                  T.C. Summary Opinion 2006-54



                     UNITED STATES TAX COURT



           SAMIE M. AND NORA L. FINCH, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20308-04S.            Filed April 17, 2006.


     Samie M. and Nora L. Finch, pro sese.

     William J. Gregg, for respondent.



     GOLDBERG, Special Trial Judge:   This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.   Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code in

effect for the year in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.
                              - 2 -

     Respondent determined a deficiency in petitioners’ Federal

income tax of $5,801 for the taxable year 2002.

     After concessions,1 the issues for decision are:    (1)

Whether petitioners are entitled to miscellaneous itemized

deductions of $28,1882 as claimed on their 2002 Federal income

tax return; (2) whether petitioners are entitled to a charitable

contribution deduction of $5,640 for taxable year 2002; and (3)

whether petitioners are entitled to a deduction for medical and

dental expenses of $2193 for taxable year 2002.

                           Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   Petitioners resided in

Moorefield, West Virginia, on the date the petition was filed in

this case.




     1
      Petitioners claimed deductions for two dependency
exemptions and Schedule E expenses of $3,267 on their 2002
Federal income tax return. Respondent, in the notice of
deficiency, disallowed the deductions for the two dependency
exemptions and the Schedule E expenses. However, at trial,
respondent conceded that petitioners are entitled to deduct the
two dependency exemptions and the Schedule E expenses.
     2
      This amount has been calculated by petitioners taking into
account the 2-percent floor imposed by sec. 67(a). The amount
claimed before the limitation was $29,288.
     3
      This amount has been calculated by petitioners taking into
consideration the 7.5-percent floor imposed by sec. 213(a). The
amount reported before the limitation was $4,344.
                                - 3 -

     During taxable year 2002, petitioners lived in Moorefield,

West Virginia.    Petitioners chose to live in Moorefield, West

Virginia, for personal reasons.    During the year in issue, Samie

M. Finch (petitioner) was employed as a nonunion ironworker by

Cianbro.    Cianbro’s headquarters was in Pittsfield, Maine.

Cianbro had a regional office in Baltimore, Maryland, and it was

out of this office that petitioner was based.

     As an employee of Cianbro, petitioner traveled to different

job sites within his region.    Those job sites included:

Annapolis, Maryland, Union Bridge, Maryland, Arlington, Virginia,

and Baltimore, Maryland.    Petitioner drove from his residence in

Moorefield, West Virginia, to the job site and returned home each

night.   According to petitioner, he made the following round

trips during taxable year 2002:    (1) 72 to Baltimore, Maryland;

(2) 52 to Union Bridge, Maryland; (3) 104 to the Pentagon or

Arlington, Virginia; and (4) 14 to the Bay Bridge in Annapolis,

Maryland.    The monthly mileage figures for these trips, together

with the cost of meals by month, were reported on a summary

sheet.   Also attached to the summary sheet were Mapquest

directions to each job site dated March 2, 2003.

     Also during the year in issue, petitioner was a pastor in

the First Church of God in Christ located in Piedmont, West

Virginia.    Petitioner did not receive compensation for his

services as a pastor during taxable year 2002.
                                 - 4 -

     During taxable year 2002, petitioner Nora L. Finch was

retired and received Social Security benefits.

     Petitioners filed a joint Federal income tax return for 2002

which included a Schedule A, Itemized Deductions, a Schedule B,

Interest and Ordinary Dividends, and a Schedule E, Supplemental

Income and Loss.

     On their jointly filed 2002 tax return, petitioners reported

adjusted gross income of $55,009 and claimed Schedule A itemized

deductions of $43,639.

     On their Schedule A, petitioners claimed the following

deductions, in pertinent part:

                 Itemized Deductions                       Amount

     Line    1   Medical and dental expenses               $4,344
     Line    4   Net medical deduction                        219
     Line    5   State and local income taxes               1,474
     Line    8   Other taxes                                  262
     Line    9   Total taxes                                1,736
     Line   15   Gifts by cash or check                     5,640
     Line   18   Total gifts to charity                     5,640
     Line   20   Unreimbursed employee business expenses   29,288
     Line   26   Net limited miscellaneous deduction       28,188
     Line   28   Total itemized deductions                 43,639

     On October 8, 2004, respondent issued petitioners a notice

of deficiency for taxable year 2002.      Respondent disallowed

$34,046 of petitioners’ claimed $43,639 Schedule A itemized

deductions for taxable year 2002.      The $34,0464 disallowed by



     4
      It appears from adding together the disallowed items that
the total amount disallowed should be $34,047 (rounded to the
nearest dollar).
                                - 5 -

respondent consists of:   (1) A disallowed net medical deduction

of $219; (2) disallowed total gifts to charity of $5,640; and (3)

disallowed net limited miscellaneous itemized deductions of

$28,188.

