                  T.C. Summary Opinion 2004-169



                     UNITED STATES TAX COURT



                ROLAND GYULA SZASZ, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13460-03S.           Filed December 9, 2004.


     Roland Gyula Szasz, pro se.

     Valerie L. Makarewicz, for respondent.



     ARMEN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time that the petition was filed.1   The decision to

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



     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 1998
and 1999, the taxable years in issue, and all Rule references are
to the Tax Court Rules of Practice and Procedure. All monetary
amounts are rounded to the nearest dollar.
                                  - 2 -

should not be cited as authority.

     Respondent determined deficiencies in petitioner’s Federal

income taxes of $8,924 and $10,084 for 1998 and 1999,

respectively.

     After concessions,2 the issues for decision are:     (1)

Whether the statute of limitations bars the assessment of the

deficiencies for 1998 and 1999; if the statute of limitations is

not a bar, (2) whether petitioner is entitled to dependency

exemption deductions for his parents in 1998 and 1999; (3)


     2
        Petitioner concedes: (1) For 1998, he is not entitled to
deduct a dependency exemption for his sister, Christina Szasz;
(2) for 1999, he received unreported income in the aggregate
amount of $5,512; and (3) he is not entitled to the following
Schedule C, Profit or Loss From Business, deductions (to the
limited extent provided herein) that were disallowed by
respondent:

     Expense                               1998    1999
     Advertising                           $384    $312
     Depreciation                         5,057   1,980
     Mortgage interest                      -0-     796
     Other interest                         -0-   1,000
     Legal and professional services         78      94
     Office expense                         235     258
     Rent                                   664   3,577
     Repairs and maintenance                -0-     191
     Supplies                               261     283
     Taxes and licenses                   1,195     697
     Travel, meals, and entertainment       -0-     185
     Other expenses--telephone               75      78
     Other expenses--points                 -0-     675

Respondent concedes: (1) For 1998 and 1999, petitioner is
entitled to deduct car and truck expenses in the amounts of
$6,763 and $6,876, respectively, as claimed on petitioner’s
Schedules C; and (2) for 1999, petitioner is entitled to deduct
mortgage interest of $4,855, taxes and licenses of $931, and
points of $417 as Schedule A, Itemized Deductions, expenses,
rather than as Schedule C expenses as claimed and disallowed in
the notice of deficiency.
                                 - 3 -

whether petitioner is entitled to head-of-household filing status

in 1998 and 1999; and (4) whether petitioner is entitled to

various Schedule C, Profit or Loss From Business, deductions in

1998 and 1999.

      An adjustment to the amount of petitioner’s itemized

deductions is purely a mechanical matter, the resolution of which

is dependent on our disposition of the issues for decision.

I.   Background

      Some of the facts have been stipulated, and they are so

found.     We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

      At the time that the petition was filed, petitioner resided

in Thousand Oaks, California.

      A.   Petitioner’s Occupation

      Until the real estate market crash in California in 1997,

petitioner worked full time as a real estate agent in

Victorville, California.    In mid-1997, petitioner relocated to

Thousand Oaks to find a better job, and he started working full

time as a real estate agent for Fred Sands Brown Realty (Fred

Sands).     By 1998, petitioner was working only part time at Fred

Sands during the evenings and on the weekends.    At all relevant

times, petitioner maintained an office at Fred Sands and focused

his real estate activity on listings and investors in both

Victorville and Thousand Oaks.    Victorville is located
                               - 4 -

approximately 130-140 miles from Thousand Oaks.

     In addition to his part-time job with Fred Sands, petitioner

worked full time as a salesman for Cardservice International

(Cardservice) in the Thousand Oaks area.    In 1998 and 1999,

petitioner worked 40 hours a week at Cardservice from 6:00 a.m.

until 2:30 p.m.

     B.   Petitioner’s Place of Residence

     In 1994, petitioner purchased a single family residence at

13040 Caspian Drive in Victorville (Victorville home).

Petitioner maintained the Victorville home as his place of

residence until mid-1997 when he relocated to Thousand Oaks.

Petitioner retained the Victorville home because he was unable to

sell it in 1997 without sustaining a significant loss.

