 Schedule C

loss, petitioners claimed, inter alia, cost of goods sold of

$49,536 and expenses for commissions and fees of $9,786, contract

labor of $22,643, meals and entertainment of $1,976, travel of

$13,255, and utilities of $7,291.    Petitioners also included with

the 2006 return Schedule E for their taxable year 2006 (2006

Schedule E).   In the 2006 Schedule E, petitioners claimed a total

rental real estate loss of $25,000.

     On April 15, 2008, petitioners filed electronically their

tax return for their taxable year 2007 (2007 return).    Petition-

ers included with the 2007 return Schedule C for their taxable

year 2007 (2007 Schedule C).    In the 2007 Schedule C, petitioners

claimed a loss of $266,996.    In calculating that 2007 Schedule C

loss, petitioners claimed, inter alia, cost of goods sold of

$66,912; expenses for car and truck of $27,340, commissions and

fees of $15,949, contract labor of $49,952, meals and entertain-

ment of $2,254, travel of $8,474, and utilities of $4,380; and

other expenses of $50,186.4    Petitioners also included with the

2007 return Schedule E for their taxable year 2007 (2007 Schedule




     4
      The other expenses that petitioners claimed in the 2007
Schedule C consisted of telemarketing of $45,654 and unidentified
expenses of $4,532.
                                  - 5 -

E).   In the 2007 Schedule E, petitioners claimed a total rental

real estate loss of $41,557.

      Respondent issued to petitioners a notice of deficiency for

their taxable years 2004, 2005, and 2006 and a notice of defi-

ciency for their taxable year 2007 (collectively, notices).           In

those notices, respondent determined to disallow the costs of

goods sold that petitioners claimed in the 2004 Schedule C, the

2005 Schedule C, the 2006 Schedule C, and the 2007 Schedule C of

$6,622, $16,444, $49,536 and $66,912, respectively.           Respondent

also determined in the notices to disallow the following expenses

that petitioners claimed in those respective Schedules C:

        Claimed           2004         2005         2006          2007
  Expense Disallowed   Schedule C   Schedule C   Schedule C    Schedule C
Car and truck              --           --           --          $27,340
Depreciation and
   sec. 179 expense     $39,115           --         --           49,677
Commissions and
   fees                    --         $8,406       $9,786         15,949
Contract labor             --         25,778       22,643         49,952
Meals and
   entertainment           --          4,083        1,976          2,254
Travel                     --          6,776       13,255          8,474
Utilities                  --           --          7,291          4,380
Other expenses             --         30,668         --           50,186

      Respondent also determined in the notices that petitioners

are not entitled in calculating “total income” for their taxable

years 2004, 2005, 2006, and 2007, respectively, to the total

rental real estate losses that they claimed in the 2004 Schedule

E, the 2005 Schedule E, the 2006 Schedule E, and the 2007 Sched-

ule E of $20,043, $6,280, $25,000 and $41,557, respectively.
                                - 6 -

     Respondent further determined in the notices that petition-

ers have interest income for their taxable years 2006 and 2007 of

$182 and $94, respectively.

     Respondent also determined in the notices that petitioners

are subject to the additional tax under section 72(t) for early

withdrawals from certain qualified plans for their taxable years

2005, 2006, and 2007, respectively.

     In addition, respondent determined in the notices that

petitioners are liable for their taxable year 2005 for an addi-

tion to tax under section 6651(a)(1) and for their taxable years

2004, 2005, 2006, and 2007, respectively, for accuracy-related

penalties under section 6662(a).

                               OPINION

     Mr. Whipple bears the burden of proving that the determina-

tions in the notices that remain at issue are erroneous.5    See

Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

Moreover, deductions are a matter of legislative grace, and Mr.

Whipple bears the burden of proving entitlement to any deduction

claimed.    See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84

(1992).    The Code and the regulations thereunder required Mr.

Whipple to maintain records sufficient to establish the amount of



     5
      Mr. Whipple does not claim that the burden of proof shifts
to respondent under sec. 7491(a). On the record before us, we
conclude that the burden of proof does not shift to respondent
under that section. See id.
                                 - 7 -

any deduction claimed.   See sec. 6001; sec. 1.6001-1(a), Income

Tax Regs.

     Respondent bears the burden of production with respect to

the addition to tax under section 6651(a)(1) that respondent

determined for petitioners’ taxable year 2005 and the accuracy-

related penalty under section 6662(a) that respondent determined

for each of their taxable years 2004, 2005, 2006, and 2007.    See

sec. 7491(c).

     In support of his position that we should not sustain the

determinations in the notices that respondent has not conceded,

Mr. Whipple relies principally on his testimony.6   We found Mr.

Whipple’s testimony to be in certain material respects general,

vague, conclusory, uncorroborated, and self-serving.   We shall

not rely on the testimony of Mr. Whipple to establish his posi-

tion that we should not sustain the determinations in the notices

that respondent has not conceded.    See, e.g., Tokarski v. Commis-

sioner, 87 T.C. 74, 77 (1986).



     6
      Mr. Whipple also relies on certain documents of his that he
and respondent stipulated. Respondent made certain concessions
on the basis of some of those stipulated documents. However,
respondent declined to make any concessions on the basis of the
remaining stipulated documents of Mr. Whipple. We conclude that
those remaining stipulated documents do not establish Mr.
Whipple’s position with respect to any of the determinations in
the notices which remain at issue and to which those documents
appear to relate. Moreover, except for Mr. Whipple’s documents
that he and respondent stipulated, Mr. Whipple did not proffer
any documents at trial in support of his position with respect to
the determinations in the notices that remain at issue.
                              - 8 -

     Based upon our examination of the entire record before us,

we find that Mr. Whipple has failed to carry his burden of

establishing that we should not sustain respondent’s determina-

tions in the notices that respondent has not conceded.7

     We have considered all of Mr. Whipple’s contentions and

arguments that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.

     To reflect the foregoing and the concessions of respondent,


                                           Decision will be entered

                                      with respect to Mr. Whipple

                                      under Rule 155.8




     7
      On the record before us, we find that respondent has satis-
fied respondent’s burden of production with respect to the
addition to tax under sec. 6651(a)(1) for petitioners’ taxable
year 2005 and the accuracy-related penalty under sec. 6662(a) for
each of their taxable years 2004, 2005, 2006, and 2007.
     8
      See supra note 2.