                              Discussion

     In general, the Commissioner’s determination in a notice of

deficiency is presumed correct.    Welch v. Helvering, 290 U.S.

111, 115 (1933).   In pertinent part, Rule 142(a)(1) provides the

general rule that “The burden of proof shall be upon the

petitioner”.   In certain circumstances, however, if the taxpayer

introduces credible evidence with respect to any factual issue

relevant to ascertaining the proper tax liability, section 7491

places the burden of proof on the Commissioner.    Sec. 7491(a)(1);

Rule 142(a)(2).    Credible evidence is “‘the quality of evidence

which, after critical analysis, * * * [a] court would find

sufficient * * * to base a decision on the issue if no contrary

evidence were submitted’”.5    Baker v. Commissioner, 122 T.C. 143,

168 (2004) (quoting Higbee v. Commissioner, 116 T.C. 438, 442

(2001)).   Section 7491(a)(1) applies only if the taxpayer

complies with substantiation requirements, maintains all required

records, and cooperates with the Commissioner for witnesses,


     5
      We interpret the quoted language as requiring the
taxpayer’s evidence pertaining to any factual issue to be
evidence the Court would find sufficient upon which to base a
decision on the issue in favor of the taxpayer. See Bernardo v.
Commissioner, T.C. Memo. 2004-199.
                                 - 6 -

information, documents, meetings, and interviews.    Sec.

7491(a)(2).    Although neither party alleges the applicability of

section 7491(a), we conclude that the burden of proof has not

shifted to respondent with respect to any of the issues in the

present case.

     Section 6001 and the regulations promulgated thereunder

require taxpayers to maintain records sufficient to permit

verification of income and expenses.     As a general rule, if the

trial record provides sufficient evidence that the taxpayer has

incurred a deductible expense, but the taxpayer is unable to

adequately substantiate the precise amount of the deduction to

which he or she is otherwise entitled, the Court may estimate the

amount of the deductible expense, bearing heavily against the

taxpayer whose inexactitude in substantiating the amount of the

expense is of his own making, and allow the deduction to that

extent.   Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930).

However, in order for the Court to estimate the amount of an

expense, the Court must have some basis upon which an estimate

may be made.    Vanicek v. Commissioner, 85 T.C. 731, 742-743

(1985).   Without such a basis, any allowance would amount to

unguided largesse.     Williams v. United States, 245 F.2d 559, 560-

561 (5th Cir. 1957).

     Moreover, deductions are a matter of legislative grace and

are allowed only as specifically provided by statute.       INDOPCO,
                               - 7 -

Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice

Co. v. Helvering, 292 U.S. 435, 440 (1934).

     With these well-established propositions in mind, we must

determine whether petitioners have satisfied their burden of

proving that they are entitled to the claimed itemized deductions

mentioned above.

1.   Miscellaneous Itemized Deductions

     As previously stated, on their Schedule A for taxable year

2002, petitioners claimed miscellaneous itemized deductions of

$28,188 for job expenses incurred during taxable year 2002.    The

deduction was claimed for expenses incurred relating to

petitioner’s travel between his residence in Moorefield, West

Virginia, and construction/work sites in Baltimore, Maryland,

Arlington, Virginia, Union Bridge, Maryland, and Annapolis,

Maryland.   Respondent disallowed the deductions in full.

Respondent determined that petitioners did not substantiate the

claimed expenses or, if substantiated, petitioners did not prove

that the expenses were not reimbursed by petitioner’s employer;

nor did petitioners prove that Moorefield, West Virginia, was

petitioner’s tax home.

     Section 162(a) allows a deduction for ordinary and necessary

business expenses paid or incurred during the taxable year in

carrying on any trade or business.     For an expense to be

“ordinary” the transaction that gives rise to the expense must be
                               - 8 -

of a common or frequent occurrence in the type of business

involved.   Deputy v. du Pont, 308 U.S. 488, 495 (1940).    To be

“necessary” an expense must be “appropriate and helpful” to the

taxpayer’s business.   Welch v. Helvering, supra at 113-114.      The

performance of services as an employee constitutes a trade or

business.   See sec. 1.162-17(a), Income Tax Regs.   The employee

must show the relationship between the expenditures and the

employment.   See Evans v. Commissioner, T.C. Memo. 1974-267,

affd. 557 F.2d 1095 (5th Cir. 1977).   The taxpayer bears the

burden of substantiation.   Hradesky v. Commissioner, 65 T.C. 87,

90 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).    “The

determination of whether an expenditure satisfies the

requirements of section 162 is a question of fact.”     Shea v.

