Dorothy E. Woodard, Petitioner

ADM .

RECORDED

SERVICE

:' JUDGE T .C . Summary Opinion 2QO8-4 5

UNITED STATES TAX COUR T

DOROTHY E . WOODARD, Pet'tioner v . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket No . 13006-06S .

iled April 29, 2008 .

Dorothy E . Woodard, pro se .

Carrie L . Kleiman, for responden t CHABOT, Judge : This case was heard pursuant to sectio n 7463 .1 The decision to be entered is n t reviewable by any othe r court, and this opinion shall not be treated as a precedent fo r any other case . Sec . 7463(b) .

section references are to If 1986 as in effect for 63, which is as in effect he petition in the instan t

SERVED APR 2 9 2008

2 - Respondent determined a deficiency in Federal individual income tax and an accuracy-related penalty under section 66622 against petitioner for 2003 in the respective amounts of $12,470 and $2,494 .

The issues for decision are :

(1) Whether petitioner is entitled to any deduction for-- (a) Medical and dental expenses ; (b) employee business expenses ; and (c) charitable contributions ; and, if so, then in what amounts ; an d (2) whether petitioner is liable for an accuracy- related penalty and, if so, then in what amount .

Backgroun d The stipulations and the stipulated exhibits are incorporated herein by this reference .

When the petition in the instant case was filed, petitioner resided in Pennsylvania .

During 2003 petitioner worked as a registered nurse for 11 different health care providers--3 in Philadelphia, Pennsylvania, 2 in Sparks, Maryland, and 1 in each of the followin g

Pennsylvania cities--Plymouth Meeting, L fayette Hill, Wyndmoor, Bensalem, Darby, and Chalfont . In 2003 etitioner resided in Lansdowne, Pennsylvania .

Petitioner was paid (and reported) n aggregate of $79,089 as wages and salaries for her services as a registered nurse,' from which Federal income tax of $4,393 was withheld .

Petitioner's 2003 adjusted gross i come was $79,424, consisting of $79,089 of wages and sala y, $15 of interest, and a $320 State and local income tax refund .

Table 1 shows the amounts petition r claimed on the Schedule A, Itemized Deductions, attached to her 2003 Form 1040, U .S .

Individual Income Tax Return .

Table 1 Medical and dental expenses 26,400 5,95 7 Less : 7 .5-percent floor Deduction $20,443 State and local income taxes 4,152 Charitable contribution s (cash or check) 17,000 Unreimbursed employee expenses $18,50 0

Less : 2-percent floor Deduction 16,912 Total itemized deductions 58,50 7 1,58 8 Respondent disallowed the entire $58,507 of claimed itemized deductions, and instead allowed the $4,750 standard deduction .'

Petitioner has not kept receipts relevant to her taxes since she started working in 1965 .

In 2003 petitioner paid medical and dental expenses . Her 2003 medical and dental expenses that were not compensated for by insurance or otherwise did not exceed $5,957 .

In 2003 petitioner paid expenses in connection with her trade or business as an employee performing services as a registered nurse . See supra note 3 . Her 2003 employee business expenses did not exceed $1,588 .

In 2003 petitioner made charitable contributions . Her 2003 charitable contributions did not exceed $598 . See supra note 4 .

Petitioner's 2003 tax return did not adequately disclose the relevant facts affecting the tax treatment of any of th e disallowed deductions . Petitioner did not have reasonable cause for the positions she took on her 2003 tax return .

' Because the standard deduction of $4,750 exceeds petitioner's claimed $4,152 deduction for State and local income taxes, respondent disallowed all of petitioner's itemized deductions and allowed the standard deduction . However, respondent does not dispute the $4,152 deduction, which would be taken into account if we were to conclude that more than $598 of the disputed deductions (after any appropriate "floors") are allowable .

Discussio n I .

Itemized Deduction s A .

In Genera l In general, the Commissioner's dete minations as to matters of fact in the notice of deficiency are resumed to be correct, and the taxpayers have the burden of pr ving otherwise . See Rule 142(a) ;5 Welch v . Helvering , 290 U .S . 11 , 115 (1933) .

Petitioner has not contended that secti n 7491 applies so as to shift the burden of proof ; on the recor in the instant case, if such a contention had been made, then w would have concluded that the requirements of section 7491(a (2) have not been met, and so the burden of proof would not ha e been shifted .

