                   T.C. Summary Opinion 2002-3



                     UNITED STATES TAX COURT



                GEORGE H. RICHARDS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18523-99S.          Filed January 14, 2002.



     George H. Richards, pro se.

     Monica J. Miller, for respondent.



     PANUTHOS, Chief 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
                                - 2 -

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

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

     Respondent determined a deficiency in petitioner’s Federal

income tax for the taxable year 1997 of $1,334.      At some point

before trial, petitioner conceded the adjustment in the notice of

deficiency; however, each party made additional claims.      The

issues remaining for decision are:      (1) Whether petitioner is

entitled to the claimed dependency exemption deductions; (2)

whether petitioner is entitled to head-of-household filing

status; (3) whether petitioner is entitled to the additional

claimed alimony deduction; and (4) whether petitioner is entitled

to the claimed Schedule C, Profit or Loss From Business, expense

deductions.

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

found.   The stipulation of facts and the attached exhibits are

incorporated herein by this reference.

     Petitioner lived in Clearwater, Florida, at the time he

filed his Tax Court petition.

Background

     Petitioner was employed by an architectural firm as a

licensed architect during 1997.   Petitioner and his wife,

Virginia Richards (Ms. Richards), had three children, Matthew,

Brigid, and Shannon, who in 1997 were ages 17, 13, and 11,

respectively.   Petitioner, Ms. Richards, and their children lived
                               - 3 -

together in the marital home until July 25, 1997, when petitioner

and Matthew moved out.   Although Matthew moved into a new

residence with petitioner in July 1997, the record is unclear as

to whether Matthew continued to live with petitioner for the

remainder of 1997.   Ms. Richards continued to live in the marital

home with Brigid and Shannon for the remainder of the year.

     Ms. Richards was awarded permanent custody of all three

children.   Petitioner and Ms. Richards were divorced in August

1998.   Effective August 1, 1997, petitioner was obligated to pay

$784.62 biweekly in alimony and $346.84 biweekly in child support

pursuant to the terms of the Report and Recommendation of General

Master on Motion for Temporary Relief (the Report) and the Order

of the Pinellas County Circuit Court (the Order).   Petitioner did

not pay the full amount of the alimony as scheduled.   The records

that petitioner submitted, including a Family Law Case History

from Pinellas County, photocopies of petitioner’s calendar with

handwritten notes and calculations, photocopies of petitioner’s

handwritten checking account balance sheets, and Ms. Richards’s

handwritten notes with photocopies of canceled checks that

respondent submitted indicate that petitioner made the following

alimony and child support payments:
                                - 4 -

         Date              Alimony           Child Support

     8/4/97                $253.16               $346.84
     8/17/97                437.78                346.84
     8/30/97                   ---                346.84
     9/12/97                   ---                346.84
     9/14/97                346.84                   ---
     9/26/97                   ---                346.84
     10/6/97                253.16                346.84
     10/24/97                  ---                346.84
     11/10/97               359.63                346.84
     11/24/97               359.63                346.84
     12/9/97                359.63                346.84
     12/21/97               359.63                346.84
       Total              2,729.46              3,815.24

     In addition to his employment with the architectural firm,

petitioner performed architectural computer-aided design (CAD)

drafting services in the evenings.      During the period he resided

at the marital home, petitioner performed the CAD drafting on his

computer at a computer desk in a room in the marital home that he

exclusively used as his home office.     The square footage of the

room in which petitioner performed the CAD drafting was 13

percent of the square footage of the marital home.     After

petitioner moved on July 25, 1997, he performed the CAD drafting

in the kitchen area of each of the rental units in which he

lived.    Petitioner often drove from his residence to a client’s

office to deliver his completed work.     Petitioner wanted to

develop an Internet Web site to promote his CAD drafting business

and to allow him to work from any location.     This Web site was

never completed.
                                    - 5 -

     Petitioner filed a 1997 Federal income tax return1 in which

he claimed, among other items, head-of-household filing status,

dependency exemption deductions for his three children, and an

alimony deduction of $2,515.

     Petitioner filed an amended 1997 Federal income tax return

dated May 15, 2000, in which he increased the amount of his

alimony deduction to $4,991.        With his amended return petitioner

included a Schedule C relating to his drafting activity on which

he reported gross income of $3,840 and a net loss of $1,548.

