                  T.C. Summary Opinion 2003-97



                     UNITED STATES TAX COURT



                THOMAS JAMES ALLEN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11105-01S.              Filed July 23, 2003.



     Thomas James Allen, pro se.

     Edwina Jones, for respondent.


     DINAN, 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.   All Rule references are to the Tax

Court Rules of Practice and Procedure.
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     Respondent determined deficiencies in petitioner’s Federal

income taxes for the years 1998 and 1999 in the amounts of $2,409

and $3,617, respectively.   All issues regarding the year 1999

raised in the statutory notice of deficiency mailed to petitioner

on September 5, 2001, have been conceded by petitioner, and we

need address only the issues pertaining to the year 1998.

     For the year 1998, we are asked to decide:   (1) Whether

petitioner is entitled to claimed job expenses and other

miscellaneous itemized deductions in excess of the $1,105 amount

allowed by respondent, and (2) whether petitioner is entitled to

Schedule C business expense deductions in the amount of $12,747

as claimed on his return, or in the amount of $2,459, as allowed

by respondent in the notice of deficiency.

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

The stipulations of fact and the attached exhibits are

incorporated herein by this reference.   Petitioner resided in

Charlotte, North Carolina, on the date the petition was filed in

this case.

     On Schedule A, Itemized Deductions, of his 1998 return,

petitioner claimed job expenses and other miscellaneous

deductions in the amount of $5,915, subject to the 2-percent

floor on miscellaneous itemized deductions in the amount of $510.

Upon auditing petitioner’s return, respondent disallowed the

amount claimed.   Respondent also determined, however, that
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petitioner was entitled to a job-related education miscellaneous

itemized deduction in the amount of $1,105, subject to the 2-

percent floor on miscellaneous itemized deductions.

     On Schedule C, Profit or Loss From Business, petitioner

claimed business expense deductions in the amount of $12,747

resulting in a loss claimed on Schedule C in the amount of

$9,372.    Respondent disallowed the claimed deductions in the

amount of $12,747.    Respondent also determined, however, that

petitioner was entitled to deduct business expenses as follows:

          Entertainment, gift, etc.             $  193
          Auto expenses                          1,950
          Travel, etc.                             316
                                                $2,459

                             Discussion

     Taxpayers generally bear the burden of proving that the

Commissioner’s determination is incorrect.    Rule 142(a); Welch v.

Helvering, 290 U.S. 111 (1933).    Pursuant to section 7491(a)(1),

however, the burden of proof shifts to the Commissioner if, among

other requirements, the taxpayer introduces “credible evidence

with respect to any factual issue relevant to ascertaining” his

tax liability.    The burden of proof in this case does not shift

to respondent because petitioner has not complied with the

requirements of section 7491(a)(1).

     A taxpayer generally must keep records to substantiate the

amounts of items reported on his Federal income tax return.      Sec.

6001; sec. 1.6001-1(a), (e), Income Tax Regs.       In the event that
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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 540, 543-544 (2d Cir. 1930).    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, 743

(1985).   Furthermore, section 274(d) supersedes the Cohan

doctrine and prohibits estimating certain expenses.    Sanford v.

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

Cir. 1969).   That section provides that unless the taxpayer

complies with certain strict substantiation rules, no deduction

is allowable (1) for travel expenses, (2) for entertainment

expenses, (3) for expenses for gifts, or (4) with respect to

listed property.   Listed property includes passenger automobiles

and other property used as a means of transportation, computers,

and cell phones or other similar telecommunications equipment.

Sec. 280F(d)(4).   To meet the strict substantiation requirements,

the taxpayer must substantiate the amount, time, place, and

business purpose of the expenses.   Sec. 274(d); sec. 1.274-5T,

Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
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Schedule A Itemized Deductions

     Petitioner claimed the following Itemized deductions:

          Form 2106 vehicle expenses          $4,007
          Tax preparation fees                   156
          Tax prep. & tax pubs.                  100
          Cont. educ. books                      500
          Uniform/shoes                        1,152
                                               5,915

     At trial, petitioner had no memory of the expenses he

deducted for the purchases of continuing education books,

uniforms, and shoes.   He also testified that he prepared and

electronically filed his own 1998 return.   No evidence was

submitted to substantiate expenses deducted for tax preparation

fees and tax publications.   Finally, petitioner admitted that all

employee business expenses incurred by him during his employment

with Polygram Manufacturing & Distribution Centers were

reimbursed.   He would not, therefore, be entitled to claim a

miscellaneous employee business expense deduction for automobile

expenses on Schedule A.   We sustain respondent’s disallowance of

the $5,915 claimed as miscellaneous itemized deductions on

Schedule A of his 1998 return.1

Schedule C Business Expenses

     During the examination of petitioner’s 1998 return, and in

particular with regard to Schedule C, respondent allowed

petitioner the following business expenses:


     1
          As discussed infra, respondent did allow petitioner to
deduct automobile expenses on Schedule C of his 1998 return.
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          Entertainment, gifts               $  193
          Automobile expenses                 1,950
          Travel                                316
                                              2,459

None of these expenses were deducted by petitioner on Schedule C

of his return.

     Respondent reviewed the Form 2106, Employee Business

Expenses, attached to petitioner’s 1998 return to support the

$4,007 automobile deduction claimed on Schedule A.       On that form,

petitioner reported 4,138 miles driven at $.325 per mile for an

amount of $1,345.    Petitioner also reported actual automobile

expenses of $2,662 for a total of $4,007.    For reasons not

appearing in the record, respondent determined that petitioner

was entitled to an automobile expense deduction of $1,950, based

upon 6,000 miles traveled at the standard mileage rate of $.325

per mile for 1998.

