                  T.C. Summary Opinion 2002-21



                     UNITED STATES TAX COURT



                MATTHEW K. MORGAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12419-99S.             Filed March 11, 2002.



     Matthew K. Morgan, pro se.

     Sylvia L. Shaughnessy, for respondent.



     WOLFE, 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

effect for the year in issue, and all Rule references are to the
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Tax Court Rules of Practice and Procedure.

     Respondent determined a deficiency of $3,210 in petitioner’s

1997 Federal income tax.   After concessions by petitioner,1 the

sole issue for decision is whether petitioner is entitled to a

dependency exemption deduction for his mother.

     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

Perris, California, when the petition was filed.

     During 1997 petitioner was a full-time employee of San Diego


     1
      Petitioner concedes the disallowance of the following
deductions claimed on his Schedule C, Profit or Loss From
Business, concerning his internet service business: (1) Car and
truck expenses of $6,655, (2) meals and entertainment expenses of
$780 ($1,560 before taking into account the 50-percent reduction
in the deductibility of such expenses under sec. 274(n)), and (3)
cellular telephone and other expenses of $2,913.
     Petitioner concedes the disallowance of his deduction of
$7,376 ($8,000 before taking into account the 2-percent floor on
miscellaneous itemized deductions under sec. 67) for legal
expenses on his Schedule A, Itemized Deductions. As a result of
respondent’s adjustment, petitioner’s itemized deductions were
reduced to amounts that totaled less than the standard deduction
for 1997. Consequently, petitioner’s tax liability was
determined by respondent using the standard deduction, and
petitioner does not dispute use of the standard deduction.
     Petitioner concedes that he did not report a taxable
distribution of $1,400 from his individual retirement account
held at the Union Bank of California. He also concedes that he
is liable for the 10-percent additional tax on such distribution
pursuant to sec. 72(t).
     Petitioner’s liability for self-employment tax is a
computational matter and is resolved by petitioner’s concessions
set forth above.
                                 - 3 -

Gas & Electric Co.   He reported wages of $44,799 on his 1997

Federal income tax return.    Petitioner’s mother, Narvella W.

Morgan (Mrs. Morgan), suffered from various kidney and heart

ailments and required dialysis treatments and heart medications

for at least 2 years before her death in 1998.    During 1997 Mrs.

Morgan received $8,820 of Social Security benefits, consisting of

$8,310 of pension for 1997 and $510 repayment for 1993.    She also

received Medicare benefits, which petitioner testified were less

than $200 per month.    In January 1997, petitioner moved in with

Mrs. Morgan, who previously had been living by herself.    In

October 1997, petitioner married and moved out of Mrs. Morgan’s

apartment.   During the year in issue, petitioner never paid any

part of Mrs. Morgan’s apartment rent of approximately $450 per

month.

     On his 1997 Federal income tax return, petitioner claimed

Mrs. Morgan as a dependent.    His tax return indicated that he

lived with Mrs. Morgan during all 12 months of 1997.    Respondent

disallowed the claimed dependency exemption deduction.

     Income tax deductions are a matter of legislative grace, and

the taxpayer bears the burden of clearly showing the right to the

claimed deduction.     INDOPCO, Inc. v. Commissioner, 503 U.S. 79,

84 (1992).   Taxpayers are required to maintain records sufficient

to substantiate their claimed deductions.    Sec. 6001; sec.

1.6001-1(a), Income Tax Regs.    Petitioner bears the burden of
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showing error in respondent’s determinations contained in the

notice of deficiency.2   Rule 142(a); Welch v. Helvering, 290 U.S.

111, 115 (1933).

     Section 151(c)(1) allows taxpayers to deduct an exemption

amount for each dependent as defined in section 152.    Under

section 152(a), the term “dependent” means certain individuals

over half of whose support was received from the taxpayer during

the calendar year for which such individuals are claimed as

dependents.   Eligible individuals who may be claimed as

dependents include, among others, the mother of the taxpayer.

Sec. 152(a)(4).