We will consider first the medical expenses, then the employee business expenses, and then th charitable contributions .

B .

Medical Expense s Petitioner is entitled to deduct er medical expenses, but only "to the extent that such expenses exceed 7 .5 percent of [her] adjusted gross income ." Sec . 21 (a) .

On her 2003 tax return, petitione claimed $26,400 of medical and dental expenses, subtracte $5,957 (7 .5 percent of $79,424 adjusted gross income), and cl imed the remaining $20,44 3

as an itemized deduction . Respondent disallowed the entire $26,400 . Because of the 7 .5-percent "floor", petitioner is not entitled to a deduction for her medical expenses unless (and only to the extent that) those 2003 expenses exceed $5,957 .

Petitioner, did not attempt to explain how she arrived at the $26,400 amount she claimed on her 2003 tax return for medical and dental expenses . Petitioner testified that she underwent major surgery in Philadelphia, Pennsylvania, in 2003 and that "the hospital bill was in excess of a hundred-thousand dollars, which the State paid ." She also testified that after the hospitalization she "could not go to work for six months ."

Apparently, some significant part of her medical expenses were incurred (and paid?) during those 6 months .

Petitioner did not present bills or receipts . Petitioner testified to some desultory efforts to communicate with certain of her medical care providers, but she never followed through to obtain a bill or receipt from any of them . On several occasions she stated that she probably could have gotten records fro m various people but did not do so because "I could probably go to * * * and get those, but what are we talking about, a couple of hundred dollars", and "I can get that, but that is not going to bring me up to where I need to be ."

7 - Petitioner testified "in 2003 and 2 04, I had a lot of medical expenses", but she did not attem t to explain how muc h related to 2003 and how much to 2004 .

As a result of the foregoing, we conclude that in 2003 petitioner paid some expenses for her m dical care (within th e meaning of section 213(d)), but it is re likely than not tha t the total of her payments not compensat d for by insurance or otherwise did not exceed $5,957, the 7 . -percent "floor" . We have so found . As a result, she is not entitled to any 200 3 medical and expense deduction .

We hold for respondent on this iss C .

Employee Business Expenses Petitioner is entitled to deduct h r unreimbursed employe e business expenses (see supra note 3), b t only to the extent the y exceed 2 percent of her adjusted gross income .

See secs . 162(a) , 62(a)(1), 67 . (None of petitioner's o her claimed itemize d deductions fall within the definition miscellaneous itemize d deductions that are subject to the 2-p rcent "floor", and so the entire 2 percent reduces petitioner's therwise deductibl e employee business expenses .

) On her 2003 tax return petitioner claimed $18,500 o f unreimbursed employee expenses, subtra ted $1,588 (2 percent of $79,424 adjusted gross income), and cl imed the remaining $16,912 as an itemized deduction .

Petitioner did not attempt to explain how she arrived at the $18,500 amount she claimed on her 2003 tax return for unreimbursed employee expenses . On her tax return she wrote "Nursing shoes, uniforms, small equipment to perform nursing job" . Petitioner did not present bills or receipts .

Petitioner testified to having bought the following items that she used in her work as a registered nurse : Computer, printer, fax, nursing shoes, uniforms, stethoscopes, and an automated external defibrillator .

Nothing in the record suggests that petitioner has complied with the strict substantiation requirements of section 274 as to the property subject to that section . We do not have anything in the record that would allow us to make an educated estimate as to depreciation deductions for any of the capital assets tha t petitioner referred to . We believe that petitioner had some nursing uniform expenses and some professional liability insurance expenses, and that petitioner would not have been reimbursed for those expenses if she had asked any of her 2003 employers to do so .

As a result of the foregoing we conclude that in 2003 petitioner paid some expenses that qualify as deductible business expenses, but it is more likely than not that the total of her payments that would not have been reimbursed by her employers did not exceed $1,588, the 2-percent "floor" . Compare Lucas v .

Commissioner , 79 T .C . 1, 6-7 (1982) (whe e the record showed the taxpayer would have been reimbursed) wit Jetty v . Commissioner , T .C . Memo . 1982-378 (where the record sh wed the taxpayer would not have been reimbursed) . We have so f und . As a result, she is not entitled to any 2003 employee business expense deductions .

