UNITED STATES TAX COURT

T.C.

emo. 2012-332

UNITED STATES TAX COURT

JOSEPH R. I OSLUNS, Petitioner v.

COMMISSIONER OF I TERNAL REVENUE, Respondent

Filed December 3, 2012.

Docket No. 13443-10.

Joseph R. Posluns, pro se.

William F. Castor, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

COHEN, Judge: Respondent determined a $5,994 deficiency and a

$1,198.80 section 6662(a) penalty r lating to petitioher's Federal income tax for

2007. A portion of the deficiency as based on self-employment tax, which

respondent conceded in the answer. The issues for decision are whether petitioner

20 DEC - 3 2012

-2[*2] adequately substantiated vehicle, travel, and "other" unreimbursed employee

business expenses and whether he is liable for the penalty. Unless otherwise

indicated, all section references are to the Internal Revenue Code for the year in

issue, and all Rule references are to the Tax Court Rules of Practice and

Procedure.

FINDINGS OF FACT

Petitioner resided in Arkansas when he filed his petition. During 2007, he

was employed by the University of Maryland University College (UMUC),

Graduate School of Management & Technology, Adelphi, Maryland, as an

associate professor, teaching online courses in the fields of Business & Executive

Programs. He was also employed by National-Louis University in Chicago,

Illinois.

UMUC's travel policy operative during 2007 stated the following:

I. Definitions

A. In-State Travel is defined as:

Travel within the State of Maryland or within the

Washington, DC Metropolitan Area and not

including an overnight stay.

[*3] B. Out-of-State Travel is defined as:

1. Travel to destinations that are outside the State

of Maryland and/or Me ropolitan Washington, DC; or

2. Travel that requires an overnight stay, even if

the overnight location is within the State of Maryland or

Metropolitan Washingt n, DC.

II. Approval

Travelers must obtain written approval from their supervisor for outof-state travel prior to initiatirig travel arrangements or commencing

the travel. Approval is necessary for out-of-state travel even if there

is no cost to UMUC. The UMUC Travel Form is to be utilized to

obtain this approval. The purÓose of the travel, regardless if in-state

or out-of-state, must be clearly identified on the UMUC Travel Form

for out-of-state travel and on the Expense Reimbursement Form for

all travel.

III. Reservations and Ticketi g

A. Travelers must use the UMUC designated travel

agency/coordinator for reservations andsticketing such as hotels, air,

train tickets and auto rentals. Travelers and the designated travel

agency/coordinator must ensure that all arrangements are at the least

expensive logical fare for the service using the most direct route (or

other reasonable routing that results in a lower fare). Travelers are

expected to make advance bopkings and.request .

governmental/educational discounts. Travelers must take advantage

of "back-to-back" airfares to ,et the best possible rate whenever

possible.

B. If travel plans change, UMUC will pay cancellation penalties

provided that the change was made for the convenience of UMUC or

necessitated by emergency circumstances. Some airlines will refund

purchase price of "non refundable" tickets if the change resulted from

-4[*4] an emergency situation. The employee (or unit) should contact

the travel agency/coordinator to pursue possibility of refunds

resulting from an emergency situation.

IV. Lodging Reimbursement

The cost of lodging will be reimbursed on the basis of receipts at the

single room rate. When choice of lodging facilities is available, the

traveler is expected to select a moderately priced hotel. Moderately

priced lodgings include Ramada Inn, Fairfield Inn, and Hampton Inn.

V. Meal Reimbursement

A. Domestic Travel

1. The traveler will be reimbursed at the per diem rates

established by the Board of Regents. A partial day's travel is

eligible for the appropriate meal(s) consumed when the travel time

encompasses four hours and the traveler is away from home or place

of work two hours before and two hours after the meal. The travel

must begin prior to 6 a.m. for breakfast or prior to 10 a.m.

for

lunch, and it must end after 8 p.m. for dinner.

2. With receipts, the out-of-state traveler may claim

reimbursement above the standard per diem rates when

circumstances necessitate high cost meals. The traveler may be

reimbursed up to actual cost with detailed receipts, when approved

by the supervisor as reasonable and necessary. In no case will the

amount reimbursed exceed $50 per day.

3. The traveler cannot claim the per diem reimbursement for

meals that are included in other travel arrangements such as meals

in flight or meals included in the conference registration fee.

-5[*5] 4. The traveler will be reimbursed for the actual cost of a

business related meal incurred on behalf of a non-state

employee. The traveler's meal will be reimbursed in accordance

with this travel policy.