     When petitioner relocated to Thousand Oaks in mid-1997, he

initially lived with his parents, Lorant and Elizabeth Szasz

(individually referred to as Lorant and Elizabeth), in their home

in Thousand Oaks.

     In September 1997, petitioner moved out of his parents’ home

and rented a guest house above a two-car garage at 1350 Camino

Cristobal in Thousand Oaks (Camino Cristobal).    The guest house

had one bedroom, one bathroom, a kitchenette, and a “great room”,

which was a combination living room and dining room.    The great

room contained a dining table, a couch, and a desk.    Petitioner

used the great room both to entertain personal guests and family
                                 - 5 -

and to meet with clients from Fred Sands.     In September 1998,

petitioner and his then-girlfriend signed a new lease for Camino

Cristobal, at which time petitioner’s girlfriend began to reside

with him.

     In 1998 petitioner paid expenses for Camino Cristobal, which

amounts remain in issue, as follows:     (1) Rent of $11,100, (2)

repairs and maintenance of $141, (3) utilities of $510, and (4)

telephone of $498.

     In mid-1999, petitioner moved to a single family residence

in Moorpark (which is in the Thousand Oaks vicinity) (Moorpark

home) under a lease with an option to purchase.3    The Moorpark

home includes approximately 1,100 square feet and has two

bedrooms, two bathrooms, a kitchen, a living room, and a dining

room.     Petitioner used the second bedroom as an office.   (For

convenience, we refer to Camino Cristobal and the Moorpark home

collectively as the Thousand Oaks home.)     In 1999 petitioner paid

expenses for the Thousand Oaks home, which amounts remain in

issue, as follows:     (1) Rent of $5,550, (2) utilities of $549,

and (3) telephone of $544.

     C.    Petitioner’s Family Household

     In November 1997, petitioner’s father, Lorant, became

disabled.     Before his disability, Lorant worked at LERC



     3
        At a time not disclosed in the record, petitioner
purchased the Moorpark home and currently resides there.
                                 - 6 -

Enterprises, Inc./Hungarians’ Sunday (LERC), a family corporation

that Lorant established in 1981.4    At all relevant times, Lorant

was the director and secretary-treasurer, and Elizabeth was the

president.

     Sometime in 1997, LERC lent approximately $77,640 to Lorant,

Elizabeth, and petitioner, collectively.5    In March 1998, Lorant

began receiving approximately $753 in Social Security disability

benefits.    In 1998 and 1999, Lorant and Elizabeth did not receive

a salary from LERC.

     Because of financial constraints, Lorant and Elizabeth sold

their home in Thousand Oaks in 1998 and moved into petitioner’s

Victorville home.     At all relevant times, Lorant and Elizabeth

resided by themselves in the Victorville home.

     D.    Petitioner’s 1998 and 1999 Income Tax Returns

     Lorant prepared petitioner’s 1998 and 1999 income tax

returns.     Petitioner executed his 1998 income tax return on

February 14, 1999, and filed it on or before April 15, 1999.

Petitioner executed his 1999 income tax return on February 11,

2000, and filed it on or before April 15, 2000.



     4
        LERC’s business operations consisted of owning several
properties, a printing company, and a mailing company.
     5
        The record does not disclose what part of the total was
lent to each individual, but the record indicates that a portion
was lent to petitioner to buy a car. By the end of the taxable
year 1998, there was an outstanding loan of $69,230 to LERC’s
stockholders.
                                 - 7 -

     During the years in issue, petitioner was not married, but

he filed as head-of-household claiming his parents as dependents.

     Petitioner attached, inter alia, a Schedule C to each of his

income tax returns for 1998 and 1999.      On each Schedule C,

petitioner identified his business activity code as 531210,

signifying an office of real estate agents and brokers.        On each

Schedule C, petitioner claimed various deductions.        After

concessions, and as relevant to the issues for decision, those

deductions were as follows:

                                   1998           1999
     Rent                        $11,100         $5,550
     Repairs and maintenance         141            -0-
     Utilities                       510            549
     Telephone                       498            544

     E.    Examination of Petitioner’s Returns

     At a time not disclosed in the record, respondent commenced

an examination of petitioner’s 1998 and 1999 returns.