Petitioner deducted the following expenses on his Schedule C:

                          Expense                            Amount
                                                             1
Car and truck                                                 $186
Depreciation and sec. 179 expense                            3,485
Office expense                                                    57
Rent or lease--vehicles, machinery, and equipment                189
                                                               1
Rent or lease--other business property                           401
Repairs and maintenance                                           30
Supplies                                                         181
Taxes and licenses                                                90
Utilities                                                        289
Other expenses (books)                                            16
Expenses from business use of house                              464
  Total                                                      5,388
            1
             The exact amount of this expense is unclear
     from the copy of the Schedule C but has been derived
     using the total.

     Ms. Richards filed a separate income tax return for the 1997

tax year.       On Schedule A, Itemized Deductions, attached to her


     1
        The return was electronically filed. This is relevant
with respect to the issue of whether a waiver was attached to the
return, as will be discussed infra. Sec. 152(e)(2)(B).
                               - 6 -

return, she claimed deductions for both mortgage interest and

real estate taxes.   Ms. Richards initially claimed dependency

exemption deductions on her 1997 return for Brigid and Shannon,

but she did not claim dependency exemption deductions on her

amended return.

     After trial, respondent filed (1) a motion to file an answer

to conform the pleadings to the proof, which the Court granted,

and (2) an answer to amended petition.

Discussion

     As a preliminary matter, we note that petitioner conceded

the adjustment determined in the notice of deficiency.

After the issuance of the notice of deficiency, in the amended

petition and at trial, petitioner raised the issues concerning

his Schedule C expenses and his increased alimony deduction;

accordingly, petitioner bears the burden of proof on those

issues.2   Rule 142(a)(1).

     In his answer to amended petition, respondent denied the

allegations in the amended petition and made affirmative

allegations that petitioner was not entitled to dependency




     2
        Sec. 7491 does not apply to shift the burden of proof to
respondent on these issues because petitioner has neither alleged
that sec. 7491 is applicable nor established that he complied
with the requirements of sec. 7491(a)(2)(A) and (B) to
substantiate items, maintain required records, and fully
cooperate with respondent’s reasonable requests.
                                 - 7 -

exemption deductions and head-of-household filing status.      These

are new matters for which respondent bears the burden of proof.

Id.

      Issue 1.   Dependency Exemption Deductions

      A dependent is defined as an individual, such as a son or

daughter of the taxpayer, over half of whose support for the

calendar year was received from the taxpayer.      Sec. 152(a)(1);

sec. 1.152-1(a), Income Tax Regs.    As relevant here, the child

must not have attained the age of 19 by the close of the calendar

year.   Sec. 151(c)(1)(B)(i).

      Support includes food, shelter, clothing, medical and dental

care, education, and the like.    Sec. 1.152-1(a)(2)(i), Income Tax

Regs.   The total amount of support for each claimed dependent

furnished by all sources during the year in issue must be

established by competent evidence.       Blanco v. Commissioner, 56

T.C. 512, 514 (1971).    The amount of support that the claimed

dependent received from the taxpayer is compared to the total

amount of support the claimed dependent received from all

sources.   Sec. 1.152-1(a)(2)(i), Income Tax Regs.     It must also

be established that the taxpayer provided more than one-half of

the total support for each claimed dependent.      Secs. 151 and 152;

sec. 1.152-1(a)(1), Income Tax Regs.

      In the case of a child who receives over half of his support

from parents who are divorced or legally separated under a decree
                               - 8 -

of divorce or separate maintenance under section 152(e)(1)(A)(i),

or separated under a “written separation agreement” under section

152(e)(1)(A)(ii),3 and the child is in the custody of one or both

parents for more than one-half of the calendar year, then such

child shall be treated as receiving over one-half of his support

from the parent having custody for a greater portion of the

calendar year.   Sec. 152(e)(1).

     The custodial parent is the parent who has custody of a

child for the greater portion of the year.    Id.   The noncustodial

parent may claim the dependency exemption deduction, and a

dependent may be treated as having received over one-half of his

support from the noncustodial parent, if the custodial parent

signs a written statement that she will not claim the child as a

dependent for the taxable year, under section 152(e)(2)(A).    The

noncustodial parent must then attach this waiver to his return.

Sec. 152(e)(2)(B); sec. 1.152-4T(a), Q&A-3, Temporary Income Tax

Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984).

