                        T.C. Memo. 2011-91



                      UNITED STATES TAX COURT



                 JESSICA SOLOMON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10359-09.               Filed April 25, 2011.



     Jessica Solomon, pro se.

     Catherine S. Tyson, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MARVEL, Judge:   Respondent determined a deficiency of $2,430

in petitioner’s Federal income tax for 2006.    The sole issue for

decision is whether petitioner is entitled to a miscellaneous
                               - 2 -

itemized deduction based on $17,0881 in claimed expenses for

2006.

                         FINDINGS OF FACT

     Some of the facts have been stipulated.   We incorporate the

stipulated facts into our findings by this reference.   Petitioner

resided in Missouri when the petition was filed.

     In May 2006 petitioner moved from Rockford, Illinois, to

Florissant, Missouri, and found a job in sales with MV Marketing,

Inc. (MV Marketing), which sold office supplies to businesses.

Petitioner worked for MV Marketing from June 2006 through

December 2006.2

     Petitioner’s job with MV Marketing consisted primarily of

visiting businesses in her sales territory and attempting to sell

office supplies.   Petitioner also attempted to generate sales

through mailings to businesses both within and without her sales

territory.   For example, petitioner sent sales flyers to

businesses she was familiar with in her hometown of Rockford,

Illinois.




     1
      All monetary figures have been rounded to the nearest
dollar. Unless otherwise indicated, all section references refer
to the Internal Revenue Code in effect for the year in issue, and
all Rule references refer to the Tax Court Rules of Practice and
Procedure.
     2
      During part of her employment with MV Marketing, petitioner
worked part time.
                                - 3 -

     On or about June 8, 2006, petitioner purchased a 2001

Chevrolet Cavalier that she used primarily for her work with MV

Marketing.    The vehicle’s odometer reflected 65,779 miles on the

date of purchase, and petitioner recorded the vehicle’s mileage

at the beginning and end of each workday.

     During her employment with MV Marketing, petitioner began

each workday with a sales meeting at MV Marketing’s office in St.

Louis, Missouri.    At the meeting, petitioner was assigned a sales

territory.3   Petitioner then spent the rest of her workday

visiting businesses in her sales territory and attempting to sell

office supplies.    At the end of each workday, petitioner returned

to MV Marketing’s office for an evening meeting where she turned

in her sales figures for the day.

     Petitioner was paid solely on commission.    In 2006 she

received commission income of $3,307 from MV Marketing.    MV

Marketing did not reimburse petitioner for mileage, postage, or

other expenses.

     Petitioner’s 2006 Federal income tax return was prepared by

H&R Block.    Petitioner brought her Forms W-2, Wage and Tax

Statement, for all of the companies she worked for in 2006,4 as


     3
      Sales territories were typically assigned weekly but would
sometimes change during the week if, for example, the salesperson
had exhausted the territory.
     4
      Petitioner received Forms W-2 with respect to her taxable
year 2006 from MV Marketing, Omni Consumer Tax, Inc., and General
                                                   (continued...)
                               - 4 -

well as a shoebox full of receipts, to H&R Block, and a return

preparer at H&R Block completed her return.   It is not clear

whether the return preparer made any attempt to distinguish

deductible from nondeductible expenses or whether the return

preparer simply added up the receipts and deducted the sum as

unreimbursed employee business expenses.

     On her 2006 Form 1040, U.S. Individual Income Tax Return,

petitioner claimed $16,614 in unreimbursed employee business

expenses.   These expenses consisted of $8,340 in vehicle expenses

(on the basis of 18,741 miles driven for business between June

and December 2006) and $8,274 of other business expenses.

Petitioner also claimed $474 in tax preparation fees.    After

application of the 2-percent floor, these expenses totaling

$17,088 generated a deduction amount of $16,203.

     On January 28, 2009, respondent issued a notice of

deficiency with respect to petitioner’s 2006 Federal income tax

return.   Respondent disallowed all of petitioner’s unreimbursed

employee business expenses and tax preparation fees.    Petitioner

timely filed a petition with this Court contesting the notice of

deficiency.