     On July 23, 2000, petitioner executed Form 2848, Power of

Attorney and Declaration of Representative, appointing Lorant as

his representative concerning income tax matters for the taxable

years 1993 through 2002.    The Form 2848 specifically authorized

Lorant to sign consents.    Lorant signed the Form 2848 on July 26,

2000.     Respondent received the Form 2848 on September 12, 2000.

     On July 17, 2001, Lorant executed on behalf of petitioner a

Form 872, Consent to Extend the Time to Assess Tax, consenting to

extend the period of limitation for 1998 to November 31, 2002
                                 - 8 -

(first consent).    Lorant signed the first consent as “Lorant

Szasz, P.O. for Roland Szasz”.    Respondent received the first

consent on July 19, 2001, and respondent’s authorized official

countersigned it on July 23, 2001.

       On August 3, 2001, Lorant executed on behalf of petitioner

another Form 872 consenting to extend the period of limitation

for 1998 to December 31, 2002 (second consent).    Lorant signed

the second consent as “Lorant Szasz, P.A. for Roland Szasz”.

Respondent received the second consent on August 9, 2001, and

respondent’s authorized official countersigned it on that same

day.

       On December 24, 2001, Lorant executed on behalf of

petitioner another Form 872 consenting to extend the period of

limitation for 1998 to December 31, 2002 (third consent).6

Lorant signed the third consent as “Lorant Szasz, P.O.A. for

Roland Szasz”.    Respondent’s authorized official countersigned it

on December 28, 2001.

       For reasons not fully explained in the record, Lorant became

unable to continue to represent petitioner in the audit.

Consequently, in or about April 2002, Lorant hired on behalf of

petitioner a certified public accountant, Scott Penn (Mr. Penn),



       6
        There is no explanation in the record why Lorant executed
two separate Forms 872, Consent to Extent the Time to Assess Tax,
consenting to extend the period of limitations to the same date
of Dec. 31, 2002.
                                 - 9 -

to handle petitioner’s income tax matters for 1998 and 1999.

Petitioner was aware that Lorant hired Mr. Penn on petitioner’s

behalf, and petitioner approved the hiring of Mr. Penn.      On April

22, 2002, Lorant executed on behalf of petitioner a Form 2848

appointing Mr. Penn as petitioner’s representative for the

taxable years 1997 through 2003.    Lorant signed the Form 2848 as

“Lorant Szasz, P.O.A. for Roland Szasz”.    Mr. Penn signed the

Form 2848 on the same day.

     From about April 2002 through May 2003, Mr. Penn

corresponded with respondent’s agent on approximately 40

occasions.    As a matter of practice, Mr. Penn would then

correspond with Lorant, who would relay all the information to

petitioner.    When Mr. Penn was unable to persuade respondent to

accept petitioner’s returns as filed, he executed on October 15,

2002, a Form 872 consenting to extend the period of limitations

for 1998 and 1999 to June 30, 2003 (last consent).    Mr. Penn

signed the last consent as petitioner’s representative.

Respondent’s authorized official countersigned it on October 21,

2002.

     F.   Notice of Deficiency

     On May 14, 2003, respondent issued to petitioner a notice of

deficiency for 1998 and 1999.    Respondent determined that

petitioner is not entitled to claim his parents as dependents,

that petitioner is not entitled to head-of-household filing
                                               - 10 -

status, and that petitioner is not entitled to deduct the

following Schedule C expenses:
Expense                                 1998                                 1999
                          Claimed    Allowed   Disallowed     Claimed   Allowed     Disallowed
Advertising                   $384      -0-       $384           $312      -0-         $312
Car and truck expenses       6,763   $1,662      5,101          6,876   $1,662        5,214
                           1
Depreciation                 5,935      878      5,057          2,858      878        1,980
Insurance                    1,452    2,180        -0-          1,583    2,180          -0-
Mortgage interest              -0-      -0-        -0-          5,651      -0-        5,651
Other interest                 -0-      -0-        -0-          1,000      -0-        1,000
Legal and professional
   services                    78       -0-         78             94      -0-           94
Office expense                235       -0-        235            258      -0-          258
Rent for other
   business property       11,774       -0-     11,774          9,127      -0-         9,127
Repairs and maintenance       112       -0-         112           191      -0-           191
Supplies                      261       -0-         261           283      -0-           283
Taxes and licenses          1,195       -0-       1,195         1,628      -0-         1,628
Travel                        -0-       -0-         -0-           185      -0-           185
Utilities                     510       -0-         510           538      -0-           538
Telephone                     573       -0-         573           622      -0-           622
Points                        -0-       -0-         -0-         1,092      -0-         1,092
                                               2                                    3
   Total expenses          29,290     4,720      24,570        32,298    4,720        27,578
1
   It appears that petitioner transposed this amount, which should have been
$5,953 as claimed on Form 4562, Depreciation and Amortization.
2
   The total amount disallowed is $25,280.                  There is no explanation for this
discrepancy.
3
   The total amount disallowed is $28,175.                  There is no explanation for this
discrepancy.

