                        T.C. Memo. 1997-540



                      UNITED STATES TAX COURT



                 LUCINE WILLIAMS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11807-96.                    Filed December 8, 1997.



     Lucine Williams, pro se.


     Mark A. Weiner, for respondent.




                        MEMORANDUM OPINION


     DAWSON, Judge:   This case was assigned to Special Trial

Judge Larry L. Nameroff pursuant to section 7443A(b)(4) and Rules
                               - 2 -


180, 181, and 183.1   The Court agrees with and adopts the opinion

of the Special Trial Judge, which is set forth below.

               OPINION OF THE SPECIAL TRIAL JUDGE

     NAMEROFF, Special Trial Judge: Respondent determined a

deficiency in petitioner’s 1991 Federal income tax in the amount

of $8,348, an addition to tax under section 6651(a)(1) in the

amount of $99, and an accuracy-related penalty under section

6662(a) in the amount of $1,670.   After concessions by the

parties, the issues to be decided are:   (1) Whether petitioner is

entitled to a fuel tax credit of $8,249; and (2) whether

petitioner is liable for the accuracy-related penalty.

     Petitioner resided in Gardena, California, at the time he

filed his petition.   Petitioner filed his 1991 Federal income tax

return reflecting taxable interest income of $563, a Schedule E

partnership loss of $42,168, a net operating loss carryover of

$153,486, and itemized deductions of $10,696.   Petitioner also

reported rental income of $6,600 and claimed rental expenses of

$5,638, resulting in a net income from rentals of $962.     For some

unexplained reason, the $962 profit was not carried forward to

the face of the Form 1040.   In the notice of deficiency,

respondent disallowed the Schedule E partnership loss, the net

operating loss deduction, and reduced the itemized deductions by

     1
        All section references are to the Internal Revenue Code
in effect for the year in issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
                                - 3 -


$7,296 to reflect an allowance of the standard deduction.      In

addition, respondent disallowed all of the rental expenses.

     In the Stipulation of Facts and Agreed Adjustments, the

parties agreed that petitioner is not entitled to the Schedule E

partnership loss or the net operating loss deduction.      Of the

disallowed rental expenses, petitioner conceded $4,987 and

respondent conceded $651.    With regard to the itemized

deductions, while the parties stipulated that petitioner

substantiated taxes of $2,164, they agreed that there is no tax

benefit because petitioner did not have itemized deductions in

excess of the standard deduction.     Finally, respondent conceded

the addition to tax for delinquency.

     On his 1991 Federal income tax return petitioner claimed a

fuel tax credit of $8,249.    Respondent disallowed this amount in

the notice of deficiency.    Respondent contends that petitioner is

not entitled to a fuel tax credit and, in any event, has not

substantiated his expenditures for gasoline and diesel fuel.

     Petitioner is a truck driver.2     In 1991, petitioner owned

two vehicles, a dump truck that operates on diesel fuel and a

pickup truck that uses regular gasoline.     Petitioner kept the


     2
        The structure of petitioner’s trucking business
apparently is that of a partnership with his son, petitioner
having 99 percent interest in the partnership. No partnership
agreement or records are contained in the record. The parties
have basically ignored the partnership in presenting this case,
and we shall do so as well.
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dump truck at a yard in Compton, California, and used his pickup

truck to go from home to the yard.     As a dump truck driver,

petitioner usually worked at construction sites hauling materials

like dirt, broken asphalt, and concrete.     The Public Utilities

Commission of the State of California issued petitioner a special

license to operate as a dump truck driver.     That license provides

that petitioner may only use the truck within a 50-mile radius of

the point of operations.

     Petitioner had his return prepared by R. Milo Gilbert (Mr.

Gilbert).   Mr. Gilbert has been preparing petitioner’s returns

for many years.   On his 1991 Federal income tax return,

petitioner reported the purchase of 12,000 gallons of gasoline

for which he claimed a credit of $1,692.     He also reported the

purchase of 31,635 gallons of diesel fuel for which he claimed a

credit of $6,359.   In addition, a $198 credit was claimed for

“diesel powered light trucks and vans”, arriving at a total

credit of $8,249.   Mr. Gilbert testified that in preparing

petitioner’s tax returns he always claimed the fuel tax credit.

In support of the substantiation of the number of gallons of fuel

purchased, the parties stipulated to an adding machine tape

reflecting total fuel purchases of $11,636.15.