     Respondent argues (and has the burden of proving) that

petitioner is not entitled to the dependency exemption deductions

claimed for his three children.    Respondent has not argued that

petitioner and Ms. Richards were not legally separated under


     3
        Sec. 152(e)(1)(A)(iii) concerns parents living apart at
all times during the last 6 months of the taxable year. This
section is not applicable because petitioner was not living apart
from Ms. Richards at all times during the last 6 months of 1997.
                               - 9 -

section 152(e)(1)(A)(i), or that there was no “written separation

agreement” under section 152(e)(1)(A)(ii).    Respondent did not

present evidence that anyone, including Ms. Richards, other than

petitioner provided any support for the children.    See sec.

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

     Respondent did not present evidence that Matthew did not

live with petitioner for a greater portion of the year and,

therefore, has not met his burden of proof.    Accordingly,

petitioner was the custodial parent for Matthew in 1997 under

section 152(e)(1).   Therefore, petitioner provided over half of

Matthew’s support, and he is entitled to a dependency exemption

deduction for Matthew for 1997.   See sec. 152(a)(1).

     Ms. Richards was the custodial parent for Shannon and Brigid

in 1997.   As previously indicated, petitioner, as the

noncustodial parent, would be entitled to the dependency

exemption deductions for Shannon and Brigid only if he attached

the proper waiver signed by Ms. Richards to his return.

Respondent neither asserted nor presented evidence that

petitioner failed to attach a waiver signed by Ms. Richards to

his return as required by section 152(e)(2).    While we recognize

that proof of a negative may be difficult, a copy of a transcript

indicating that no such waiver was attached to the 1997 return

would have provided some evidence on this matter.    Cf. Kessler v.

Commissioner, T.C. Memo. 1977-117 (determining that the taxpayer,
                              - 10 -

who had the burden of proof, met the burden of proving the

negative by providing credible testimony).    The copy of

petitioner’s electronically filed 1997 return produced to the

Court does not indicate whether petitioner attached a waiver or

subsequently mailed a waiver to the Internal Revenue Service.     We

are unable to find that a waiver was not attached or mailed

separately, along with Form 8453, U.S. Individual Income Tax

Declaration for Electronic Filing.4    Thus, we cannot conclude

that respondent met his burden of proof.

     Accordingly, petitioner is allowed the claimed dependency

exemption deductions.

     Issue 2.   Head-of-Household Filing Status

     For a taxpayer to qualify for head-of-household filing

status, he must satisfy the requirements of section 2(b).    An

individual shall be considered a head of household if he is not

married at the close of the taxable year, is not a surviving

spouse, and, in relevant part, maintains as his home a household

     4
        Respondent asserts in his answer to amended petition that
Ms. Richards initially claimed two children as dependents;
accordingly, respondent concluded that she did not sign a waiver.
We note that while Ms. Richards initially claimed her two
daughters as dependents on her separate income tax return, she
did not claim the children as dependents on her amended return
for the 1997 tax year and she testified at trial that she was not
entitled to. Ms. Richards’s treatment of the dependency
exemption deductions on her original and amended returns does not
affect the outcome of this issue as to petitioner. Nevertheless,
allowing petitioner the dependency exemption deductions does not
create a result inconsistent with Ms. Richards’s treatment of
this item.
                              - 11 -

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

principal place of abode of a child as a member of such

household.   Sec. 2(b)(1)(A)(i).   An individual maintains a

household only if he furnishes over half of the costs of

maintaining the household during the taxable year.    Sec. 2(b)(1);

sec. 1.2-2(b)(1), Income Tax Regs.     The costs of maintaining the

household include property taxes, mortgage interest, utility

charges, upkeep and repairs, property insurance, and food

consumed on the premises.   Sec. 1.2-2(d), Income Tax Regs.

     An individual who is married shall not be considered married

if he is legally separated from his spouse under a decree of

divorce or of separate maintenance.    Secs. 2(b)(2)(B) and (c),

7703(a).

     Petitioner claimed head-of-household filing status on his

1997 return.   Respondent has argued (and has the burden of

proving) that petitioner is not entitled to the claimed head-of-

household filing status.

