             T.C. Summary Opinion 2007-183



                UNITED STATES TAX COURT



               MCLU BUAH, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent

               PETER BUAH, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket Nos. 10639-05S, 10640-05S.   Filed October 25, 2007.



McLu Buah, pro se in docket No. 10639-05S.

Peter Buah, pro se in docket No. 10640-05S.

Cleve Lisecki, for respondent.
                               - 2 -

     PANUTHOS, Chief Special Trial Judge:1    These consolidated

cases were heard pursuant to the provisions of section 74632 of

the Internal Revenue Code in effect when the petitions were

filed.   Pursuant to section 7463(b), the decisions to be entered

are not reviewable by any other court, and this opinion shall not

be treated as precedent for any other case.

     In a notice of deficiency, respondent determined

deficiencies in petitioner Peter Buah’s (Mr. Buah) 2002 and 2003

Federal income taxes of $2,284 and $817, respectively.    The issue

for decision is whether Mr. Buah is entitled to deductions

claimed on Schedule A, Itemized Deductions, in amounts greater

than that allowed by respondent for the years in issue.

     In a separate notice of deficiency, respondent determined

deficiencies in petitioner McLu Buah’s (Mrs. Buah) 2002 and 2003

Federal income taxes of $4,044 and $2,547, respectively.    The


     1
       After the death of Special Trial Judge Carleton D. Powell
on Aug. 23, 2007, the parties were directed to file, on or before
Oct. 2, 2007, a response consenting to the reassignment of these
cases or file a notice objecting to the reassignment together
with a motion for a new trial or a motion to supplement the
record, stating reasons in support of either motion. On Sept.
13, 2007, counsel for respondent filed a response in each case
consenting to the reassignment of these cases; however, no
responses were filed by petitioners. After allowing ample time
for responses to be filed by petitioners, the Chief Judge
reassigned these cases to Chief Special Trial Judge Peter J.
Panuthos, for disposition on the existing records.
     2
       Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                                - 3 -

issues for decision are whether Mrs. Buah is entitled to an

earned income credit, whether she qualifies as a head of

household, and whether she is entitled to a standard deduction

for the years in issue.

                             Background

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

The stipulations of facts and the attached exhibits, as well as

additional exhibits introduced at trial, are incorporated herein

by this reference.

     Petitioners resided in Woodbridge, Virginia, when the

petitions were filed.    Petitioners were married sometime before

2002 and remained married at the time of trial.     They have two

children, DB and GB.3

     During part or all of the years at issue, Mr. Buah worked

for Landmark Honda as a salesman and for National Delivery

Service as a newspaper deliveryman.     Mrs. Buah worked as a

hairdresser.    Petitioners purchased a house together in June

2003.    On a loan application dated June 13, 2003, petitioners

indicated they had been living together for the past 3 years.

     Although petitioners had previously filed joint Federal

income tax returns, they filed separate returns for 2002 and

2003.    On his 2002 return, Mr. Buah claimed itemized deductions



     3
       Because it appears the children are minors, the Court uses
only their initials.
                                - 4 -

of $28,954.   Respondent disallowed $17,706 of that amount,

consisting of medical and dental expenses, cash and noncash

contributions, and unreimbursed employee business expenses.   In

2003, Mr. Buah claimed itemized deductions of $27,182.

Respondent disallowed $5,406 of that amount, consisting of cash

contributions and unreimbursed employee business expenses.

     Mrs. Buah filed her 2002 and 2003 tax returns as “head of

household” and claimed an earned income credit and a standard

deduction for each year.   In the notice of deficiency, respondent

changed Mrs. Buah’s filing status to married filing separately

and disallowed the earned income credit and standard deduction

for each year.4

     Petitioners each filed a timely petition for review with the

Court.   Mr. Buah’s case was assigned docket No. 10640-05S.   Mrs.

Buah’s case was assigned docket No. 10639-05S.   By Order of the

Court dated October 31, 2005, we consolidated the cases for

trial, briefing, and opinion.

                            Discussion

     In general, the Commissioner’s determinations set forth in a

notice of deficiency are presumed correct, and the taxpayer bears



     4
       Respondent also increased Mrs. Buah’s child tax credit
from zero to $498 in 2002 and from zero to $633 in 2003 but
reduced the additional child tax credit from $350 to zero in 2002
and from $189 to zero in 2003. Mrs. Buah has not disputed these
adjustments, and therefore we do not address them further. See
Barnes v. Commissioner, T.C. Memo. 2007-141 n.2.
                                - 5 -

the burden of showing that the determinations are in error.      Rule

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

and credits are a matter of legislative grace, and the taxpayer

bears the burden of proving entitlement to any deduction or

credit claimed on a return.    See INDOPCO, Inc. v. Commissioner,

503 U.S. 79 (1992); Wilson v. Commissioner, T.C. Memo. 2001-139.

We are not required to accept a taxpayer’s unsubstantiated

testimony that he is entitled to a deduction or credit.    See

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

Commissioner, T.C. Memo. 2006-47.