     Respondent’s determinations are presumed correct, and

petitioner bears the burden of proving them erroneous.     Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
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     As relevant to this case, section 34 allows a credit against

a tax equal to the sum of the amounts payable to the taxpayer

under section 6421 with respect to gasoline used during the

taxable year otherwise than as a fuel in a highway vehicle.

Section 6421(a) provides as follows:

     NONHIGHWAY USES. --Except as provided in subsection
     (j), if gasoline is used in an off-highway business
     use, the Secretary shall pay (without interest) to the
     ultimate purchaser of such gasoline an amount equal to
     the amount determined by multiplying the number of
     gallons so used by the rate at which tax was imposed on
     such gasoline under section 4081. * * *

     Section 6421(e)(2)(A) provides the definition of off-highway

business use as:

     any use by a person in a trade or business of such
     person or in an activity of such person described in
     section 212 * * * otherwise than as a fuel in a highway
     vehicle--

             (i) which (at the time of such use) is
          registered, or is required to be registered, for
          highway use under the laws of any State or foreign
          country * * *.

     Section 6427(g) provides for the payment to the original

purchaser of any qualified diesel-powered highway vehicle the

amount of $198 for a truck or van.      This credit applies only to

vehicles purchased after January 1, 1985.     Sec. 6427(g)(5).

     With regard to the credit payable under section 6421,

petitioner must prove that his dump truck was not a highway

vehicle that was registered or required to be registered for

highway use.   Rule 142(a).   If so, he then must establish the
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number of gallons of gasoline or diesel fuel purchased in 1991

for use in the dump truck.

     It is clear from petitioner’s testimony that he drove his

dump truck on the highway from its storage yard to various

project sites for which he had hauling contracts.   He also would

haul materials from the project sites to other locations,

provided such destinations were within a 50-mile radius.    In so

doing, petitioner used public highways.   He has failed to prove

that the dump truck was not a highway vehicle, or that it was not

registered or required to be registered for highway use.3

     3
        See sec. 48.4061(a)-1(d)(1), Manufacturers & Retailers
Excise Tax Regs., for a definition of "highway vehicle" and its
use. See also sec. 48.6421-4(b) of the regulations with respect
to the meaning of "qualified business use" for claiming the fuel
tax credit, and particularly subparagraph (5) which contains the
following example illustrating its application:

     M corporation, a logging company, files its income tax
     return on the basis of the calendar year. During 1982, the
     company used 20,000 gallons of gasoline in its logging
     business. Of this amount, 12,000 gallons were used as fuel
     in registered highway vehicles which were operated both on
     the public highways and on the company's private roads. Of
     the remaining 8,000 gallons, 6,000 were used in nonhighway
     vehicles, such as tractors and bulldozers, and 2,000 gallons
     were used in highway vehicles such as heavy trucks which, at
     the time of use, were neither registered nor required to be
     registered under state law for highway use by reason of
     being operated entirely on the company's property. As the
     ultimate purchaser, M may take a credit on its income tax
     return for 1982 under this section in respect of the 6,000
     gallons used in the nonhighway vehicles and the 2,000
     gallons used in the unregistered highway vehicles. However,
     no credit may be allowed with respect to the 12,000 gallons
     used in the registered highway vehicles even though a
     portion of this gasoline was used in operating the vehicles
                                                   (continued...)
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Petitioner is not entitled to a fuel tax credit for diesel fuel

purchased.

     Similarly, petitioner used his pickup truck for various

purposes, including commuting.    He has not proven that it was

used for business or other profit-seeking purposes or that it was

a nonhighway vehicle.   Therefore, he is not entitled to a fuel

tax credit for the gasoline purchased for use in the pickup

truck.   Hence, we need not consider the alternative issue as to

whether petitioner has established the purchase of gasoline or

diesel fuel and the amount of fuel tax paid.

     Under section 6427, petitioner must establish that he

purchased a diesel-powered highway vehicle after January 1, 1985.

From this record it would appear that the partnership, not

petitioner, may have purchased the truck because no depreciation

schedule is included with petitioner’s Federal income tax return.

Nevertheless, petitioner has failed to establish the vehicle’s

purchase date.   Accordingly, petitioner is not entitled to the

fuel tax credit of $198, as claimed.

     Finally, respondent determined an accuracy-related penalty

with respect to the fuel tax credit.     After examination of the

record herein, and taking into account petitioner's reliance on




     3
      (...continued)
     on the company's own property.
                                 - 8 -


Mr. Gilbert, we hold that petitioner is not liable for the

accuracy-related penalty.

     To reflect the foregoing,


                                           Decision will be entered

                                      under Rule 155.
