                    T.C. Summary Opinion 2008-55



                      UNITED STATES TAX COURT



         MICHAEL R. AND MELANIE J. BIRDSILL, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 5884-07S.              Filed May 20, 2008.



     Michael R. and Melanie J. Birdsill, pro sese.

     Fred E. Green, Jr., for respondent.



     WHERRY, Judge:   This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.1   Pursuant to section 7463(b), the

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



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as in effect for the year in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                               - 2 -

this opinion shall not be treated as precedent for any other case.

     This case is before the Court on a petition for

redetermination of a deficiency with respect to petitioners’ 2003

Federal income tax.   After concessions by both parties,2 the

issue remaining is whether respondent may require $23,756 of

depreciation recapture in 2003 on a 1998 GMC Suburban for which

Michael R. Birdsill (petitioner) and Melanie J. Birdsill (Mrs.

Birdsill) claimed a section 179 expense deduction on their 2002

joint Federal income tax return.3


     2
      Respondent concedes that Melanie J. Birdsill is entitled to
innocent spouse relief pursuant to sec. 6015(b). Respondent also
concedes that petitioners are entitled to deduct the following
expenses reported on their 2003 Schedule C, Profit or Loss From
Business, totaling $4,553: (1) $71 for advertising; (2) $262 for
office expense; (3) $396 for supplies; (4) $2,920 for car and
truck expenses; (5) $392 for repairs and maintenance; and
(6) $512 for utilities.

     Petitioners concede that they are not entitled to deduct the
following Schedule C expenses totaling $17,005 for taxable year
2003: (1) $16,078 for depreciation; (2) $720 for insurance; and
(3) $207 for meals and entertainment.
     3
      On brief, petitioner requested that “the Interest on any
taxes due be Abated for the period of April 2005 through June
2006 (14 months)”. Pursuant to sec. 6404(e)(1), the Commissioner
may abate part or all of an assessment of interest on any
deficiency or payment of income tax. Abatement may be granted to
the extent that any tax deficiency or delay in payment is
attributable to unreasonable erroneous or dilatory performance of
a ministerial or managerial act by an officer or employee of the
IRS acting in his or her official capacity.

     This Court lacks jurisdiction over petitioner’s abatement
request. Generally, a taxpayer must first file with the
                                                   (continued...)
                                - 3 -

                             Background

     Some of the facts have been stipulated.    The stipulations,

with accompanying exhibits, are incorporated herein by this

reference.    At the time the petition was filed, petitioner

resided in Chico, California.

     Petitioner has over 30 years’ experience in the broadcast

industry.    During 2003, petitioner was a full-time chief engineer

and operations manager for California State University at Chico,

California.    In January 2002 petitioner started a broadcast

engineering consulting business.    In connection with that

business he created his own database on digital transmission

radio towers in order to capitalize on the new Federal

Communications Commission rules approving a digital broadcast

standard for radio stations.    He believed that many radio

stations would require new antenna systems.

     To create the database petitioner surveyed approximately 35

digital transmission radio tower sites in northern California in

2003.    Approximately half of the radio tower sites that

petitioner surveyed required one visit by petitioner, while the

other half required two visits.


     3
      (...continued)
Commissioner Form 843, Claim for Refund and Request for
Abatement. See sec. 301.6404-1(c), Proced. & Admin. Regs. If
the taxpayer’s request for abatement of interest is denied, then
the taxpayer may petition this Court to review the Commissioner’s
adverse determination. See sec. 6404(h).
                               - 4 -

     Petitioner owned three vehicles during 2003:   (1) A 1993

Ford F-250 truck that was purchased in 2000; (2) a 1998 GMC

Suburban sport utility vehicle with all-wheel drive that was

purchased in 1998; and (3) a 1997 Pontiac that was purchased in

1997.4

     Petitioner placed the GMC Suburban into use for his business

in 2002 and deducted a depreciation expense of $26,396 on his and

Mrs. Birdsill’s 2002 joint Form 1040, U.S. Individual Income Tax

Return.   Petitioner placed the Ford F-250 into use for his

business on January 3, 2003, and deducted a depreciation expense

of $11,968 on his and Mrs. Birdsill’s 2003 joint Form 1040.5

     On petitioner and Mrs. Birdsill’s 2003 joint Form 1040

Schedule C, Profit or Loss From Business, petitioner reported

$171 in income and claimed $21,558 in deductions for his

broadcast engineering consultancy business.   With respect to his

motor vehicles, petitioner deducted a $2,920 car and truck

expense and a $720 insurance expense for the Ford F-250.

Petitioner did not deduct any expenses for the GMC Suburban.

