                  T.C. Summary Opinion 2004-56



                     UNITED STATES TAX COURT



    GEORGE W. MOSS AND GWENDOLYN ARLINE-MOSS, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11414-02S.             Filed May 12, 2004.


     George W. Moss and Gwendolyn Arline-Moss, pro sese.

     Timothy S. Murphy, for respondent.



     DEAN, 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.   Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code in effect for the year at issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

The decision to be entered is not reviewable by any other court,

and this opinion should not be cited as authority.
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     Respondent determined a deficiency in petitioners' Federal

income tax of $1,694 for 1998.    Petitioners concede as correct

respondent's adjustments for:    (a) Charitable contributions of

$4851 on Schedule A, Itemized Deductions; (b) repairs expense of

$1,175 on Schedule E, Supplemental Income and Loss; and (c) labor

expenses of $450 on Schedule E.    Respondent concedes that

petitioners are entitled to deduct:      (1) Travel expenses of

$3,319 on Schedule C, Profit or Loss From Business; and (2)

miscellaneous expenses of $400 on Schedule E.      The issue

remaining for decision is whether petitioners are entitled to

deduct on Schedule C, $4,067 of telephone expenses.

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

The stipulation of facts and exhibits received in evidence are

incorporated herein by reference.    At the time the petition was

filed, petitioners resided in Flint, Michigan.

                             Background

     During the year 1998, Gwendolyn Arline-Moss (petitioner) was

employed by the State of Michigan as a supervisor in the Office

of Financial Management.    She also worked part-time as a real

estate agent for Robert Edwards and Associates (Edwards).      There

were 63 agents at the company and only 12 desks from which to

work.    Due to the difficulty in obtaining work space at the


     1
      The amount of the adjustment was misstated as $450 during
the oral agreement on the record.
                               - 3 -

Edwards office, petitioner set up an office in the basement of

her home.

     She had installed in her basement office an Ameritech

telephone line that was separate from the personal home

telephone.   The Ameritech line serviced her business phone

number, a Fax number, and an internet line.    Petitioner was also

billed by Ameritech for cell phone service.    Petitioner paid

Ameritech $4,128.24 for telephone services in 1998.

                            Discussion

     Because petitioners failed to meet the requirements of

section 7491(a)(2), the burden of proof does not shift to

respondent in this case.

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

necessary expenses incurred in carrying on a trade or business.

Generally, a taxpayer must establish that deductions taken

pursuant to section 162 are ordinary and necessary business

expenses and must maintain records sufficient to substantiate the

amounts of the deductions claimed.     Sec. 6001; Meneguzzo v.

Commissioner, 43 T.C. 824, 831-832 (1965); sec. 1.6001-1(a),

Income Tax Regs.

     Where a taxpayer has established that he has incurred a

trade or business expense, failure to prove the exact amount of

the otherwise deductible item may not always be fatal.

Generally, unless precluded by section 274, the Court may
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estimate the amount of such an expense and allow the deduction to

that extent.   See Finley v. Commissioner, 255 F.2d 128, 133 (10th

Cir. 1958), affg. 27 T.C. 413 (1956);     Cohan v. Commissioner, 39

F.2d 540, 543-544 (2d Cir. 1930).   In order for the Court to

estimate the amount of an expense, however, there must be some

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

Commissioner, 85 T.C. 731, 742-743 (1985).    Without such a basis,

an allowance would amount to unguided largesse.     Williams v.

United States, 245 F.2d 559, 560 (5th Cir. 1957).

     With respect to certain business expenses specified in

section 274(d), however, more stringent substantiation

requirements apply.   Section 274(d) disallows deductions for

traveling expenses, gifts, and meals and entertainment, as well

as for "listed property", unless the taxpayer substantiates by

adequate records or by sufficient evidence corroborating the

taxpayer's own statement:   (1) The amount of the expenses; (2)

the time and place of the expense; (3) the business purpose of

the expense; and, (4) the business relationship to the taxpayer

of the persons involved in the expense.    The term listed property

is defined in section 280(F)(d) and includes cellular phones, and

other similar telecommunications equipment, such as pagers.       See

sec. 280F(d)(4)(v).

     The substantiation requirements of section 274(d) are

designed to encourage taxpayers to maintain records, together
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with documentary evidence substantiating each element of the

expense sought to be deducted.     Sec. 1.274-5T(c)(1), Temporary

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

     Petitioners submitted copies of Ameritech phone bills for

1998 that contain summary information on petitioner's telephone

charges but give no detail on the nonbasic and larger charges

included in the total bill.   For example, each bill shows a

monthly service charge, and separate charges for local and long

distance service, and for taxes.      For some months, the bills

show separate charges for internet service and for paging.        Still

other monthly bills show, in some cases, hundreds of dollars of

charges for which there is no explanation.        The face of the bill

states:   "For Detailed Charges    - See Page 3".     There is,

however, no page 3 available for any of the bills.        With respect

to what the Court assumes from petitioners' testimony may be cell

phone charges, there is nothing in the record meeting the

requirements of sec. 1.274-5T(c)(1), Temporary Income Tax Regs.,

50 Fed. Reg. 46016 (Nov. 6, 1985).        If the charges were other

than cell phone charges, petitioners have failed to offer any

explanation or any substantiation for them.

     Petitioners, for the real estate business phone, paid

$1,148.15 for monthly service charges, and separate charges for

local and long distance service, taxes, internet service, and

paging.   The Court finds that petitioners have failed to properly
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substantiate telephone charges in connection with a trade or

business in excess of that amount.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                      Decision will be entered

                              under Rule 155.