      Pursuant to section 7491(a), the burden of proof as to

factual matters shifts to the Commissioner under certain

circumstances.    Petitioners have neither alleged that section

7491(a) applies nor established their compliance with the

requirements of section 7491(a)(2)(A) and (B) to substantiate

items, maintain records, and cooperate fully with respondent’s

reasonable requests.    Petitioners therefore bear the burden of

proof.

I.   Mr. Buah--Docket No. 10640-05S

      A.   Medical and Dental Expenses

      Under section 213(a), medical and dental expenses paid and

not compensated for by insurance or otherwise are deductible to

the extent they exceed 7.5 percent of adjusted gross income

(AGI).
                                - 6 -

     Before applying the 7.5-percent AGI limitation, Mr. Buah

reported $14,520 of medical and dental expenses in 2002.

Respondent allowed $3,982 of that amount and disallowed the

remainder.   Copies of medical bills and related documents

indicate that the value of medical services received in 2002

greatly exceeded $3,982.    However, Mr. Buah acknowledges that

insurance paid a portion of the medical expenses.    For example,

one document indicates that insurance paid $2,242 of the cost of

medical services performed in June 2002 while Mr. Buah was

responsible only for the remaining $502.    Mr. Buah has not

demonstrated that the expenses not compensated for by insurance

exceed the amount that respondent allowed.    Accordingly,

respondent’s determination on this issue is sustained.5

     B.   Contributions

     In general, section 170(a) allows as a deduction any

charitable contribution made within the taxable year.     Mr. Buah

claimed a deduction for cash and noncash contributions of $5,100

in 2002 and $4,665 in 2003.    Respondent disallowed $3,618 for

2002 and $2,100 for 2003.    The only corroborating evidence that

Mr. Buah introduced are statements from Love International Church

indicating he made contributions of $544 in 2002 and $1,565 in


     5
        Since we have sustained   respondent’s determination on
this issue, we need not address   whether Mr. Buah can claim
deductions for medical expenses   of his wife and children given
that petitioners filed separate   returns and Mrs. Buah claimed the
children as dependents.
                                 - 7 -

2003.     Because the amounts shown on the statements do not exceed

the amounts that respondent allowed, respondent’s determinations

on this issue are sustained.

     C.     Unreimbursed Employee Business Expenses

     In general, a taxpayer may deduct ordinary and necessary

expenses paid or incurred in connection with the operation of a

trade or business.     Sec. 162(a); Boyd v. Commissioner, 122 T.C.

305, 313 (2004).     A trade or business includes the trade or

business of being an employee.     O’Malley v. Commissioner, 91 T.C.

352, 363-364 (1988).     For such expenses to be deductible, the

taxpayer must not have the right to obtain reimbursement from his

employer.     See Orvis v. Commissioner, 788 F.2d 1406, 1408 (9th

Cir. 1986), affg. T.C. Memo. 1984-533.

     Mr. Buah claimed a $9,400 deduction in 2002 and a $11,150

deduction in 2003.     Respondent disallowed $3,550 for 2002 and

$3,306 for 2003.     The claimed deductions appear to consist

primarily of mileage expenses that Mr. Buah contends he incurred

delivering newspapers for National Delivery Service.

     Mr. Buah’s testimony on this issue was vague and confusing.

It is not clear whether National Delivery Service reimbursed Mr.

Buah for his expenses.     Nor is it clear whether Mr. Buah reported

the income he received from National Delivery Service.     For

example, on his 2002 return Mr. Buah reported total wages of

$29,826.     Except for a tax refund, he reported no other sources
                               - 8 -

of income in 2002.   A payroll statement from Mr. Buah’s other

employer, Landmark Honda, indicates he earned $28,686 in 2002.

The difference between the wages reported on the return and the

amount received from Landmark Honda is $1,140.    Mr. Buah did not

explain why he would incur $9,400 of mileage expense for a job

that paid him only $1,140.

     We also note that passenger automobiles are “listed

property” under section 280F(d)(4)(A)(i).    Thus, the claimed

mileage expenses are subject to the heightened substantiation

requirements of section 274(d).   See Romer v. Commissioner, T.C.

Memo. 2001-168.   Mr. Buah must substantiate by adequate records

or by sufficient evidence corroborating his own testimony the

amount of the expense, the time and place of the use, and the

business purpose of the use.   Sec. 274(d); sec. 1.274-5T(b),

Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).

