Tax Court Sustains Deficiency Determination and Imposes Penalties for Failure to Substantiate Charitable and Other Itemized Deductions

In Etchinson v. Commissioner, T.C. Summ. Op. 2011-30; No. 4110-08S, The Court ruled that the taxpayer failed to produce any substantiating documents to support any of the deductions in dispute. According to the taxpayer, her records were stolen from a storage facility in December 2005. The court found that the the only evidence supporting the disputed deductions was the returns themselves. The Court held that because the taxpayer failed to establish that her mother was her qualifying relative for 2006, the taxpayer was not entitled to a dependency exemption deduction and thus did not qualify as a head of household for that year. Moreover the Court imposed penalites on the taxpayer because she had not shown the existence of reasonable cause or that she acted in good faith with respect to the underpayment.