     At trial petitioner submitted only 14 receipts to

substantiate the unreimbursed employee business expenses and tax



     4
      (...continued)
Motors.
                                 - 5 -

preparation fees claimed on her 2006 Federal income tax return.

Petitioner also submitted a mileage log with respect to her use

of the Chevrolet Cavalier from June through December 2006.

Petitioner explained that she kept most of her receipts in the

office of a retail store where her then boyfriend worked and that

the receipts were lost when authorities seized the store as part

of an unrelated investigation.

                              OPINION

I.   Deductions

     Deductions are a matter of legislative grace, and the

taxpayer generally bears the burden of proving he or she is

entitled to the deductions claimed.      Rule 142(a); New Colonial

Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).     If the taxpayer

produces credible evidence with respect to any factual issue

relevant to ascertaining the taxpayer’s liability and meets

certain other requirements, section 7491(a) shifts the burden to

the Commissioner with respect to these factual issues.

Petitioner does not assert that section 7491(a) shifts the burden

to respondent, and the record does not permit us to conclude that

section 7491(a) applies.   Consequently, petitioner bears the

burden of proof with respect to all factual issues.

     Section 162(a) generally allows a deduction for all ordinary

and necessary expenses paid or incurred during the taxable year

in carrying on any trade or business.     Unreimbursed employee
                               - 6 -

business expenses generally are deductible under section 162(a).

However, such expenses are miscellaneous itemized deductions, see

secs. 62(a)(1), 67(b), and are deductible only to the extent such

deductions, in the aggregate, exceed 2 percent of the taxpayer’s

adjusted gross income, sec. 67(a); Alexander v. Commissioner,

T.C. Memo. 1995-51, affd. 72 F.3d 938 (1st Cir. 1995).     Tax

preparation fees generally are deductible under section 212(3)

but also are subject to the 2-percent floor for miscellaneous

itemized deductions.   Sec. 67(a); see, e.g., Crouch v.

Commissioner, T.C. Memo. 1995-289.     No deduction is allowed for

personal, living, or family expenses.    Sec. 262.

     Taxpayers must maintain adequate records to substantiate

their claimed deductions.   Sec. 6001; Shea v. Commissioner, 112

T.C. 183, 186 (1999); sec. 1.6001-1(a), Income Tax Regs.        When a

taxpayer establishes that he or she has incurred a deductible

expense but is unable to substantiate the exact amount, we may

estimate the deductible amount (the Cohan rule).      Cohan v.

Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930); Vanicek v.

Commissioner, 85 T.C. 731, 742-743 (1985).    In these instances,

the Court is permitted to make as close an approximation of the

allowable expense as it can, bearing heavily against the taxpayer

whose inexactitude is of his or her own making.      Cohan v.

Commissioner, supra at 544.   To estimate the amount of an

expense, however, the Court must have some basis upon which to
                                - 7 -

make an estimate.    Vanicek v. Commissioner, supra at 742-743.

Without such a basis, any allowance would amount to “unguided

largesse.”    Williams v. United States, 245 F.2d 559, 560 (5th

Cir. 1957).

     In some instances, a taxpayer must satisfy strict

substantiation requirements to deduct expenses that would

otherwise be deductible under section 162.    For example, section

274(d) provides that no deduction is allowed with respect to,

inter alia, 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 (1) the amount of the expense or item; (2) the time

and place of the travel, entertainment, or expense; (3) the

business purpose of the entertainment or expense; and (4) the

taxpayer’s relationship to the person or persons entertained.

Section 280F(d)(4) defines listed property as, inter alia, any

passenger automobile or any other property used as a means of

transportation.   Section 274(d) supersedes the Cohan rule with

respect to section 280F(d)(4) listed property.    Sanford v.

