                  T.C. Summary Opinion 2004-25



                     UNITED STATES TAX COURT



                 ELMER J. HOPSON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 5678-03S.           Filed March 9, 2004.



     Elmer J. Hopson, pro se.

     Karen Nicholson Sommers, for respondent.



     GOLDBERG, 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
                              - 2 -

effect for the year in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.

     Respondent determined a deficiency in petitioner’s Federal

income tax of $3,815 for the taxable year 1999.

     The issues for decision are (1) whether petitioner is liable

for the alternative minimum tax (AMT) in the amount determined by

respondent, and (2) whether petitioner is (a) entitled to

deductions in addition to those claimed on his return, and/or (b)

entitled to recharacterize as business expense deductions any of

the itemized deductions that he claimed on his return.

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   Petitioner resided in San

Diego, California, on the date the petition was filed in this

case.

     Petitioner filed a Federal income tax return for taxable

year 1999 which was dated April 20, 2002.    On this return, he

reported wage and salary income of $69,432, and he claimed

itemized deductions totaling $56,531.    The itemized deductions he

claimed were for State and local taxes of $4,617, interest of

$441, charitable contributions of $5,924, employee business

expenses of $38,062, tax preparation fees of $100, and vehicle
                                  - 3 -

and boat depreciation of $8,776.1       Petitioner did not report

liability for the AMT in any amount.        In the notice of

deficiency, respondent’s sole adjustment was his determination

that petitioner was liable for AMT of $3,815.          Respondent did not

adjust any of petitioner’s claimed itemized deductions, nor did

respondent determine that any additions to tax or penalties were

applicable.

     The first issue for decision is whether petitioner is liable

for the AMT in the amount determined by respondent.              Petitioner

argues that respondent’s calculation of the AMT is in error, but

he does not single out any specific aspect of that calculation.

We have reviewed respondent’s calculation and conclude that it is

in accordance with the provisions of the Internal Revenue Code.

This calculation, and the underlying provisions of the Code, can

be summarized as follows:

     Taxable income reported by petitioner                           $10,151
     Miscellaneous itemized deductions claimed by petitioner          36,773
     Itemized deduction for taxes paid claimed by petitioner           4,617
     Exemption deduction claimed by petitioner                         2,750
     Alternative minimum taxable income under sec. 55(b)(2)1          54,291
     Exemption amount pursuant to sec. 55(d)(1)(B)                   (33,750)
     Taxable excess under sec. 55(b)(1)(A)(ii)                        20,541
     Tentative minimum tax under sec. 55(b)(1)(A)(i) (in this
           case equal to 26% of the taxable excess)                    5,341
     Regular tax under sec. 55(c)(1) as reported by petitioner        (1,526)
     AMT liability under sec. 55(a)                                    3,815
           1
             The adjustments to taxable income required in this case to
     calculate alternative minimum taxable income are found, respectively, in
     sec. 56(b)(1)(A)(i) and (ii) and (E).




     1
      The deductions for the employee business expenses and tax
preparation fees were reduced by $1,389 pursuant to the sec.
67(a) floor on miscellaneous itemized deductions.
                                - 4 -

We sustain respondent’s determination in the notice of

deficiency.

     The second issue for decision is whether petitioner is (a)

entitled to deductions in addition to those claimed on his

return, and/or (b) entitled to recharacterize as business expense

deductions any of the itemized deductions that he claimed on his

return.2   Petitioner argues that he is entitled to the changes

which he made to his filed return on a Form 1040X, Amended U.S.

Individual Tax Return.   Petitioner submitted this form to the IRS

in April 2003, following the issuance of the notice of deficiency

underlying this case.    On the form, petitioner claimed a variety

of changes to the information on his original return.    First, he

added a Schedule C, Profit or Loss From Business, on which he

claimed zero gross income and a loss of $28,379 for a business

named “Maritime Ventures” engaged in the business of “Antique

Dealer”.   Petitioner also decreased his claimed itemized

deductions by $11,328 to $45,203, due in whole or part to his

recharacterization of certain expenses--which he claimed on his

original return as itemized deductions--as business expenses on

the Schedule C.   Respondent has not accepted any amounts reported

by petitioner on the amended return.




     2
      The recharacterization of itemized deductions as business
expense deductions would change petitioner’s AMT liability under
sec. 55(a).
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     Under section 162(a), a taxpayer generally may deduct the

ordinary and necessary expenses paid or incurred during the

taxable year in carrying on his trade or business.    A taxpayer is

engaged in a trade or business if the taxpayer is involved in the

activity with continuity and regularity and with the primary

purpose of making a profit.   Commissioner v. Groetzinger, 480

U.S. 23, 35 (1987).

     A taxpayer must keep records sufficient to establish the

amounts of the items required to be shown on his Federal income

tax return.   Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.

In the event that a taxpayer establishes that a deductible

expense has been paid but is unable to substantiate the precise

amount, we generally may estimate the amount of the deductible

expense bearing heavily against the taxpayer whose inexactitude

in substantiating the amount of the expense is of his own making.

Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930).     We

cannot estimate a deductible expense, however, unless the

taxpayer presents evidence sufficient to provide some basis upon

which an estimate may be made.     Vanicek v. Commissioner, 85 T.C.

731, 743 (1985).

     In his opening statement at trial, petitioner argued that

the following is the nature of his Schedule C business:

     My antique shop association in Redwood City was with
     Antiques on Broadway. My association here was with the
     Trolley Shop Antiques in Lemon Grove in the mid 90s and at
     the present time on the Internet. My future plans of the
                               - 6 -

     business include use of a to-be-restored fire engine for
     rent or lease to movies, parties and promotions.

Petitioner’s testimony concerning the business can be summarized

as follows.   During the year at issue, petitioner’s business

consisted of a rented space in an antique market.   Petitioner

would open his retail space on one day each month in order to

conduct his business, but his merchandise was available at other

times for viewing and possibly sales by another merchant.

Petitioner has had no sales or other income from this business in

any year, aside from sales in 1999 which “wouldn’t have been over

$100”.

     Petitioner did not present the Court with any documentary

evidence concerning either the existence of the Schedule C

business or the nature or amount of the claimed expenses.    The

amounts reported on the amended return merely represent

petitioner’s assertions and are not evidence that petitioner was

engaged in any business or that he incurred any of the expenses.

The only evidence provided by petitioner concerning the Schedule

C business is his own self-serving, uncorroborated testimony,

which we do not accept as credible evidence that a bona fide

business existed or that he incurred the additional expenses.

Because petitioner has presented no substantiation of the

business or any of the expenses, we conclude that he is not

entitled to any additional deductions and that he is not entitled
                              - 7 -

to recharacterize any of the original deductions.    Sec. 6001;

sec. 1.6001-1(a), (e), Income Tax Regs.3

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                      Decision will be entered

                              for respondent.




     3
      In the absence of substantiation or credible evidence
regarding this issue, the burden of proof remains on petitioner
to show the existence of the business and his entitlement to the
deductions. Sec. 7491(a); Rule 142(a).