     Petitioner claimed an advertising expense deduction of $450

on his 1998 Schedule C.    Petitioner informs us that he made signs

that he placed in the windows of various stores to advertise

goods that he held for sale.    He submitted no evidence either

that he spent $450 to produce the signs or that he paid $450 to

display them in the various store windows.       Respondent is

sustained on this issue.

     Petitioner claimed a $403 depreciation expense deduction on

his 1998 Schedule C.    He admitted at trial that he was not
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entitled to the claimed $403 deduction because that amount

pertained to the automobile for which he was allowed an

automobile expense deduction in the amount of $1,950, based upon

6,000 miles of business travel.    Respondent is sustained on this

issue.

     Petitioner claimed a $1,300 legal and professional services

expense deduction on his 1998 Schedule C.    He explained that he

paid that to a friend of a friend to draw up a business plan that

would lead to the incorporation of an unexplained business that

petitioner intended to pursue.    There is no evidence in the

record that petitioner had an incorporated business during the

years in issue.    Testimony may be sufficient as proof but in an

instance such as here, where the testimony is conclusory and

subject to doubt, it falls short of overcoming respondent’s

presumption of correctness.    Hearn v. Commissioner, 36 T.C. 672

(1961), affd. 309 F.2d 431 (9th Cir. 1962).    We sustain

respondent on this issue.

     Petitioner claimed a vehicle rent or lease deduction on his

1998 Schedule C.    He stated that he rented vans to transport

various items to his home from Chicago and Commerce, Georgia, to

sell.    Again, we are left with petitioner’s uncorroborated self-

serving testimony to substantiate the claimed deduction, which

this Court need not accept.    Sacks v. Commissioner, T.C. Memo.

1994-217, affd. 82 F.3d 918 (9th Cir. 1996); Niedringhaus v.
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Commissioner, 99 T.C. 202, 212 (1992); Tokarski v. Commissioner,

87 T.C. 74, 77 (1986).   We sustain respondent on this issue.

     Petitioner claimed a $500 repairs and maintenance expense

deduction on his 1998 Schedule C.    He admitted at trial that he

was not entitled to the claimed deduction.   It pertained to

maintenance expenses paid to repair the automobile for which he

was allowed a standard mileage expense.   Respondent is sustained

on this issue.

     Petitioner claimed deductions of $175 and $150 for supplies

and licenses, respectively, on his 1998 Schedule C.   No evidence

was submitted to substantiate these claimed deductions.

Respondent is sustained on this issue.    See Niedringhaus v.

Commissioner, supra.

     In Part V of his 1998 return, petitioner deducted “Other

Expenses” as follows:

                 Education                $3,500
                 Telephone                 1,750
                 Cellular phones 2         2,000
                 Pagers 2                    144
                 Laptop computer           2,150
                                           9,544

     As noted, supra, respondent determined in the notice of

deficiency that petitioner was entitled to a job-related

education miscellaneous itemized deduction in the amount of

$1,105 subject to the 2-percent floor on miscellaneous

deductions.   Petitioner has not substantiated that he is entitled

to any education expense deduction in excess of the amount
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determined by respondent, nor has he shown that the education

expense allowed should be a Schedule C deduction, rather than a

Schedule A itemized deduction.    Respondent is sustained on this

issue.

     Even had petitioner established that he spent the amounts

claimed, supra, for a telephone, two cellular phones, two pagers,

and a laptop computer, petitioner would not be entitled to deduct

the amounts expended for those items on Schedule C of his 1998

return.2

     Section 179 permits taxpayers (other than estates, trusts

and certain noncorporate lessors) to elect to deduct the cost of

qualifying depreciable property in the year in which the property

is placed in service rather than to recover the cost through

depreciation.

     A section 179 election to expense the cost of qualifying

property must be made on either (1) the taxpayer’s first return

for the tax year in which the property is placed in service or

(2) an amended return that is filed prior to the due date

(including extensions) for filing the return.   Sec. 1.179-5(a),

Income Tax Regs.    The election is made on Form 4562, Depreciation

and Amortization.   Petitioner did not elect to expense the above-




     2
          We need not and do not decide whether the above-
mentioned property constitutes qualifying depreciable property.
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mentioned property on his 1998 return.       Respondent is sustained

on this issue.

     At trial, petitioner raised a new issue, arguing that he is

entitled to a business expense deduction on his 1998 return for

amounts he paid to Morningstar Storage to “store everything”.

Petitioner submitted no documents to substantiate the claimed

business expense deduction.       His testimony was vague and

unpersuasive:

            The Court:     That storage business still in
                           existence?

            The Witness:   Yes, sir.

            The Court:     Did you ever go to anyone and ask
                           them for a receipt?

            The Witness:   Yes.

            The Court:     What did they tell you?

            The Witness:   They said they couldn’t pull any records
                           back from that far. They’re still in
                           business, Morningstar Storage on Sharon--

            The Court:     This 1998, and they couldn’t pull any
                           records back from 1998?

            The Witness:   That’s what the manager on site said.
                           They have an in-house guy right there.

     Petitioner has submitted no credible evidence that he is

entitled to a business expense deduction for storage rental space

in 1998, and we do not further consider the issue.

     Reviewed and adopted as the report of the Small Tax Case

Division.
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To reflect the foregoing,

                                  Decision will be entered

                             for respondent.