Commissioner, 50 T.C. 823, 827-828 (1968), affd. 412 F.2d 201 (2d

Cir. 1969).   Consequently, we are precluded from allowing vehicle

expenses on the basis of any estimate or approximation or the

taxpayer’s uncorroborated testimony.    Id.
                                - 8 -

     A.   Vehicle Expenses

     As noted above, vehicle expenses that are deducted as

business expenses will be disallowed in full unless the taxpayer

satisfies strict substantiation requirements.    Secs. 274(d),

280F(d)(4).    As applicable to vehicle expenses, section 274(d)

requires a taxpayer to substantiate the expenses by adequate

records or other corroborating evidence of (1) the amount of each

use (i.e., the mileage), (2) the time and place of the use, and

(3) the business purpose of the use.    See Fessey v. Commissioner,

T.C. Memo. 2010-191; sec. 1.274-5T(b)(6), (c)(2), Temporary

Income Tax Regs., 50 Fed. Reg. 46016, 46017 (Nov. 6, 1985).      In

the absence of adequate records to substantiate an element of an

expense, a taxpayer may establish an element by “his own

statement, whether written or oral, containing specific

information in detail as to such element”, and by “other

corroborative evidence sufficient to establish such element.”

Sec. 1.274-5T(c)(3)(i), Temporary Income Tax Regs., 50 Fed. Reg.

46020 (Nov. 6, 1985).

     Petitioner kept track of her automobile mileage using a

daily mileage log.   However, there are several problems with the

mileage log.   First, the mileage log simply notes the odometer

reading on petitioner’s car at the beginning and end of each day

and includes no information regarding where petitioner drove, the

purpose of the trip, or petitioner’s business relationship to the
                               - 9 -

persons she visited.   Second, petitioner included in the mileage

log the roughly 27 miles she drove each workday commuting to and

from MV Marketing’s office.5   Finally, petitioner conceded that

she may have included some personal trips in the mileage log.6

Petitioner did not present any evidence at trial, such as

appointment books, calendars, or maps of her sales territories,

to corroborate the bare information contained in the mileage log,

nor did she testify with any specificity regarding her vehicle

expenses in 2006.

     Although we do not doubt that petitioner used her Chevrolet

Cavalier for business between June and December 2006, we have no

choice but to deny in full petitioner’s deduction for mileage

expenses.   For the reasons discussed in the preceding paragraph,

petitioner’s mileage log does not satisfy the adequate records

requirement of section 274(d), petitioner did not present any

documentary evidence to corroborate the mileage log, and

petitioner’s testimony was not detailed or specific enough to

satisfy the requirements of section 274(d) and section

1.274-5T(c)(3), Temporary Income Tax Regs., supra.   Moreover, we



     5
      It is well established that expenses incurred in commuting
from one’s home to one’s place of employment are nondeductible.
E.g., Randolph v. Commissioner, 74 T.C. 284, 292 (1980).
     6
      Respondent also argues there is no evidence that the
mileage log was prepared contemporaneously. However, we accept
as credible petitioner’s testimony that she recorded her mileage
at the beginning and end of each day.
                                - 10 -

are not permitted to estimate petitioner’s mileage because

section 274(d) supersedes the Cohan rule.       Consequently,

petitioner’s deduction for mileage expenses is denied in full.

     B.   Other Business Expenses

     As noted above, unreimbursed employee business expenses

generally are deductible under section 162(a), subject to the 2-

percent floor of section 67(a).    However, a taxpayer’s failure to

seek reimbursement from his or her employer for expenses that

were reimbursable under the employer’s reimbursement policy

precludes deducting such expenses as unreimbursed employee

business expenses.   Orvis v. Commissioner, 788 F.2d 1406, 1408

(9th Cir. 1986), affg. T.C. Memo. 1984-533; Lucas v.

Commissioner, 79 T.C. 1, 7 (1982).       We accept as credible

petitioner’s testimony that MV Marketing did not, and would not,

reimburse her for expenses incurred in her work.

     Petitioner deducted other business expenses of $8,274.

