- 3 -
itemized deductions in lieu of the standard deduction.2 Another
concession involves charitable contributions for the 2 years at
issue. At trial, petitioner conceded the adjustments disallowing
the cash portion of his contributions. With these concessions,
the remaining issues for decision are: (1) Whether petitioner is
entitled to itemized deductions for noncash charitable
contributions for the 2 years at issue; (2) whether petitioner is
entitled to itemized deductions for employee business expenses
and tax preparation fees for the 2 years in question; and (3)
whether petitioner is liable for the accuracy-related penalties
under section 6662(a) for the 2 years in question. In addition,
the Court considers the applicability of section 6673(a) to the
facts of this case.
2 One technical adjustment will be necessary if
petitioner is allowed to itemize his deductions. On his 1999
return, petitioner claimed an itemized deduction for State and
local taxes of $1,792. During 2000, petitioner received a refund
of State and local taxes of $672, which petitioner included as
income on his 2000 return. Since respondent determined in the
notice of deficiency that petitioner was entitled to the standard
deduction in lieu of itemized deductions for both 1999 and 2000,
petitioner, therefore, did not realize a tax benefit from his
itemized deduction of State and local taxes for 1999. Therefore,
petitioner's receipt of the $672 State and local tax refund
during 2000 would not constitute income for that year.
Consequently, in the notice of deficiency, respondent determined
that the $672 did not constitute gross income for the 2000 tax
year. However, respondent asserted at trial that, based on the
Court's holdings in the case, if petitioner is entitled to
itemized deductions for both years in lieu of the standard
deduction, petitioner's gross income for 2000 will be adjusted to
include as income the $672 State and local tax refund received by
petitioner that year.
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