                        T.C. Summary Opinion 2009-69



                           UNITED STATES TAX COURT



            DANIEL K. MCAFEE AND MELISSA A. ALLEN, Petitioners v.
                 COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 15417-07S.              Filed May 11, 2009.



        Daniel K. McAfee and Melissa A. Allen, pro sese.

        Cindy L. Wofford, for respondent.



        LARO, Judge:    This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.1       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, section references are to the
applicable versions of the Internal Revenue Code, and Rule
references are to the Tax Court Rules of Practice and Procedure.
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      Petitioners petitioned the Court to redetermine respondent’s

determination of a $20,833 deficiency in petitioners’ 2002

Federal income tax and a $5,350.43 addition thereto for untimely

filing under section 6651(a)(1).    Following concessions, we

decide the following issues:

      1.   Whether petitioners may deduct $36,550 as a commission

expense.    We hold they may not;

      2.   whether petitioners are liable for the addition to tax.

We hold they are.

                             Background

      The parties have submitted to the Court a stipulation of

facts with accompanying exhibits.    The stipulated facts and

accompanying exhibits are incorporated herein by this reference.

      Petitioners are husband and wife, and they filed a joint

Form 1040, U.S. Individual Income Tax Return, for 2002 on

November 16, 2005.    They resided in Texas when their petition to

this Court was filed.

      Daniel K. McAfee (Mr. McAfee) is a self-employed consultant

on the health industry.    Petitioners claimed on their 2002 return

a deduction for a $36,550 commission paid by Mr. McAfee as an

expense of his consulting business.     Respondent disallowed this

deduction.

                             Discussion
I.   Deduction for Commission

      Petitioners bear the burden of proving that respondent’s

determinations set forth in the notice of deficiency are
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incorrect.    See Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111,

115 (1933).   Deductions are strictly a matter of legislative

grace, and petitioners must show that their claimed deductions

are allowed by the Code.    Petitioners also must keep sufficient

records to substantiate any deduction that would otherwise be

allowed by the Code.    See sec. 6001; New Colonial Ice Co. v.

Helvering, 292 U.S. 435, 440 (1934).    While section 7491(a)

sometimes shifts the burden of proof to the Commissioner, that

section is not applicable where, as here, petitioners have failed

to meet the recordkeeping and substantiation requirements of the

Code.   See sec. 7491(a)(2)(A) and (B).

      Section 162(a) allows a cash method taxpayer such as Mr.

McAfee to deduct any ordinary and necessary expense paid during

the taxable year in carrying on a business.    Petitioners assert

that Mr. McAfee paid an individual $36,550 as a commission

related to Mr. McAfee’s consulting business.    We decline to find

that assertion as a fact.   Petitioners have provided the Court

with no documentation for the expense, nor has either petitioner

clearly articulated the specifics of the expense.    We sustain

respondent’s disallowance of petitioners’ claim to the $36,550

deduction.

II.   Addition to Tax

      Respondent determined that petitioners are liable for an

addition to tax under section 6651(a)(1).    That section imposes

an addition to tax for failing to file a tax return when due

unless it is shown that such failure is due to reasonable cause
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and not due to willful neglect.     Respondent bears a burden of

production with respect to petitioners’ liability for such an

addition to tax.     See sec. 7491(c).    If that burden is met,

petitioners bear the burden of establishing that they exercised

ordinary business care and prudence and nevertheless were unable

to file their 2002 return timely.     See United States v. Boyle,

469 U.S. 241, 246 (1985); sec. 301.6651-1(c)(1), Proced. & Admin.

Regs; see also Higbee v. Commissioner, 116 T.C. 438, 446-448

(2001).

       Petitioners concede they filed their 2002 tax return late.

Respondent has therefore met his burden of production.

Petitioners argue that they acted reasonably in filing their

return late because, they assert, their accountant disappeared

with their records.     We decline to find that assertion as a fact.

We sustain respondent’s determination of an addition to tax under

section 6651(a)(1).

III.    Conclusion

       We have considered all of petitioners’ contentions and

allegations, and we conclude that those contentions and

allegations not discussed herein are without merit or irrelevant.

To reflect the foregoing,

                                              Decision will be entered
                                         under Rule 155.