We hold for respondent on this issue .

D .

Charitable Contribution s Petitioner is entitled to deduct her charitable contributions . See sec . 170(a) .

On her 2003 tax return petitioner laimed $17,000 of charitable contributions, all shown on chedule A line 15, "Gifts by cash or check ." Next to the $17,000 amount on her Schedule A, petitioner wrote "Church tithes differe t Churches--Cash eac h Sunday" . Respondent disallowed the entire $17,000 . As a result of our determinations that petitioner i not entitled to deduct her medical expenses and her employee b siness expenses , petitioner's itemized deductions will exceed the standard deduction that respondent allowed only if we hold that petitioner's deductible charitable cont ibution deductions exceed $598 . See supra note 4 .

Petitioner did not attempt to expl in how she arrived at the $17,000 amount she claimed for charitab e contributions on her 2003 tax return .

Petitioner initially testified that she attended "any kind of [her denomination's] churches that I could find * * * [and contributed] 10 percent of what I earned that week . " Petitioner then testified that she gave "a thousand dollars up here under the table because of a drug and alcohol place that was opening up on 17th and Montgomery in Philadelphia ." The asserted donee organization ("Nextus") did not give to petitioner a written acknowledgment of the asserted $1,000 contribution .

See sec . 170(f)(8) (requiring in general that no charitable contribution deduction is allowable "for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization") . It does not appear from the record herein that any exception to this general rule applies in the instant case . Accordingly, even if we were persuaded that petitioner did make the $1,000 contribution to Nextus in 2003 and all the other requirements for a deduction had been met, the statute would prohibit allowance of a deduction for this asserted $1,000 contribution .

When the Court noted that petitioner had testified to amounts aggregating far short of the $17,000 she claimed, petitioner testified : "Maybe I gave more than the 10 percent to the churches during 2003 . I am saying maybe . I am not going to say, yes, I did ."

When respondent pressed petitione r n the amount of her weekly contributions, noting that petiti per's claimed $17,000 in contributions would require her to have ontributed more tha n $300 a week in cash on hand, petitioner testified that her "home church is * * * in * * * South Carolina, which I send $500 a year to religiously ." Petitioner then testi f ied :

I go to various churches, and visit, that is my home church . An with $300 in my pocket, but I know work on Saturday night from 11 :00 at whatever church before I go hom is $110, yes, I will take that al o when I go home t o I don't walk around when I am leavin g o 7 :00, I will stop E to sleep, and if it g with me .

The following colloquy then took place :

Q [Ms . Kleinjan] So when you ID repared your return would you agree that was more of a estimate ?

guess or a n A [Petitioner] No, it wasn't guess or a n estimate . If I go back home and t whatever, I will probably be able it is $17,000 .

ink about things, or o come up with wh y We came away from the foregoing wi h the impression that petitioner's testimony was focused on p ausibility and not reality . We conclude that it is more 1 kely than not tha t petitioner's deductible charitable contributions did not excee d $598 . We have so found . As a result, her total itemize d deductions did not exceed the standard deduction that respondent allowed in the notice of deficiency .

We hold for respondent on this issue .

Decision will be entere d for respondent .

1. Unless indicated otherwise, all sections of the Internal Revenue Code the year in issue, except as to sec . 7 for proceedings commenced on the date case was filed .
2. At trial respondent's counsel clarified that the penalty is for substantial understatement of income tax and not for negligence or any other category to which sec . 6662 applies .
3. All but $7,500 of this aggregate was reported on Forms W- 2, Wage and Tax Statement . The remaining $7,500 was reported on a Form 1099-MISC, Miscellaneous Income, and was designate d thereon as "Nonemployee compensation" . Petitioner included this $7,500 in the amount she reported as " ages, salaries, tips, etc ." . She did not report this as business income, she did not claim "above-the-line" deductions, and she did not show a self- employment tax liability on her tax re urn . Respondent neither determined nor asserted that petitione had a self-employment tax liability in addition to her ch 1 tax liability . Both sides appear to treat this $7,500 as income rom petitioner's registered nurse services as an employ e ; we do so also, without further exploration .
5. Unless indicated otherwise, all Rule references are to the Tax Court Rules of Practice and Proced re .