5. The traveler will not be reimbursed for alcoholic beverages.

B. International Travel

1. The traveler will be r imbursed at actual cost with receipts .

or at the applicable U.S. Depar ment of State meal and incidental

(M&IE) rate without receipts, in accordance with the USM policy.

VI. Vehicles

A. UMUC Fleet Vehicles

1. The traveler must use a UMUC fleet vehicle whenever

possible. .

2. Whenever possible, the traveler must verify with the UMUC

fleet manager the availability of fleet vehicles.prior to renting a

car.

B. Personal Vehicles

1. All personal vehicles must be properly insured.

2. Mileage will be rein bursed at the Board of Regents'

approved rate for miles dri en which exceed the normal daily

commute miles. Mileage must be calculated using the most direct

route. Commuting mileage to the normal work site is not

reimbursable. No mileage ill be reimbursed for travel less than

five miles one.way_if origination or destination is a local University

of Maryland System site.

.

-6[*6] 3. Multiple travelers to one destination should carpool

whenever feasible.

4. Traveler should verify that personal vehicle usage is the

most economical mode of transportation.

C. Car Rentals

1. The traveler is expected to rent the least expensive car that

will accommodate the trip's requirements.

2. Rentals should be arranged through the UMUC designated

travel agency/coordinator.

3. Multiple travelers to one location should carpool whenever

feasible.

4. The traveler should not purchase additional insurance for a

car rental within the U.S. Insurance is provided by the State.

5. The traveler will be reimbursed for gas purchased at a gas

station with receipts. If feasible, the traveler should fill the

gasoline tank at a gas station prior to returning the car to the rental

agency.

VII. Travel with Spouses

Expenses incurred by spouses traveling in an unofficial capacity are

not reimbursable.

VIII. Miscellaneous Expenses

A. Parking Fees - Receipts should be requested for reimbursement

of garage or lot parking. Travelers to airports should take advantage

-7[*7] B. Taxi/Shuttle Service Re eipts should be requested for

reimbursement of taxi and airpbrt shuttle service.

C. Telephone Calls - Busin ss related telephone calls will be

reimbursed.

D. Laundry - The cost of laundry, cleaning and pressing is

reimbursable with receipts.

E. Gratuities - Moderate gratuities will be allowed for baggage

and/or when the traveler is trai sporting UMUC materials.

XI. Documentation required for Travel:

A. Airline/Rail Boarding Pass or detailed receipt;

B. Hotel itemized invoice/receipt

C. Car Rental Itemized Receipt; itemized gas station receipt if

filled prior to returning car to ental agency »

D. Meal-Itemized Receipt if asking for reimbursement of actual

expenses

E. Registration Form with confirmation of registration

F. Parking Fees - Receipts should be requested for reimbursement

of garage or lot parkmg

.

G. Taxi/Shuttle Service Receipts

H. Telephone Calls - Business related telephone calls will be

reimbursed; itemized invoice from hotel or phone provider required

I. Laundry - The cost of laundry, cleaning and pressing is

reimbursable with receipts

-8[*8] IX. Policy Exceptions

A. The respective Member of the Executive Committee must

approve exceptions to this Policy resulting in a claim larger than $500.

The Associate Vice President, Finance, may approve all other

exceptions.

During 2007, petitioner received reimbursements from UMUC totaling $1,248.17.

Although petitioner performed services for UMUC under the terms of several

appointment letters, none of the documents suggested that his employment related

to contracts with the U.S. Department of Defense or required travel to military

bases.

Petitioner prepared and filed a Form 1040, U.S. Individual Income Tax

Return, for 2007 as "married filing separately" and showing Quebec, Canada, as his

address. He reported wages from UMUC and from National-Louis University. On

Schedule C, Profit or Loss From Business, he identified his business as

"development of online educational programs and instructions" and claimed a loss

deduction of $45,101.34. Among the expenses claimed were $4,785 for vehicles,

$3,650.50 for travel, and $12,912 of "other expenses" as follows:

[*9]

Expense

Amount

Conferences

$1,652

Professional development

1,221

Research materials (books, wvev, mags, reports) 042

1,395

Computer software, simulations, Webinar participation 2,105

Revenue-enhancing presentations

1,650

Telephone, cable, Internet

1,940

Research and development (focus groups)

1,175

Shipping, postage (UPS, Fed Ex)

464

Registration of competitive online programs

1.310

Total

12,912

After his 2007 return was filed it was audited by the Internal Revenue

Service (IRS). During the course of the audit,.petitionér submitted a Form 1040X,

Amended U.S. Individual Income Tax Return, on which he claimed as employee

business expense deductions the same items previously claimed on Schedule C.