However, petitioner presented only limited receipts to

substantiate the claimed deductions, and some of the records

relate to expenses incurred before petitioner began her

employment with MV Marketing.    After eliminating these expenses,

the record reflects the following expenses:
                                - 11 -

           Date                Expense               Amount
   July 13, 2006            Postage                    $14
   July 24, 2006            Business books              55
   Aug. 17, 2006            Postage                     19
   Sept. 20, 2006           Postage                     12
   Nov. 6, 2006             Postage                     14
   Dec. 26, 2006            Postage                      9
     Total                                             123


     Petitioner has met her burden of establishing that these

expenses were incurred, and on the basis of petitioner’s

testimony, we are satisfied that the expenses were related to

petitioner’s job in sales for MV Marketing.    Petitioner appears

to concede that she cannot substantiate any additional expenses.

     With respect to the remaining claimed expenses, i.e.,

$8,151, petitioner has not established that she incurred those

expenses, nor has she presented any evidence that would allow us

to estimate the amounts.7    See Cohan v. Commissioner, 39 F.2d at

543-544.    Consequently, respondent’s determination is sustained

with respect to the remaining claimed expenses.




     7
      Sec. 1.274-5T(c)(5), Temporary Income Tax Regs., 50 Fed.
Reg. 46022 (Nov. 6, 1985), allows substantiation by reasonable
reconstruction where a taxpayer can show that the absence of
records is due to circumstances beyond his or her control, such
as a fire, flood, or other casualty. Even if we were to assume,
arguendo, that the seizure of petitioner’s records by authorities
in an unrelated investigation was a circumstance beyond her
control, petitioner failed to reconstruct her records through
corroborating records or testimony regarding the specific
expenses incurred.
                                - 12 -

     C.     Tax Preparation Fees

     Section 212(3) allows a deduction for costs incurred in the

preparation of a tax return.       Hughes v. Commissioner, T.C. Memo.

2008-249.    However, the taxpayer bears the burden of proving that

he or she incurred the costs and of maintaining appropriate

records to substantiate the deduction.      See sec. 6001; sec.

1.6001-1(a), Income Tax Regs.

     Petitioner deducted tax preparation fees of $474 but did not

maintain records to substantiate the deduction.      Instead,

petitioner submitted receipts for $127 and $119 from H&R Block,

dated November 10 and 17, 2006, respectively, as well as a voided

check for $127 dated November 10, 2006.8      The receipt for $127

and the voided check in the same amount appear to relate to a

clothing company that was run by petitioner’s then boyfriend, and

the receipt for $119 bears the name of another individual.

Moreover, the receipts cannot possibly relate to petitioner’s

2006 Federal income tax return because they were issued in

November 2006; i.e., before petitioner’s 2006 taxable year had

concluded.    While we are inclined to believe that petitioner

incurred some expense to have H&R Block prepare her 2006 Federal

income tax return, petitioner did not substantiate the deduction,

and there is no evidence in the record that would allow us to


     8
      The voided check appears to have been submitted in order to
process the $127 payment. It is not clear why petitioner
actually filled out and signed the check.
                               - 13 -

estimate the amount of the deductible expense.9     Consequently,

respondent’s determination with respect to the tax preparation

fees is sustained.

II.   Conclusion

      In summary, we conclude that petitioner’s claimed mileage

expenses are disallowed in full, her other business expenses are

allowable only to the extent of $123, and her tax preparation

fees are disallowed in full.   Petitioner’s allowable deductions

are less than 2 percent of her 2006 adjusted gross income, which

was $44,263 and, therefore, petitioner is not entitled to deduct

miscellaneous itemized deductions.

      We have considered all other arguments raised by the parties

and, to the extent not discussed above, we conclude they are

irrelevant, moot, or without merit.

      To reflect the foregoing,


                                       Decision will be entered for

                                  respondent.




      9
      Given our conclusion that petitioner’s mileage expenses are
disallowed in full and her other business expenses are allowed
only to the extent of $123, petitioner’s claimed deduction for
tax preparation fees is something of a moot point. Indeed, even
if we were to allow the deduction in full, petitioner’s total
miscellaneous itemized deductions would still be far less than 2
percent of her adjusted gross income and thus no deduction for
miscellaneous itemized deductions would be allowed.
