                    T.C. Summary Opinion 2010-92



                        UNITED STATES TAX COURT



                PHILIP LESLIE HOLT, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 784-10S.                 Filed July 13, 2010.



     Philip Leslie Holt, pro se.

     Lynette Mayfield, for respondent.



     RUWE, Judge:     This case was heard pursuant to the provisions

of section 74631 of the Internal Revenue Code in effect when the

petition was filed.    Pursuant to section 7463(b), the decision to

be entered is not reviewable by any other court, and this opinion

shall not be treated as precedent for any other case.



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
                                - 2 -

     Respondent determined a $1,455 deficiency in petitioner’s

2007 Federal income tax.    The issue for decision is whether

petitioner underreported his income by $5,000 on his 2007 Federal

income tax return.

                            Background

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

The stipulation of facts, the supplemental stipulation of facts,

and the attached exhibits are incorporated herein by reference.

     At the time the petition was filed, petitioner resided in

Tennessee.

     After retiring from service as a pilot in the U.S. Air

Force, petitioner performed services as a pilot for Vol Air,

L.L.C. (Vol Air).    Pursuant to an oral agreement, petitioner

would receive $1,160 on the 1st and 15th of every month during

2007.    Of that amount, $100 was for reimbursement of petitioner’s

telephone bills and $220 was to cover petitioner’s health

insurance expense.

     During 2007 Vol Air paid petitioner $29,000 and sent him a

Form 1099-MISC, Miscellaneous Income, showing that $29,000 of

nonemployee compensation had been paid to him during 2007.2      On



     2
      A transaction detail report provided by Vol Air, along with
a list of checks provided by their parent company’s financial
reporting manager, show that petitioner received 25 checks, each
for $1,160, during 2007. Petitioner received an additional check
in 2007 because the final check from the prior year was actually
paid to petitioner in January 2007.
                               - 3 -

Schedule C, Profit or Loss From Business, attached to his 2007

Federal income tax return, petitioner reported only $24,000 of

that compensation and claimed $14,055 in business expense

deductions.

                            Discussion

     Generally, the Commissioner’s determinations in the notice

of deficiency are presumed correct, and the taxpayer bears the

burden of proving error in the Commissioner’s determinations.

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

section 7491(a), the burden of proof with respect to any factual

issue shifts to the Commissioner if the taxpayer introduces

credible evidence with respect to that issue.   Rule 142(a)(2).

Petitioner has neither claimed nor shown eligibility for a shift

in the burden of proof.

     Petitioner does not dispute that he received $29,000 from

Vol Air in 2007.   However, petitioner contends that $29,000 was

an incorrect measure of his gross income because it included

amounts that were intended as reimbursement for his telephone

bills and health insurance expense and that this justified his

decision to report the reduced amount of $24,000 as gross income.

     Section 61(a) defines gross income as “all income from

whatever source derived”.   Commissioner v. Glenshaw Glass Co.,

348 U.S. 426 (1955).   Petitioner was paid compensation in
                                 - 4 -

exchange for his services, and section 61(a)(1) requires that the

payments be included in determining his gross income.

      In determining a taxpayer’s adjusted gross income, and

ultimately his taxable income, any deductions that might be

available are subtracted from gross income only after gross

income has first been calculated.    Secs. 62(a), 63(a).     As a

result, petitioner was incorrect in reducing the amount of gross

income reported on his Schedule C.       Instead, any deductions that

might have been available to petitioner should have been claimed

in arriving at adjusted gross income or taxable income.       In this

respect, we note that petitioner deducted $14,055 in business

expenses on his Schedule C (including $1,839 for utilities), and

he also claimed on Schedule A, Itemized Deductions, a deduction

for medical expenses.

     We hold that petitioner underreported his gross income by

$5,000 on his 2007 Federal income tax return, and we sustain

respondent’s determination of a $1,455 deficiency.

     To reflect the foregoing,


                                              Decision will be entered

                                         for respondent.