          G.   Petition

          Petitioner timely filed a petition with the Court disputing

respondent’s determinations.                   Paragraph 4 of the petition states:

          1. I am requesting the “Head of the Household” status
          be reinstated! Reason: my father has been disabled
          since 1997. Since then he has received less than
          $800.00/m in income to live on. Out of this my parents
          spend approx. half, $400.00/m on insurance and
          medications. With today’s cost of living it is
          impossible to even get by on 400 per month, per married
          couple. I have been providing shelter and support
          since my father became disabled. 2. Please reinstate
          my original tax declaration! I have responded in time
          to any inquiry that was issued by the IRS. After my
          initial responses the IRS changed the accounting to
                               - 11 -

      “Alternative Minimum Tax”.[7] 3. Please consider that
      after I agreed to “Consent to Extend the Time to Assess
      Tax”, the IRS response was received 4 months after the
      due date of December 31, 2002!

II.   Discussion

      A.   Statute of Limitations

      We must first decide whether the statute of limitations bars

the assessment of the deficiencies in issue.   In doing so, we

must decide whether the last consent is valid for 1998 and 1999.

If it is valid, then the period for assessment of income tax was

extended and respondent’s notice of deficiency for 1998 and 1999

was timely.    If, however, the last consent is invalid, then the

period for assessment of income tax expired before respondent

issued the notice of deficiency.

      Generally, an income tax must be assessed within 3 years

after the applicable return is filed.   Sec. 6501(a).   In this

regard, a return filed before the due date is considered as

having been filed on the date it was due.   Sec. 6501(b)(1).    This

period may be extended, however, if the taxpayer and the

Commissioner consent in writing, before the expiration of the

limitations period, to extend the 3-year period of limitations.

Sec. 6501(c)(4)(A).    The Commissioner and the taxpayer may extend

the period so agreed upon by subsequent agreements in writing


      7
        We note that respondent did not determine in the notice
of deficiency that petitioner is subject to the alternative
minimum tax. Therefore, we need not address petitioner’s
allegation.
                               - 12 -

made before the expiration of the period previously agreed upon.

Id.

      The bar of the statute of limitations on assessment is an

affirmative defense, and the party raising it must specifically

plead it and carry the burden of proving its applicability.

Rules 39, 142(a).   If the taxpayer makes a prima facie case

proving the filing date of his or her income tax return and the

expiration of the statutory period prior to the mailing of the

notice of deficiency, the burden of going forward with the

evidence shifts to respondent.    Robinson v. Commissioner, 57 T.C.

735, 737 (1972).    Respondent may discharge this burden by showing

that the parties executed a written consent, valid on its face,

extending the period of limitations for assessment and that the

notice of deficiency was mailed prior to the expiration of the

extended period.    Adler v. Commissioner, 85 T.C. 535, 541 (1985).

If respondent introduces an apparently valid consent and the

taxpayer asserts that such consent is ineffective, the burden of

going forward again shifts back to the taxpayer to affirmatively

show the invalidity of the written consent.     Id.   The burden of

proof; i.e., the burden of ultimate persuasion, however, always

remains with the party who pleads that the assessment is barred

by the statute of limitations.    Id. at 540.

      Petitioner timely filed his 1998 and 1999 income tax

returns, and the period of limitations with respect to those
                              - 13 -

years ordinarily would have expired on April 15, 2002, and April

15, 2003, respectively.   Respondent contends, however, that

petitioner duly executed a consent, which is valid on its face,

extending the period of limitations to June 30, 2003, and that

respondent issued the notice of deficiency before such date.