     Although petitioner was married in 1997, he will not be

treated as married for purposes of section 2 because, as

discussed above with respect to section 152(e)(1)(A), there has

been no argument or facts produced that indicate that petitioner

and Ms. Richards were not legally separated under a decree of

separate maintenance.
                                  - 12 -

     The facts of the case indicate that petitioner furnished

over one-half of the costs of maintaining the household at the

marital home (e.g., he paid the mortgage, real estate taxes, and

utilities).     Petitioner’s marital home constituted a household

that was the principal place of abode for at least one-half of

the year for all three of his children, for whom he is entitled

to dependency exemption deductions under section 151, as

discussed above.     Accordingly, petitioner is eligible for head-

of-household filing status.

     Issue 3.    Alimony

     A taxpayer is allowed as a deduction an amount equal to the

amount paid that constitutes “alimony”5 or a “separate

maintenance [payment]” paid during his taxable year under section

215(a).    Alimony is defined as a payment in cash that satisfies a

four-part test set forth in section 71(b)(1).

     Respondent does not dispute that petitioner was responsible

for paying alimony to Ms. Richards, and we are satisfied that the

payments constitute alimony for purposes of sections 215 and

71(b).    Respondent disputes the amount petitioner claimed as an

alimony deduction on his amended return.

     Payments that constitute support of minor children are not

included in the definition of alimony and are not deductible.

Secs. 71(c), 215(b).       If any payment that is made is less than

     5
          The Order refers to the payments as “alimony”.
                              - 13 -

the full amount specified in the instrument, then the payment

amount that does not exceed the sum payable for support shall be

considered a payment for child support.    Sec. 71(c)(3); Blyth v.

Commissioner, 21 T.C. 275, 279 (1953).

     Pursuant to the terms of the Report and the Order,

petitioner was directed to make biweekly payments to Ms. Richards

of $784.62.   Petitioner produced documents indicating that he

paid Ms. Richards alimony of $2,729.466 in 1997; therefore,

petitioner is allowed a deduction for alimony in that amount.

     Issue 4.   Schedule C Expense Deductions

     Deductions are a matter of legislative grace, and a taxpayer

must establish his right to the deductions claimed.    INDOPCO,

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

     Under section 162, a deduction is allowed for ordinary and

necessary expenses that are paid or incurred during the taxable

year in carrying on a trade or business.   Sec. 162(a).   Section

167 allows a depreciation deduction for property used in a trade

or business or held for the production of income.   Sec. 167(a).

     Generally, a taxpayer is required to substantiate deductions

by maintaining books and records sufficient to establish the


     6
        We have credited petitioner with a payment of alimony of
$346.84 on Sept. 14, 1997. While it may appear that this payment
was child support, petitioner met his child support obligation
for September 1997 and was not otherwise in arrears. Moreover,
petitioner did not designate the payment as child support as he
had done with the payments on Sept. 12 and 26, 1997.
                                - 14 -

amount of his deductions.     Sec. 6001; sec. 1.6001-1(a), Income

Tax Regs.   If a taxpayer is unable to fully substantiate the

expenses incurred in his trade or business but there is evidence

that deductible expenses were incurred, the Court may

nevertheless allow a deduction based upon an approximation of

expenses.    Ellis Banking Corp. v. Commissioner, 688 F.2d 1376

(11th Cir. 1982), affg. in part and remanding in part T.C. Memo.

1981-123; Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir. 1930);

Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).

     Respondent does not dispute and we conclude that petitioner

was in the trade or business of performing architectural CAD

drafting services in 1997.     Respondent argues that petitioner

failed to substantiate the expenses for which he claimed

deductions on his Schedule C.     We shall discuss each claimed

expense below.

            A.   Car and Truck Expenses

     Petitioner claimed a deduction of $186 on his Schedule C for

car and truck expenses.     It is not clear from his Schedule C or

the attached Form 4562, Depreciation and Amortization, whether

the claimed amount represents depreciation for his Nissan Altima

automobile, a standard mileage allowance, or actual expenses such

as gasoline and tolls.

     To deduct expenses, such as depreciation, with respect to

“listed property” under section 280F(d)(4)(i), which includes an
                                - 15 -

automobile, the taxpayer must comply with strict substantiation

requirements under section 274(d)(4).    Section 274 requires, in

relevant part, that the taxpayer substantiate by either adequate

records or sufficient corroborating evidence the following items:

(1) The amount of the claimed expense; (2) the time and place of

the use of the property; and (3) the business purpose of the

expense.    Sec. 274(d); sec. 1.274-5T(b)(6), Temporary Income Tax

Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).    Even if such an

expense is otherwise deductible, the deduction for the listed

item may be denied if the substantiation is insufficient to

support it.    Id.   The substantiation requirements under section

274 override the general substantiation requirements of section

6001 and Cohan v. Commissioner, supra.