Commissioner, 112 T.C. 183, 186 (1999).

     In the case of travel expenses, entertainment expenses, and

expenses paid or incurred with respect to listed property, e.g.,

passenger automobiles, section 274 overrides the Cohan doctrine,

and expenses are deductible only if the taxpayer meets the

section’s stringent substantiation requirements.     Secs. 274(d),

280F(d)(4); Sanford v. Commissioner, 50 T.C. 823, 827-828 (1968),

affd. 412 F.2d 201 (2d Cir. 1969); sec. 1.274-5T(a), Temporary

Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).

     Section 274(d) specifically provides:

          SEC. 274(d). Substantiation Required.--No deduction or
     credit shall be allowed–-
                               - 9 -

               (1) under section 162 or 212 for any traveling
          expense (including meals and lodging while away
          from home),

               (2) for any item with respect to an activity which
          is of a type generally considered to constitute
          entertainment, amusement, or recreation, or with
          respect to a facility used in connection with such
          an activity,

               (3) for any expense for gifts, or

               (4) with respect to any listed property (as
          defined in section 280F(d)(4)),

     unless the taxpayer substantiates by adequate records or by
     sufficient evidence corroborating the taxpayer’s own
     statement (A) the amount of such expense or other item, (B)
     the time and place of the travel, entertainment, amusement,
     recreation, or use of the facility or property, or the date
     and description of the gift, (C) the business purpose of the
     expense or other item, and (D) the business relationship to
     the taxpayer of persons entertained, using the facility or
     property, or receiving the gift. * * *

This section “contemplates that no deduction or credit shall be

allowed a taxpayer on the basis of such approximations or

unsupported testimony of the taxpayer.”   Sec. 1.274-5T(a),

Temporary Income Tax Regs., supra.

     In order to substantiate a deduction by means of adequate

records, a taxpayer must maintain a diary, log, statement of

expenses, trip sheet, or similar record, and documentary evidence

which, in combination, are sufficient to establish each element

of each expense or use.   Sec. 1.274-5T(c)(2)(i), Temporary Income

Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985).   A contemporaneous

log is not required, but corroborative evidence to support a

taxpayer’s record of the elements of expenditure or use must have
                               - 10 -

“a high degree of probative value to elevate such statement and

evidence to the level of credibility” of a contemporaneous

record.   Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., supra.

Thus, no deduction for expenses under section 274(d) may be

allowed on the basis of any approximation or the unsupported

testimony of the taxpayer.    See, e.g., Murata v. Commissioner,

T.C. Memo. 1996-321; Golden v. Commissioner, T.C. Memo. 1993-602.

     Petitioner did not keep a handwritten log of his travel and

meals.    In order to substantiate his claimed business travel for

2002, petitioner offered into evidence the typed summary of his

travel and an information sheet from his employer showing trips

to job sites.   The typed summary, as stated before, shows the

number of round trips made from petitioner’s home to the job

sites, the round-trip mileage, and the meal expenses paid.      There

are no receipts in the record indicating meal expenses.    In

addition, the Court cannot determine what the numbers on the

information sheet from petitioner’s employer indicate.     Further,

petitioner did not explain the information sheet, nor did he

testify as to its contents.   Petitioner received $35 as

reimbursement from his employer for every day he traveled to a

nongovernment work site, such as Baltimore, Maryland, or Union

Bridge, Maryland.   The $35 was to reimburse him for gasoline

expenses and meal expenses paid during work-related travel.
                                  - 11 -

Also, petitioner’s employer reimbursed him “34 cents per mile for

traveling expenses”, in addition to the $35 per day.

     We believe petitioner did travel to the job sites during

2002.     However, we conclude that petitioner has not satisfied the

substantiation requirements of section 274(d) as to the mileage

and meal expenses.     Although, for the sake of argument, if we

conclude that petitioner has satisfied the substantiation

requirements of section 274(d) as to the mileage and meal

expenses, petitioner has not shown that he was not reimbursed for

all of his traveling expenses, i.e., mileage and meals, by his

employer.     Further, even if petitioner could substantiate the

travel expenses in issue and that such amounts were not

reimbursed by his employer, upon the basis of the record we

conclude that Baltimore, Maryland, and not Moorefield, West

Virginia, was petitioner’s “tax home”, and therefore he would be

entitled to reimbursement only for travel while he was away from

his employer’s regional office in Baltimore, Maryland, on work

assignment.     The mileage for these trips is not in the record,

and thus we could not make a Cohan determination.