     Although Mr. Buah introduced mileage logs, their reliability

is suspect.   It is unclear when the logs were made, and several

entries have been whited out and replaced with other numbers.

Mr. Buah introduced a notarized statement that is somewhat

difficult to read, but which appears to state that Mr. Buah “do

(510) five hundred & ten miles weekly for his routing schedule.

That is, 85 miles per day.   Thanks.”   The statement is not on

National Delivery Service letterhead, the signature is illegible,

and there is no contact information listed.    We do not find this
                                  - 9 -

statement to be credible evidence that Mr. Buah incurred the

mileage expenses he claimed.      Respondent’s determinations on this

issue are sustained.

II.   Mrs. Buah--Docket No. 10639-05S

      A.   Earned Income Credit

      Section 32(a) generally provides eligible individuals with

an earned income credit against their income tax liability.      An

“eligible individual” is defined as any individual who has a

“qualifying child”.    Sec. 32(c)(1)(A)(i).   A qualifying child

includes a son or daughter of the taxpayer, sec.

32(c)(3)(B)(i)(I), who has the “same principal place of abode as

the taxpayer for more than one-half of such taxable year”, sec.

32(c)(3)(A)(ii).

      Section 32(d) provides, however, that “In the case of an

individual who is married (within the meaning of section 7703),

this section shall apply only if a joint return is filed for the

taxable year under section 6013.”     An individual legally

separated from his spouse under a decree of divorce or separate

maintenance shall not be considered as married.     Sec. 7703(a)(2).

In addition, section 7703(b) provides that an individual who is

married shall not be considered as married if four requirements

are satisfied:    (1) The individual files separately; (2) the

individual maintains as his home a household which constitutes

for more than one-half of the taxable year the principal place of
                              - 10 -

abode of a child who is the tax dependent of such individual; (3)

the individual furnishes over one-half the cost of maintaining

such household during the taxable year; and (4) for the last 6

months of the taxable year, the individual’s spouse is not a

member of such household.

     Petitioners did not file a joint return for either year and

were not legally separated under a decree of divorce or separate

maintenance.   Petitioners assert, however, that they were living

apart and that the children lived with Mrs. Buah, thereby

satisfying the requirements of section 7703(b).    Respondent

contends that petitioners lived together during the years at

issue.   In the alternative, respondent asserts that even if

petitioners lived apart and Mrs. Buah maintained a household that

was the children’s principal place of abode, Mrs. Buah did not

furnish over one-half of the cost of maintaining the household.

     Petitioners testified they lived apart in 2002 and 2003 and

had separate mailing addresses.   As we indicated at trial,

however, we do not find petitioners’ testimony on this issue to

be credible.   Petitioners failed to explain why they would

purchase a home together if they were separated.    The signed loan

application, which indicates that petitioners were in fact living

together, further undercuts petitioners’ position.    In addition,

Mr. Buah conceded that although petitioners had separate mailing
                                 - 11 -

addresses, Mrs. Buah had bank statements and other correspondence

sent to Mr. Buah’s Post Office box.

     Petitioners also testified that, during the time they

purportedly were living apart, Mrs. Buah lived with a friend and

Mr. Buah lived at another location.       Petitioners did not call

either person as a witness.     We infer that such testimony would

not have been favorable to petitioners.       See Wichita Terminal

Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162

F.2d 513 (10th Cir. 1947); Arnold v. Commissioner, T.C. Memo.

2007-168.

     Petitioners have failed to prove that Mr. Buah was not a

member of Mrs. Buah’s household for the last 6 months of 2002 or

2003.     Accordingly, Mrs. Buah is not entitled to the earned

income credit for the years in issue.       We need not address

respondent’s alternative position that Mrs. Buah did not furnish

over one-half of the cost of maintaining the household.

     B.     Head of Household Filing Status

     Section 1(b) imposes a special income tax rate on a taxpayer

filing as head of household.     To qualify as a head of a

household, a taxpayer must be unmarried at the end of the taxable

year.     Sec. 2(b)(1).   As is relevant here, a taxpayer’s marital

status is determined under section 7703(b).       See sec. 2(c).   For

the reasons discussed above, we find that Mrs. Buah was married

at the end of the years in issue.     Therefore, she is not entitled
                                - 12 -

to head of household filing status.      Respondent’s determinations

on this issue are sustained.

     C.   Standard Deduction

     Mrs. Buah claimed a standard deduction for each year which

respondent disallowed because Mr. Buah claimed itemized

deductions.   If married individuals file separately and one

spouse itemizes deductions, then the other spouse is not entitled

to the standard deduction.     See sec. 63(c)(6)(A); Cotton v.

Commissioner, T.C. Memo. 2000-333.       Respondent’s determinations

on this issue are sustained.

     To reflect the foregoing,


                                      Decisions will be entered

                                 for respondent.