Thereafter, the IRS sent a notice of deficiency isallowing the amounts claimed for

vehicle expenses, travel, and "other expenses". Because the deficiency was

determined in relation to petitioner's original return, the notice determined selfemployment tax liability and allowed a deduction for one-half of the amount of that

tax.

Procedural Matters

Events occurring after the peti ion is filed and at trial ordinarily are not

included in the findings of fact. See Rule 151(e). In this case, however, certain

- 10 [*10] procedural matters are relevant to our determinations about the reliability of

the evidence.

The petition was filed June 14, 2010. By notice served August 13, 2010, the

case was set for trial in Little Rock, Arkansas, on January 10, 2011. Included with

the notice of trial was the Court's standing pretrial order, which included the

following provisions:

Stipulation. It is ORDERED that all facts shall be stipulated

(agreed upon in writing) to the maximum extent possible. All

documents and written evidence shall be marked and stipulated in

accordance with Rule 91(b), unless the evidence is to be used only to

impeach (discredit) a witness. Either party may preserve objections by

noting them in the stipulation. If a complete stipulation of facts is not

ready for submission at the start of the trial or when otherwise ordered

by the Court, and if the Court determines that this is due to lack of

cooperation by either party, the Court may order sanctions against the

uncooperative party.

Trial Exhibits. It is ORDERED that any documents or materials

which a party expects to use (except solely for impeachment) if the

case is tried, but which are not stipulated, shall be identified in writing

and exchanged by the parties at least 14 days before the first day of the

trial session. The Court may refuse to receive in evidence any

document or material that is not so stipulated or exchanged, unless the

parties have agreed otherwise or the Court so allows for good cause

shown.

Due to a weather-related delay in commencement of the session the case was

called and recalled twice on January 11, 2011, and recalled again on January 12,

2011. The parties had not executed a stipulation. Petitioner did not have a

- 11 [*11] log or other original receipts or substantiating documents, and he

explained that they were in Canada. He moved for a continuance to return to .

Canada "to retrieve the supporting d cuments requested by the IRS pursuant to

PETITIONER'S original tax for the year 2007." -Petitioner's motion was granted.

By notice served September 1 , 2011, accompanied by the Court's standing

pretrial order, the case was set for trial in Little Rock, Arkansas, on February 13,

2012. On November 29, 2011, respo ident served on petitioner a request for

production of documents asking for, mong other things:

A list of any business trips taken or conventions attended during

2007.

A description of the recórds maintained for travel and

transportation expenses for 2007.

For travel expense, copies of any and all records, including, but

not limited to, logs, diaries, n tebooks, receipts, cancelled checks, etc.,

reflecting: (1) the cost of each separate expense for travel, lodging,

and meals; (2) the dates you 1 ft and returned for each trip and the

number of days spent on busi ess; (3) the destination or area of travel

(name of the city, town, or other designation); and (4) the business

purpose for the expense or the business benefit gained or expected to

be gained.

For transportation expenses, copies of any and all records,

including, but not limited to, logs, diaries, notebooks, receipts,

cancelled checks, etc., reflecting: (1) the cost of each separate expense

(for car expenses, the cost of he car, the date you started using it

- 12 [*12] for business, the mileage for each business use, and the total

miles for the year); (2) the date of the expense; (3) your business

destination and (4) the business purpose for the expense.

Petitioner responded on December 29, 2011, objecting to the requests on several

grounds including that he had previously provided documents to the IRS, but

indicating that he intended to produce a travel log within the next 21 days.

Petitioner failed to produce any documents in accordance with the standing

pretrial order. During the week of February 6, 2012, petitioner told respondent's

counsel that he would not provide any documents prior to the trial date.

When the case was called on February 13, 2012, the parties still did not have

a stipulation. Petitioner stated that he had shown his original log to respondent's

counsel that morning. The case was recalled on February 14, at which time

petitioner had the log and purported summaries of the log, but no original receipts.

