                  T.C. Summary Opinion 2007-113



                      UNITED STATES TAX COURT



                MICHAEL J. ROVELL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18728-05S.             Filed July 2, 2007.



     Michael J. Rovell, pro se.

     Julie A. Jebe, 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.   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.   Unless otherwise indicated, subsequent

section references are to the Internal Revenue Code in effect for
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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 for the year 2001 in the amount of $22,502.42.      The

issues for decision are whether petitioner is entitled to a

deduction for State and local taxes paid in the year in issue,

and whether petitioner is entitled to deductions for other

miscellaneous business expenses and tax preparation fees in 2001.

                           Background

     The stipulation of facts and the attached exhibits are

incorporated herein by reference.   At the time the petition was

filed, petitioner resided in Chicago, Illinois.

     Petitioner is a criminal defense attorney based out of

Chicago, Illinois, with clients in several States.   Petitioner

filed his Federal income tax return for 2001 listing the

following deductions on Schedule A, Itemized Deductions:

     State and local income taxes                    $19,400
     Gifts by cash or check                              250
     Tax preparation fees                             12,721
     Other miscellaneous deductions
          (books, seminar expenses, dues)             5,750
     Other business expenses
          (entertainment & promotion)                 4,600

     On July 7, 2005, respondent mailed petitioner a notice of

deficiency, disallowing all of the deductions listed on

petitioner’s Schedule A, with the exception of the deduction

claimed of $250 in Gifts by Cash or Check.
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     Part of the exhibits received into evidence is photocopies

of four canceled checks, each in the amount of $2,000, all

drafted on an account labeled, “The Law Offices of Michael J.

Rovell, Chtd. - Office Account #1”, and all made payable to the

Illinois Department of Revenue.   The Court also received at trial

two letters sent to petitioner by his attorney, Michael Moss (Mr.

Moss), for legal services rendered between May 10 and December

31, 2001.

     At the conclusion of the trial, the Court ordered that the

record in this case be held open so that petitioner could submit

additional documents substantiating the other miscellaneous and

business expense deductions listed on the Schedule A.   In

response to this order, petitioner submitted photocopies of three

canceled checks in the amounts of $7,000, $4,000, and $1,600, all

drafted on an account labeled, The Law Offices of Michael J.

Rovell, Chtd. - Office Account #1, and all made payable to

Michael Moss.   These checks were dated 2/20/01, 6/26/01, and

7/13/01.    These three checks were the only documents petitioner

submitted to the Court before the record was closed on August 23,

2006.

                             Discussion

     The determinations of the Commissioner in a notice of

deficiency are presumed correct, and the burden is on the

taxpayer to prove that the determinations are in error.   Rule
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142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).   Section

7491 shifts the burden of proof to the Commissioner if the

taxpayer introduces credible evidence with respect to any factual

issue relevant to ascertaining a tax liability, provided the

taxpayer has maintained books and records, and has cooperated

with reasonable requests by the Commissioner for witnesses,

information, documents, meetings, and interviews.   Based on our

review of the entire record in this case, we are convinced that

the burden has not shifted to respondent on any issue before the

Court.

     Taxpayers are permitted deductions only as a matter of

legislative grace, and only as specifically provided by statute.

INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New

Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).     In

addition, section 6001 places upon the taxpayer the requirement

to maintain records sufficient to sustain the veracity of

taxpayer’s income and expenses.

     After taking into account petitioner’s concession,1 our

decision rests on whether petitioner has presented the Court with

evidence sufficient to support the deductions disallowed by

respondent for the year in issue.



     1
       At trial, petitioner conceded that of the $19,400
deduction for State and local taxes at issue in this case, $7,400
of that amount was actually for Federal taxes, leaving only
$12,000 of the original amount in dispute at issue.
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     First, as to the issue of State and local taxes paid, we are

persuaded from our review of the entire record before us that the

$8,000 in canceled checks submitted at trial was paid to the

State of Illinois for personal taxes owed by petitioner and not

for those owed by his business.   We find petitioner’s testimony

credible that these checks were for State and local income taxes

personally owed to the State of Illinois.   We are further

convinced by the check registry submitted at trial that the

checks at issue were, in fact, paid for personal State income

taxes owed.   We believe petitioner’s testimony that his law

practice was not operating as a corporation during the year in

issue and that these checks were not paid for any State or local

taxes on its behalf.   Finally, we note that the State and local

tax deduction at issue was claimed only on petitioner’s Schedule

A and not his Schedule C, Profit or Loss From Business, where

taxes paid for his business would be deducted.   Accordingly, we

hold that petitioner is entitled to an itemized deduction in the

amount of $8,000 for State and local taxes paid in 2001.

     With respect to petitioner’s deduction for tax preparation

fees, at trial, petitioner explained that these expenses were

primarily for legal services.   Although petitioner did submit two

letters from Mr. Moss listing the nature of the services provided

to petitioner, it is unclear, both from the letters and from

petitioner’s testimony what portion of these services was
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rendered with respect to petitioner’s income tax issues and

petitioner’s personal life (i.e., divorce proceeding).    Moreover,

Mr. Moss’s letters are likewise ambiguous as to what portion of

the legal services at issue was rendered strictly for

petitioner’s income tax problems.   Therefore, because it is

impossible to determine the nature of these legal services, and

due to petitioner’s failure to provide additional information

with respect to the nature of these services after the Court

ordered the record to be held open for that purpose, we sustain

respondent with respect to the disallowance of petitioner’s

deduction for tax preparation fees.

     Third, and with respect to the deduction taken for

petitioner’s other miscellaneous business expenses for

entertaining clients and promoting his legal practice, petitioner

failed to provide the Court with any documentation or, for that

matter, credible testimony as to the nature and type of these

expenses.   Section 274(a) provides that no deduction will be

allowed for items considered entertainment unless the taxpayer

establishes that the item was related to the active conduct of

the taxpayer’s trade or business.   Sec. 274(a)(1).   Moreover,

section 274(d)(2) requires that the taxpayer substantiate

entertainment expenses by showing adequate records or providing

sufficient evidence corroborating the taxpayer’s own statement.

In this case, petitioner’s testimony that he maintains a national
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law practice courting high-profile clients who need to be “wined

and dined” is insufficient evidence to substantiate the amount he

claims.   Accordingly, we sustain respondent’s disallowance of

petitioner’s other miscellaneous deductions.

     Finally, with regard to the disallowance of other expenses

for books, fees, seminars, and dues in the amount of $5,700,

petitioner has failed to offer any evidence with regard to these

expenses; therefore, we sustain respondent’s total disallowance.

     Based on the foregoing,


                                       Decision will be entered

                                   under Rule 155.