     When a consent appears regular on its face and in accordance

with law, we generally presume that the parties who signed the

consent acted within the scope of their authority.   Concrete Engg

Co. v. Commissioner, 19 B.T.A. 212, 221 (1930), affd. 58 F.2d 566

(8th Cir. 1932); Ryan v. Commissioner, T.C. Memo. 1991-49.     The

last consent properly identifies petitioner as the taxpayer and

bears the signature of petitioner’s representative, Mr. Penn, who

acted pursuant to a valid Form 2848.   Furthermore, respondent’s

authorized representative executed the last consent before the

expiration of the period of limitations.   Therefore, respondent

has introduced a consent form that appears to be valid, and

petitioner must prove that the last consent is invalid.   See Ryan

v. Commissioner, supra; Lefebvre v. Commissioner, T.C. Memo.

1984-202, affd. per curiam 758 F.2d 1340 (9th Cir. 1985).

     Petitioner contends that the last consent is invalid because

Mr. Penn did not have the requisite authority to execute an

extension on petitioner’s behalf.   In this regard, petitioner
                              - 14 -

contends that he never delegated such authority to Mr. Penn.8     We

reject petitioner’s contention.

     Petitioner, acting through Lorant, hired Mr. Penn

specifically to resolve the audit of petitioner’s taxable years

1998 and 1999.   On April 22, 2002, petitioner, again acting

through Lorant, executed a Form 2848 appointing Mr. Penn as his

personal representative with respect to petitioner’s income tax

matters for the taxable years 1997 through 2003.    We consider

significant that the Form 2848 specifically authorized the

representative to sign consents.    Thus, we find that petitioner

gave Mr. Penn authority to represent him before the Internal

Revenue Service, including the execution of a consent form.

     Petitioner contends, however, that Mr. Penn was required to

obtain approval from petitioner before executing any consent to

extend the period of limitations.   Petitioner further maintains

that had Mr. Penn asked for approval to execute the last consent,

petitioner would not have authorized such action.    However, there

is nothing on the Form 2848 or in the record to suggest that Mr.

Penn did not have the requisite authority to execute the last

consent.   Thus, petitioner has failed to prove that Mr. Penn

acted outside the scope of his authority.



     8
        Petitioner does not contend that Lorant lacked authority
to execute the first three consents on his behalf, nor does
petitioner contend that Lorant lacked authority to hire Mr. Penn
as petitioner’s representative.
                                - 15 -

     Consequently, Mr. Penn properly executed, pursuant to a Form

2848, the last consent to extend the period of limitations for

1998 and 1999 to June 30, 2003.    Because respondent issued the

notice of deficiency before such date, the statute of limitations

does not bar the assessment of any deficiency in income tax for

1998 and 1999.

     B.   Burden of Proof

     As a general rule, the Commissioner’s determinations are

presumed correct, and the taxpayer bears the burden of proving

that those determinations are erroneous.    Rule 142(a); INDOPCO,

Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering,

290 U.S. 111, 115 (1933).

     By virtue of section 7491(a), however, the burden of proof

may, under certain circumstances, be shifted to the Commissioner.

On the basis of the record, we hold that section 7491(a) does not

operate to shift the burden of proof to respondent because:   (1)

Petitioner did not introduce credible evidence with respect to

any factual issue relevant to ascertaining his liability; (2) he

did not comply with the requirements to substantiate his

deductions; and (3) he did not maintain all required records.

Sec. 7491(a); Higbee v. Commissioner, 116 T.C. 438 (2001).    In

view of the foregoing, we proceed with our analysis on the basis

that petitioner bears the burden of proving that respondent’s

determinations are erroneous.
                                  - 16 -

     C.    Dependency Exemption Deductions

     On each of his returns for 1998 and 1999, petitioner claimed

dependency exemption deductions for both of his parents.         In the

notice of deficiency, respondent denied the deductions.