     A self-employed individual may deduct a mileage allowance

under section 62(a)(1), section 1.274-5T(c)(2)(ii), Temporary

Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985), and section

1.274(d)-1, Income Tax Regs.     Dehr v. Commissioner, T.C. Memo.

1998-441.     A deduction for a mileage allowance requires the same

substantiation under section 274 as set forth above (i.e.,

amount, time and place, and business purpose).    The amount of the

mileage can be substantiated by any reasonable means, such as

using a contemporaneous business log, or otherwise establishing

the miles driven.     Smith v. Commissioner, 80 T.C. 1165 (1983).

The Commissioner is authorized to establish the standard mileage
                               - 16 -

rate that is deemed to satisfy the substantiation requirements

and has done so for 1997.   Sec. 1.274(d)-1(a), Income Tax Regs.;

Rev. Proc. 96-63, 1996-2 C.B. 420.

     Actual allowable expenses such as gasoline and tolls are

deductible if incurred in a trade or business and if they do not

constitute personal commuting expenses.    Sec. 162; Green v.

Commissioner, 59 T.C. 456 (1972); sec. 1.162-1(a), Income Tax

Regs.

     Petitioner’s Nissan Altima qualifies as “listed property”

under sections 274(d)(4) and 280F(d)(4)(A)(i).    Petitioner has

not provided any facts in support of depreciation of the

automobile.   Therefore, the deduction for depreciation of the

automobile is denied.

     Petitioner produced a handwritten list approximating his

miles driven and tolls paid.   This list provides no assistance as

to whether petitioner has claimed as a deduction a standard

mileage rate or actual expenses.    To the extent that this list

reflects mileage, it does not appear to be a contemporaneous log.

See Smith v. Commissioner, supra.    It also fails to establish

petitioner’s time, place, and business purpose of the miles

driven.   Therefore, petitioner has not substantiated the

deduction for a mileage allowance, and it is denied.

     To the extent that petitioner’s handwritten list reflects

actual expenses associated with the automobile, petitioner has
                               - 17 -

not substantiated any expenses except for tolls of $24, which we

allow as a deductible expense.

     Accordingly, except with respect to the $24 deduction for

tolls, petitioner has failed to substantiate these deductions,

and they are denied.

           B.   Depreciation and Section 179 Expense

     A taxpayer may elect to deduct as a current expense the cost

of any “section 179 property” which is acquired by purchase for

use in the active conduct of a trade or business.      Sec. 179(a),

(d)(1).   Section 179 property is tangible property to which

section 168 applies and which is section 1245 property.7     Sec.

179(d)(1); sec. 1.179-4(a), Income Tax Regs.

     Computer equipment is “listed property” under section

274(d)(4), as defined under section 280F(d)(4)(A)(iv), unless it

falls under the exception in section 280F(d)(4)(B).     Computer

equipment is excepted from the definition of listed property

under section 274 (and will, therefore, not be subject to the

substantiation requirements for listed property under section 274

and section 1.274-5T(b)(6), Temporary Income Tax Regs., supra) if

it is used exclusively at a regular business establishment and

owned or leased by the person operating such establishment.     Sec.

280F(d)(4)(B).    A regular business establishment includes a home

     7
        Sec. 1245 property is defined in sec. 1245(a)(3) as
property subject to the allowance for depreciation under sec.
167, including personal property.
                               - 18 -

office for which the requirements of section 280A(c)(1) are met.

Id.

      Section 179 has its own substantiation and election

requirements.   The taxpayer must maintain records reflecting how

and from whom the section 179 property was acquired, and when it

was placed in service.   Sec. 1.179-5(a), Income Tax Regs.   The

taxpayer is also required to elect on his first return for the

taxable year or on a timely filed amended return as a separate

item the total section 179 expense deduction claimed with respect

to all section 179 property selected and the portion of that

deduction allocable to each specific item.    Id.

      Petitioner indicated on Form 4562 attached to his Schedule C

that he elected to deduct computer equipment as a current expense

under section 179.   Petitioner’s computer equipment qualifies as

section 179 property because it is tangible property to which

section 168 applies.   Secs. 167(a)(1) and 168(f).   The computer

equipment also qualifies as section 1245 property.   Sec.