Petitioner then complained that respondent would not settle with him, asserting:

There's a document that the IRS Commissioner said that anybody who

goes after the IRS in Tax Court, we're going to try to get a minimum

of $3,000 from. It conforms to the fact, this is a test case to try and

water board me to concede. I offered to pay them, even though I don't

owe them nothing, zero. I have the documentation that I sent them

and I will show them, I owe them not a cent. But to say thank you for

letting me work in this country, I offered to pay them. This case could

- 13 [*13] Respondent's còunsel replied tl at the case had not settled because

substantiating documentation hãd hot been received and that there were questions

concerning the authenticity of the log.

The case was called for trial on February 15, 2012. At that time petitioner

asserted that respondent's counsel ha engaged in an inappropriate conversation

with the Court's deputy trial clerk the previous.day and that, when challenged, had

called in Court security officers to in imidate petitioner.

.

Before and during trial and rin 1 is^brief, petitioner asserted that he could not

identify students with whom he met during 2007 because of the Family Educational

Rights and Privacy Act of.1974, Púb L. No. 93-380, sec. 513, 88 Stat. at 571,

current version at 20 U.S.C. sec. 1232g (2006), or national security concerns., .

PINION

Preliminary Matters

r

In the petition and prior to trial, petitioner contended that the.notice of

deficiency is invalid because it was issued after he had submitted an amended

return recharacterizing the.disputed 040ehicle,

travel, and other expenses as employee

expenses rather than business expenses. Respondent has cited authorities holding .

contrary to petitioner's position, and petitioner has cited none supporting his

position. See Fayeghi v. Commissi ner, 211 F.3d 504, 507 (9th Cir. 2000), af_f'g.

- 14 [*14] T.C. Memo. 1998-297; Koch v. Alexander, 561 F.2d 1115, 1117 (4th Cir.

1977); Pace v. Commissioner, T.C. Memo. 2010-272; Colvin v. Commissioner, T.

C. Memo. 2004-67, aff'd, 122 Fed. Appx. 788 (5th Cir. 2005). The notice of

deficiency is valid.

Before the first trial date, petitioner filed a motion to shift the burden of

proof, citing section 7491. That motion was denied. In his posttrial brief,

petitioner implicitly contends that respondent must prove that his claimed

deductions are not permissible. Section 7491(a) shifts to the Commissioner the

burden of proof with respect to a factual issue only if the taxpayer introduces

credible evidence and has complied with substantiation requirements, has -

maintained required records, "and has cooperated with reasonable requests * * *

for witnesses, information, documents". Sec. 7491(a)(2)(B). Petitioner has not met

the conditions for shifting the burden of proof, and it remains with him. See Rule

142(a); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); Rockwell v.

Commissioner, 512 F.2d 882 (9th Cir. 1975), aff'g T.C. Memo. 1972-133.

Respondent disputes petitioner's credibility based on his belated production

of the log and the appearance of that log, the absence of original records, his

vague and uncorroborated testimony, and his implausible accusations against

respondent's counsel and Court security personnel. We need not accept

- 15 [*15] petitioner's testimony and may and do reject it because of the many indicia of

unreliability. See Gaudiano v. Comn issioner, 216 F.3d -524, 536 (6th Cir. 2000),

aff'a T.C. Memo. 1998-408,:vacated and remanded on another ground, 531 U.S.

1108 (2001); Fleischer v. Commissio er,,403 F.2d. 403, 406-(2d Cir. 1968); af£g

T.C. Memo. 1967-85; Tokarski v. C mmissioner, 87 T.C. 74, 77 (1986). For

example, one of petitioner's accusati ns against respondent']s counsel was based on

his alleged overhearing of a conversa on with Court staff, even though he admitted

that he is hard of hearing. The conversation he described certainly would be

improper and is unlikely to have occurred, if at all, in open Court in petitioner's

presence. The alleged conversation was denied by the alleged participants. We do

not believe that it occurred.

Petitioner contends that he has been targeted under a program of the IRS that

precludes settlement and attempts to force payment of excessive taxes. The efforts

of respondent's counsel to settle this case are apparent from the transcripts of

January 2011. As petitioner's inherently improbable accusations expand to more

and more public servants, his percep ions become more and more questionable.

His claims about his employment ar not supported by the records of his employer,

which he referred to as "fraudulent" but which were received pursuant to rules

803(6) and 902(11) of the Federal R les of Evidence and 28 U.S.C. section 1746

- 16 [*16] (2006)(declarations under penalty of perjury). His refusal to identify

persons with whom he allegedly met on various trips invites heightened scrutiny.