     A taxpayer is entitled to a deduction for an exemption for

each individual who qualifies as the taxpayer’s dependent under

sections 151 and 152.       Secs. 151(a), (c), 152.   The term

“dependent” includes a taxpayer’s parents over half of whose

total support is received from the taxpayer for the calendar

year.     Sec. 152(a)(4).    “The term ‘support’ includes food,

shelter, clothing, medical and dental care, education, and the

like.”     Sec. 1.152-1(a)(2)(i), Income Tax Regs.

     Petitioner contends that he contributed over half of his

parents’ total support.       In support of this contention,

petitioner introduced at trial a worksheet indicating that his

parents’ sole source of income was Lorant’s annual Social

Security benefits of approximately $9,036, that his parents’

total support cost was $34,625, and that petitioner contributed

$25,588 towards his parents’ support.9      We do not find the

worksheet to be reliable because petitioner did not have personal

knowledge of the information in the worksheet, which was

completed by Lorant, and petitioner did not present any testimony


     9
        We note that the worksheet erroneously counted rent for
the Victorville home as an expense of the entire household and as
another separate expense of the dependents.
                              - 17 -

or other documentary evidence to explain the types of expenses,

the amounts he paid, and the frequency of the expenses.

Moreover, there is evidence in the record to suggest that Lorant

and Elizabeth also may have received some support from LERC

during the years in issue, which information was not reflected in

the worksheet nor refuted at trial.

     Although we do not doubt that petitioner may have

contributed towards the support of his parents, petitioner failed

to show the extent of such support.    On the basis of the record,

we decline to accept petitioner’s unsupported assertion that he

provided over half of his parents’ support.     See Tokarski v.

Commissioner, 87 T.C. 74, 77 (1986).    Respondent’s determination

on this issue is therefore sustained.

     D.   Head-of-Household Filing Status

     On each of his returns for 1998 and 1999, petitioner listed

his filing status as head-of-household.     In the notice of

deficiency, respondent changed petitioner’s filing status to

single.

     A taxpayer is considered a head-of-household if either:      (1)

The taxpayer maintains as his or her home a household that

constitutes, for more than one-half of the taxable year, the

principal place of abode of an individual who qualifies as the

taxpayer’s dependent under sections 151 and 152, or (2) the

taxpayer maintains a household that constitutes the principal
                                - 18 -

place of abode of the taxpayer’s father or mother but only if

such parent qualifies as the taxpayer’s dependent under sections

151 and 152.    Sec. 2(b)(1).

     We have already held that petitioner is not entitled to

deductions for exemptions for his parents for 1998 and 1999

because they do not qualify as petitioner’s dependents under

sections 151 and 152.    Accordingly, petitioner does not qualify

as a head-of-household for either of those years.    Sec. 2(b)(1).

Because petitioner was unmarried, his filing status is “single”,

see secs. 1(c), 3(c), and he is entitled to the standard

deduction applicable to that particular filing status, see sec.

63(c).    Accordingly, we sustain respondent’s determination on

this issue.

     E.    Schedule C Deductions

     As relevant to the issues for decision, petitioner claims

that he is entitled to deductions for business expenses as

follows:    (1) Rent of $11,100 and $5,550 for 1998 and 1999,

respectively, (2) repairs and maintenance of $141 for 1998, (3)

utility expenses of $510 and $549 for 1998 and 1999,

respectively, and (4) telephone expenses of $498 and $544 for

1998 and 1999, respectively.

     Deductions are a matter of legislative grace, and the

taxpayer bears the burden of proving that he or she is entitled

to any deduction claimed.    Rule 142(a); New Colonial Ice Co. v.
                                - 19 -

Helvering, 292 U.S. 435, 440 (1934); Welch v. Helvering, 290 U.S.

111, 115 (1933).    A taxpayer is required to maintain records

sufficient to substantiate his or her claimed deductions.      Sec.

6001.    This includes the burden of substantiating the amount and

purpose of the items claimed.    Id.; Hradesky v. Commissioner, 65

T.C. 87, 90 (1975), affd. per curiam 540 F.2d 821 (5th Cir.

1976).

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

necessary expenses paid or incurred during the taxable year in

carrying on a trade or business.    Section 262(a), however,

generally precludes deductions for personal, living, or family

expenses.    Section 280A further disallows business expenses with

respect to the use of a dwelling unit used by the taxpayer during

the taxable year as a residence.    Sec. 280A(a).