1245(a)(3).

      Petitioner’s computer equipment is not listed property under

section 274(d)(4) because it falls under the home office

exception to section 274 under section 280F(d)(4)(B) and section

280A(c)(1), as discussed below.   Therefore, the computer

equipment is not subject to the substantiation requirements of

section 274.    Nevertheless, the computer equipment is subject to
                              - 19 -

the substantiation and election requirements of section 179 and

general substantiation requirements.

     Although petitioner produced many receipts reflecting

purchases of computer equipment, all receipts except one reflect

a subsequent tax year and cannot be used to substantiate

purchases of property for 1997.   The one receipt from 1997

indicates a purchase of computer equipment of $32.09.

     Petitioner failed to maintain records reflecting the cost of

the computers, the use of the property, the date of the use, the

business purpose of the property, from whom the equipment was

acquired, and when the computer equipment was placed in service,

as required by section 1.179-5(a), Income Tax Regs.   In addition,

petitioner’s amended return was dated May 15, 2000, and filed

sometime thereafter.   Petitioner’s 1997 return was due on April

15, 1998, so the amended return was not timely filed.

Accordingly, petitioner is denied the deduction for his computer

equipment.

          C.   Expenses From Business Use of Home

     Petitioner deducted depreciation of the marital home, a

casualty loss, mortgage interest, real estate taxes, insurance,

and utilities in connection with the business use of his home on

Form 8829, Expenses for Business Use of Your Home, attached to

his return.
                             - 20 -

     Deductions for expenses attributable to the taxpayer’s

business use of his home are disallowed unless they fit within

the exceptions under section 280A.    Sec. 280A(a).   A deduction

may be allowed to the extent the item is allocable to a portion

of the home which is exclusively used on a regular basis as the

principal place of business for his trade or business.     Sec.

280A(c)(1)(A).

     Deductions for expenses related to the business use of a

taxpayer’s home are further limited by section 280A(c)(5) to the

excess of the gross income derived from the use of the home

office over the deductions allocable to the home office that are

otherwise allowable.

     As the facts indicate, during the period from January 1

through July 25, 1997, petitioner used a room in the marital home

exclusively as his work space for his drafting activity.

Petitioner also used the room as such on a regular basis

throughout this period.

     After petitioner moved from the marital home, he performed

his drafting in the kitchen of each of his subsequent apartments.

Because petitioner did not use a portion of each rental unit

exclusively for his drafting activity, petitioner is not allowed

a deduction after July 25, 1997.

     Petitioner and respondent agreed that petitioner is allowed

a deduction for home mortgage interest and real estate taxes of
                               - 21 -

$2,555 and $683, respectively, for 1997.     Accordingly, the

portions of the mortgage interest and real estate taxes that are

allocable to the portion of petitioner’s marital home devoted to

his home office during the period from January 1 through July 25,

1997, are expenses in connection with the business use of his

home and deductible on Schedule C.8

     Petitioner claimed a deduction for utilities as part of his

deduction for the business use of his home and also as a separate

expense on the Schedule C.   Petitioner failed to explain why he

deducted the same item twice or that the items are not, in fact,

duplications.   The deduction for utilities is allowed as an

expense with respect to the home office only.

     Petitioner has not substantiated his basis in the marital

home, the casualty loss, or the insurance.    Accordingly, the home

office expense deduction with respect to these items is

disallowed.

          D.    Office Expense, Supplies, Taxes and Licenses,
                Utilities, and Other Expenses

     We are satisfied that petitioner has provided credible

evidence relating to the following CAD drafting expenses:    Office

expenses of $57; supplies of $181; taxes and licenses of $90;




     8
        The remaining portion of the mortgage interest and real
estate taxes may be deductible by petitioner under sec. 163(h)(3)
and sec. 164(a)(1), respectively.
                                - 22 -

utilities of $289; and books of $16.     These amounts are

deductible under section 162.

     Petitioner provided evidence concerning the attempted

creation of his Web site.   Because petitioner primarily intended

for the Web site to promote his CAD drafting services, it is a

deductible advertising expense under section 162.

     Petitioner has failed to provide any facts concerning the

expenses relating to the following claimed deductions:       Rent or

lease of vehicles, machinery, and equipment; rent or lease of

other business property; and repairs or maintenance.

Accordingly, these expenses are disallowed.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                           Decision will be entered

                                     under Rule 155.