The central and decisive issue here, however, is whether petitioner's travel log is

adequate to substantiate the expenses in dispute and to excuse the production of

corroborating witnesses and other documentary evidence.

Petitioner insists that he presented copies of receipts substantiating his

deductions to various IRS offices at the time he filed his original return and during

the audit and to respondent's counsel. He did not, however, produce for stipulation

or at trial any such documents, despite having obtained a continuance to travel to

Canada to retrieve them. A trial before the Tax Court is a proceeding de novo;

what petitioner may or may not have submitted with the return or during the audit

is irrelevant. See Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324, 327

(1974). Petitioner was cautioned by the Court several times before and

during trial that what he had previously produced to the IRS was not to be

considered and that he had to prove his case to the Court during the trial. Yet the

only actual receipts he produced were for mailings to the IRS after 2007, the year

m issue.

- 17 [*17] Disallowed Deductions

Section 6001 reqùires that a taxpayer keep' such records as ai·e necessary to

establish his or her deductions. See sec. 1.6001-1(a), Income Tax Regs.

Petitioner's vehicle and travel expenses, and certain of the types of expenses he .

reported as "other expenses", are de uctible only if he satisfies the enhanced substantiation requirements of sectio 274(d). Section 274(d) requires a taxpayer

to substantiate "by adequate records or by sufficient evidence corroboratirig the

taxpayer's own statement" any expen es for travel and "with respect to any listed

property (as def'med by section 280F(d)(4))". Listed property includes "any

computer or peripheral equipment", any passenger automobile", and "any other

property used as a means of transportation". Sec. 280F(d)(4)(A)(i), (ii), (iv); see

also sec. 1.274-5(k)(7), Income Tax Regs. To satisfy the adequate records

requirement, the taxpayer must maintain "an account book, diary, log, statement of

expense, trip sheets, or similar record", as well as documentary evidence, such as

receipts or paid bills. Sec. 1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50

Fed. Reg. 46017 (Nov. 6, 1985); sec. 1.274-5(c)(2)(iii)(A), Income Tax Regs.

Each element of the expense or busir ess use must be recorded at or near the time it

occurs. Sec. 1.274-5T(c)(2)(ii), Ten porary Income Tax Regs., supra. A taxpayer

unable to produce adequate records may alternatively establish an element of an

- 18 [*18] expenditure by his own statement and "other corroborative evidence

sufficient to establish such element." Sec. 1.274-5T(c)(3)(i)(B), Temporary

Income Tax Regs., 50 Fed. Reg. 46020 (Nov. 6, 1985). In the case of listed

property, those elements to be established are the amount of the expenditure, the

amount of each business use, the date of the expenditure, and the business purpose.

Sec. 1.274-5T(b)(6)(i)-(iii), Temporary Income Tax Regs., 50 Fed. Reg. 46016

(Nov. 6, 1985).

Credit card statements petitioner presented at trial were in petitioner's wife's

name, and specific items listed on them disclosed only the name of the charging

entity and not whether an expense was business or personal. Petitioner claimed

that some of his travel was to military bases, but he testified specifically about only

two items of travel expense. He contends that he spent the period from January 6

to February 28, 2007, in Majorca, Spain, where he went "to talk about the cyberwarfare program and recruit." His wife was also there at that time, but he denied

deducting her expenses. He did not identify any specific persons that he spoke to

for business purposes, and he did not explain how this travel related to his

employment with UMUC. Much of his testimony suggested that UMUC was

unaware of his alleged activities in traveling to military bases and teaching

- 19 [*19] cyberwarfare. There is no evidence that petitioner complied with the UMUC

travel policy quöted in our findings and much to suggest that he did not.

Petitioner also testifièd that he met with UMUC Dean Brady in Chicago on

April 11, 2007, and incurred airfare and hótel expenses in connection with that trip.

In that.regard, his testimony was as f llowsn "I started to teach for National .

University who wanted to get in the n ilitary, and I documented I met with both of

them, but UMUC authorized it. Now the way it's done is although UMUC had a

policy, this was outside --- the cyber- arfare was not known to UMUC people at

all". In view of this seemingly self-contradictory testimony, we cannot discern

how the meeting related to'petitioner s e ployment with UMUC rather than to

some activi

outside of his assigned duties.

Petitioner offered summaries of the log that he had prepared for trial, but the

summaries did not constitute substantiation of items listed in the log. Many of the

entries in the log are illegible,·and many éntries for different days appear to have

been added.at the samë time.: Contra

to petitioner's contention, the log does not

appear to include the names of any students v/ith whom he met.