     Section 280A(c), however, permits the deduction of expenses

allocable to a portion of the dwelling unit that is used

exclusively and on a regular basis as either:    (1) The principal

place of business for the taxpayer’s trade or business, or (2) a

place of business that is used by clients or customers in meeting

or dealing with the taxpayer in the normal course of the

taxpayer’s trade or business.    Sec. 280A(c)(1).   In determining

whether a home office is a taxpayer’s principal place of

business, we must consider (1) the amount of time spent at each

location, and (2) the relative importance of the activities
                               - 20 -

performed at each location.   See Commissioner v. Soliman, 506

U.S. 168, 174 (1993).

     Petitioner first contends that the Victorville home was his

personal residence and that the Thousand Oaks home was his place

of business away from home.   Thus, petitioner maintains that he

is entitled to expenses for rent, repairs and maintenance,

utilities, and telephone associated with the Thousand Oaks home.

Petitioner’s contention is not supported by the evidence.

     The record is clear that the Thousand Oaks home, rather than

the Victorville home, was petitioner’s personal residence and tax

home for 1998 and 1999.   Petitioner testified that he kept the

Victorville home for financial reasons and that he had to rent

business property in Thousand Oaks because he could not commute

every day between Victorville and Thousand Oaks.      We are unable

to accept petitioner’s testimony at face value.      See Tokarski v.

Commissioner, supra at 74.    We find that petitioner’s reason for

relocating to Thousand Oaks, for renting a personal residence in

Thousand Oaks, and for keeping the Victorville home was purely

personal in nature.   Petitioner voluntarily relocated to Thousand

Oaks to seek gainful employment.   Indeed, petitioner began

working full time at a new job with Cardservice in Thousand Oaks

and found a residence close to it.      Thus, we are not convinced

that petitioner’s desire to continue working as a part-time real

estate agent established a business purpose for renting the
                              - 21 -

Thousand Oaks home.   Consequently, expenses such as rent, repairs

and maintenance, utilities, and telephone associated with the

Thousand Oaks home are disallowed under section 262.

     In the alternative, petitioner contends that he is entitled

to these expenses because he maintained a home office in the

Thousand Oaks home.   Petitioner’s contention lacks merit.

     Although we do not doubt that petitioner may have worked at

home on occasion with respect to his real estate activity, we

decline to accept petitioner’s naked assertion that the expenses

are valid business expenses without further supporting evidence

of the business purpose of the expenses or the correct allocation

between personal and business expenses.    See Geiger v.

Commissioner, 440 F.2d 688 (9th Cir. 1971), affg. T.C. Memo.

1969-159.   On the basis of the record, we find that petitioner’s

principal place of business for his real estate activity was his

office at Fred Sands and that petitioner maintained his home

office for his own personal convenience.

     In addition, petitioner failed to present any evidence

whatsoever indicating the amount of time and the relative

importance of the activities that he performed at Fred Sands in

comparison to the Thousand Oaks home, and the extent to which he

used his home office for business in the normal course of his

real estate activity.   In particular, we fail to see how

petitioner could have used the great room at Camino Cristobal
                               - 22 -

exclusively for business in light of the fact that the great room

comprised of the living room and dining room, and for most of the

year, petitioner’s girlfriend lived with him.    With respect to

the Moorpark home, petitioner did not present any testimony or

documentary evidence of the extent to which he may have used the

second bedroom as an office.    Thus, petitioner has not proven

that the expenses associated with the Thousand Oaks home were

deductible under sections 162 and 280A, rather than nondeductible

personal, living, or family expenses.    See, e.g., Graves v.

Commissioner, 88 T.C. 28, 38 (1987); Hynes v. Commissioner, 74

T.C. 1266, 1289 (1980).    Accordingly, we sustain respondent’s

determination on this issue.

III.    Conclusion

       We have considered all of petitioner’s arguments, and, to

the extent that we have not specifically addressed them, we

conclude that they are without merit.

       Reviewed and adopted as the report of the Small Tax Case

Division.

       To reflect our disposition of the disputed issues, as well

as the parties’ concessions,



                                          Decision will be entered

                                     under Rule 155.