     Section 151(c)(1) further provides, as a condition for the

dependency exemption, that the gross income of the dependent for

the taxable year must be less than the exemption amount for that

year, unless the claimed dependent is a child of the taxpayer

under the age of 19 (24 if the child is a student).    The

exemption amount for 1997 is $2,650.   Rev. Proc. 96-59, 1996-2

     2
      The Internal Revenue Service Restructuring and Reform Act
of 1998, Pub. L. 105-206, sec. 3001, 112 Stat. 685, 726, added
sec. 7491, which shifts the burden of proof to the Secretary in
certain circumstances. Sec. 7491 is applicable to court
proceedings arising in connection with examinations commenced
after July 22, 1998. Petitioner does not contend that sec. 7491
is applicable to him. Accordingly, the burden of proof is on
petitioner to show that respondent’s determinations are
erroneous. See Tamms v. Commissioner, T.C. Memo. 2001-201 (and
cases cited therein). In any event, the application of sec. 7491
is precluded by petitioner’s failure to comply with the
substantiation requirements of the Internal Revenue Code. See
secs. 7491(a)(2)(A), 6001.
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C.B. 392, 395.   For purposes of section 151(c), gross income does

not include the amount of Social Security benefits excluded from

gross income under section 86(a).    See Carter v. Commissioner,

T.C. Memo. 1998-243, affd. without published opinion 187 F.3d 640

(8th Cir. 1999).   However, in determining the total amount

contributed for the claimed dependent’s support, and determining

whether a taxpayer contributed more than half the support of

another, amounts of support paid by Social Security benefits are

considered.   See id.; sec. 1.152-1(a)(2)(ii), Income Tax Regs.

Medicare benefits are not considered in determining the total

amount contributed for the claimed dependent’s support.     Turecamo

v. Commissioner, 64 T.C. 720 (1975), affd. 554 F.2d 564 (2d Cir.

1977).

     Because Social Security benefits are included in the

computation of total support, petitioner, at a minimum, must show

that during 1997 he contributed more than $8,310 toward the

support of Mrs. Morgan.   Additionally, petitioner must show the

total amount of her support furnished by all sources for the

year.    Blanco v. Commissioner, 56 T.C. 512, 514 (1971); Jeter v.

Commissioner, T.C. Memo. 2001-223, affd. per curiam without

published opinion ___ F.3d ___ (4th Cir., Feb. 6, 2002); sec.

1.152-1(a)(2)(i), Income Tax Regs.     The term “support” includes,

among other things, food, shelter, clothing, and medical care.

Sec. 1.152-1(a)(2)(i), Income Tax Regs.    The amount of total
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support may reasonably be inferred from competent evidence.

Blanco v. Commissioner, supra at 514-515.      However, if the amount

of total support is not established, and cannot reasonably be

inferred from competent evidence, then it is not possible to

conclude that the taxpayer contributed more than one-half.      Id.;

Jeter v. Commissioner, supra.

     There is little doubt that petitioner provided for the

support of Mrs. Morgan during the year in issue.     The extent of

the support, however, is far from clear.     Petitioner estimated

that he spent $850 per month supporting Mrs. Morgan.     He

testified that he paid for her general living expenses, including

her utilities, food, and clothing.      However, petitioner provided

supporting documentation for only minimal expenditures for the

support of his mother during 1997.      Petitioner argues that his

reported wages of $44,799 for 1997 show that he had enough income

to provide for more than half of Mrs. Morgan’s support during

1997.   While this may be true, there is insufficient evidence to

establish how much of petitioner’s income actually was spent on

supporting his mother.   Petitioner had business and personal

obligations, and he had a brother who may have contributed to

Mrs. Morgan’s support even though petitioner claims that the

brother had significant other family obligations.

     Petitioner offered insufficient evidence to establish either

the total amount of Mrs. Morgan’s support or his own
                               - 7 -

contributions toward her support.   He explained that

documentation pertaining to his mother had been put in storage

when she died and that “It’s just too much stuff to go through.”

We are unable reasonably to infer the required information from

the evidence presented.   Without other competent evidence, we

cannot determine that petitioner provided more than half of Mrs.

Morgan’s overall support.   Petitioner is asking us to make a

guess that he provided more than half his mother’s support during

1997 on the basis of his unsupported self-serving testimony and

very little more.   We cannot make a decision based on such a

guess.   Accordingly, we hold that petitioner is not entitled to a

dependency exemption deduction for Mrs. Morgan, and respondent’s

determination in this regard is sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                            Decision will be entered

                                       for respondent.