Respondent argues that the lo was created or reconstructed in preparation

for trial rather than contemporanëously. Petitioner testified that the expense

notations were prepared as of the time the tax return was filed, but even if true that

- 20 [*20] testimony does not demonstrate that the entries were prepared at or near the

time the expense was incurred, as required by the applicable regulations. See Park

v. Commissioner, T.C. Memo. 2012-279, at *4; Evan v. Commissioner, T.C.

Memo. 2004-180. The log does not corroborate petitioner's generalized testimony,

and only his testimony would validate the log. The absence of original records

undermines the reliability of both the testimony and the log.

Petitioner acknowledged that some of the disallowed items might have been

reimbursed by his employer, but he did not seek reimbursement. He testified:

Why would I seek reimbursement for them? It is helping my

promotion. It's helping my familiarity with the students who are there.

It's helped me train generals and that to go to Kandahar in Iraq, and

it's also helping me get -- stay as an associate professor. The contracts

are renewed every year. So for promotion, associate professor, the

comradery, the fact that they praised me for handling the conferences,

I'm very proud of what I did.

Reimbursable expenses of employees are not deductible. See Orvis v.

Commissioner, 788 F.2d 1406, 1408 (9th Cir. 1986), aff'a T.C. Memo. 1984-533;

Brown v. Commissioner, 446 F.2d 926, 928 n.5 (8th Cir. 1971), aff'a T.C. Memo.

1970-253; Coplon v. Commissioner, 277 F.2d 534, 535 (6th Cir. 1960), aff¼ T.C.

Memo. 1959-34.

We cannot tell from the record which of the "other expenses" reported by

petitioner would be subject to the heightened substantiation requirements of section

- 21 [*21] 274(d) or would be reimbursab e by UMUC, because petitioner has not

explained specific items. Even if we ere authorized to approximate the amount of

deductions to which petitioner might be entitled, the evidence is inadequate to c

make a reasonable allowance. We can estimate the amount of the deductible

expense only when the taxpayer provides evidence sufficient to establish a

reasonable basis upon which the estiinate can be made. See Vanicek v.

Commissioner, 85 T.C. 731, 742-743 (1985). Again, only petitioner's generalized

assertions that he incurred and subst tiated the expenditures are in evidence, and

his statements are no more persuasive than assertions that his amended return was

correct as filed. Tax returns do not establish the truth of the matters stated in them.

See McLaine v. Commissioner 138 .C. 228, 245 (2012); Lawinger v.

Commissioner, 103 T.C. 428, 438 (1994); Wilkinson v. Commissioner, 71 T.C.

633, 639 (1979); Roberts v. Commissioner, 62 T.C. 834, 837 (1974).

We conclude that the disputed deductions cannot be allowed-because they

have not been substantiated.

.

Section 6662(a) Penalty

Section 6662(a) and (b)(1) imposes a 20% accuracy-related penalty on any

underpayment of Federal income ta attributable to a taxpayer's negligence or

disregard of rules or regulations. Section 6662(c) defines negligence as

- 22 [*22] including any failure to make a reasonable attempt to comply with the

provisions of the Code and defines disregard as any careless, reckless, or

intentional disregard. Disregard of rules or regulations is careless if the taxpayer

does not exercisereasonable diligence to determine the correctness of a return

position that is contrary to the rule or regulation. Sec. 1.6662-3(b)(2), Income Tax

Regs.

Section 7491(c) imposes on respondent the burden of production with

respect to the section 6662 penalty. On his original 2007 return, petitioner claimed

as Schedule C expenses deductions allowable, if at all, only on Schedule A as

unreimbursed employee expenses. For the reasons explained above, he is not

entitled to those deductions respondent disallowed. Thus respondent's burden of

showing that the penalty for negligence is appropriate has been met. See Higbee v.

Commissioner , 116 T. C. 438, 446 (2001).

There is no suggestion in the record that petitioner sought competent tax

advice or otherwise made a reasonable attempt to comply with the recordkeeping

requirements related to his expenses. He simply insists that he substantiated his

deductions and that respondent unreasonably disallowed them. He has not

persuaded us that he has reasonable cause under section 6664(c) to avoid the

penalty.

- 23 [*23] To give effect to respondent's boncession,

Decision will be entered

under Rule 155.