2.      Charitable Contribution

        As previously stated, petitioners on their Schedule A filed

with their Federal income tax return for taxable year 2002

claimed a deduction for contributions to charity by cash or check

of $5,640.
                                - 12 -

     Respondent determined that petitioners did not adequately

substantiate any of their claimed charitable contribution

deduction.

     A deduction generally is allowed for any charitable

contribution made within the taxable year.      Sec. 170(a)(1).

     As previously stated, taxpayers generally must keep records

sufficient to establish the amounts of the items required to be

shown on their Federal income tax return.      Sec. 6001; sec.

1.6001-1(a), (e), Income Tax Regs.       In the event that a taxpayer

establishes that a deductible expense has been paid but is unable

to substantiate the precise amount, we generally may estimate the

amount of the deductible expense, bearing heavily against the

taxpayer whose inexactitude in substantiating the amount of the

expense is of his own making.     Cohan v. Commissioner, 39 F.2d at

543-544.     We cannot estimate a deductible expense, however,

unless the taxpayer presents evidence sufficient to provide some

basis upon which an estimate may be made.       Vanicek v.

Commissioner, 85 T.C. 731 (1985).

     Deductions for charitable contributions are subject to

further substantiation requirements.      Sec. 170(a)(1).    Generally,

such deductions must be substantiated with reliable written

records reflecting the name of the donee, the date of the

contribution, and either the amount of any cash contribution or a

description of the property contributed.      Sec. 1.170A-13(a) and
                              - 13 -

(b), Income Tax Regs.   Deductions for contributions of $250 or

more are disallowed in the absence of a contemporaneous written

acknowledgment of the contribution by the donee.    Sec. 170(f)(8);

sec. 1.170A-13(f), Income Tax Regs.

     Petitioners provided a typed receipt, signed by Bishop

Henderson Wheeler, acknowledging that petitioners contributed

$3,359.87 to the First Church of God in Christ.    Petitioners

testified that a total amount of $3,359.87 was contributed by

them during the taxable year 2002 at Sunday worship services.     In

view of the fact that petitioners attended services regularly and

that we believe the receipt is credible, we find that the receipt

is sufficient substantiation of petitioners’ charitable

contribution of $3,359.87.   However, petitioners have not

testified as to or substantiated charitable contributions above

that amount.   Thus, we conclude that petitioners are entitled to

a charitable contribution deduction of $3,3606 for the taxable

year 2002.

3.   Medical and Dental Expenses

     As previously stated, on their Schedule A for taxable year

2002, petitioners claimed a deduction for medical and dental

expenses incurred of $219 above the 7.5-percent floor.

Respondent disallowed the deduction in full.   Respondent

determined that petitioners did not prove that the expenses were


     6
      This amount is rounded to the nearest dollar.
                                - 14 -

incurred or, if incurred, that they were paid during taxable year

2002.

       Section 213(a) allows as a deduction any expenses that are

paid during the taxable year for the medical care of the

taxpayer, his spouse, and dependents and that are not compensated

for by insurance or otherwise.     Estate of Smith v. Commissioner,

79 T.C. 313, 318 (1982).     The deduction is allowed only to the

extent the amount exceeds 7.5 percent of adjusted gross income.

Sec. 213(a); sec. 1.213-1(a)(3), Income Tax Regs.      The term

“medical care” includes amounts paid “for the diagnosis, cure,

mitigation, treatment or prevention of disease, or for the

purpose of affecting any structure or function of the body”.

Sec. 213(d)(1)(A); Estate of Smith v. Commissioner, supra at 318-

319.

        Petitioners testified that they paid $1,231 in medical

expenses during taxable year 2002.       Giving petitioners the

benefit of the doubt, we find that petitioners’ testimony

substantiates medical expenses of $1,231.       However, as previously

stated, the deduction for medical expenses is allowed only to the

extent the amount exceeds 7.5 percent of adjusted gross income.

Sec. 213(a); sec. 1.213-1(a)(3), Income Tax Regs.      Because

petitioners reported adjusted gross income for taxable year 2002

of $55,009, $1,231 does not exceed 7.5 percent of petitioners’

adjusted gross income.     Therefore, since petitioners did not
                              - 15 -

testify as to any other medical and dental expenses, and they

have not offered into evidence any documentation substantiating

other medical and dental expenses, we conclude that they are not

entitled to any medical and dental expense deduction for taxable

year 2002.   See sec. 213(a); sec. 1.213-1(a)(3), Income Tax Regs.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                    Decision will be entered

                               under Rule 155.