     Petitioner attached Form 4562, Depreciation and

Amortization, to the joint Form 1040.   In Section A, Depreciation

and Other Information, of Form 4562, petitioner listed as

     4
      Petitioner used the Pontiac to commute to his full-time job
and for other personal uses.
     5
      Petitioner also deducted a depreciation expense of $4,110
for a computer placed into service on Jan. 3, 2003.
                                - 5 -

“Property used more than 50% in a qualified business use” the

Ford F-250.6   In Section B, Information on Use of Vehicles,

petitioner listed 8,110 miles for both business and total mileage

of the Ford F-250.

     On December 15, 2006, respondent mailed to petitioners the

aforementioned notice of deficiency that determined a deficiency

of $11,314 for taxable year 2003.    Petitioner and Mrs. Birdsill

timely petitioned this Court.   Their petition stated:

          Item 7(b) of the Notice-Depreciation Recapture-is
     totally without Merit. In fact, that issue was “added”
     to the Audit Report after an Appeal Request was Filed
     with the Appeals Office in Sacramento, California.
     This smacks of a retaliatory action by the Auditor.

          All other Items are in Dispute. An offer to
     Settle was not given any consideration by the Appeals
     Office; this Case has landed in this Forum because the
     Appeals Office did nothing for 14 Months (April 2005-
     June 2006), and then the Appeals Officer tried to goad
     the Taxpayer into Signing an Extension of the Statute
     of Limitations. Taxpayer indicated that the Extension
     would only be signed if the Document was limited in its
     duration and in the scope of the issues involved.
     Appeals Officer refused and issued the Notice of
     Deficiency.

     Petitioner and Mrs. Birdsill’s divorce became effective on

June 28, 2007, pursuant to a decree issued on August 30, 2007.

On October 4, 2007, Mrs. Birdsill filed an amended petition

requesting innocent spouse relief.      An attachment to the amended

petition indicated that petitioner did not object to

Mrs. Birdsill’s request.   At trial on November 7, 2007, in Reno,

     6
      Petitioner also listed a computer.     See supra note 5.
                               - 6 -

Nevada, respondent conceded that Mrs. Birdsill was entitled to

innocent spouse relief pursuant to section 6015(b); there was no

objection by petitioner.

                            Discussion

I.    Burden of Proof

      As a general rule, the Commissioner’s determination of a

deficiency is presumed correct, and the taxpayer bears the burden

of proving that the determination is improper.    See Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933).     However, pursuant

to section 7491(a), the burden of proof on factual issues that

affect the taxpayer’s tax liability may be shifted to the

Commissioner where the “taxpayer introduces credible evidence

with respect to * * * such issue.”     The burden will shift only if

the taxpayer has, inter alia, complied with substantiation

requirements pursuant to the Internal Revenue Code and

“cooperated with reasonable requests by the Secretary for

witnesses, information, documents, meetings, and interviews”.

Sec. 7491(a)(2).   In the instant case, petitioner did not argue

that the burden should shift, and he failed to comply with the

substantiation requirements.   Accordingly, the burden of proof

remains on petitioner.

II.   Retaliatory Action

      Petitioner alleges that the depreciation recapture is a

retaliatory action by the revenue agent who conducted his and
                                - 7 -

Mrs. Birdsill’s audit because it became an issue only after

petitioner and Mrs. Birdsill filed an appeal request with

respondent’s Appeals Office.7   As a general rule, this Court will

not look behind a notice of deficiency.   It does not usually

examine the evidence used or the propriety of the Commissioner’s

motives, policy, or procedures in making audit determinations.

See Riland v. Commissioner, 79 T.C. 185, 201 (1982); Greenberg’s

Express, Inc. v. Commissioner, 62 T.C. 324, 327-328 (1974); Human

Engg. Inst. v. Commissioner, 61 T.C. 61, 66 (1973); Suarez v.

Commissioner, 58 T.C. 792, 814 (1972), overruled in part Guzzetta

v. Commissioner, 78 T.C. 173 (1982).

     However, this Court has recognized an exception to the rule

when there is substantial evidence of unconstitutional conduct on

the Commissioner’s part and the integrity of the judicial process

would be impugned if the Court permitted the Commissioner to

benefit from his conduct.   Suarez v. Commissioner, supra; see

Greenberg’s Express, Inc. v. Commissioner, supra at 328.    But

even in these limited situations, this Court has refused to hold

the notice of deficiency null and void.   Human Engg. Inst. v.

     7
      Although petitioners seem to think that this issue was
raised by the revenue agent, the record reflects that the issue
was more likely raised by Appeals. To encourage settlement,
Appeals officers are discouraged from raising new issues.
However, per Policy Statement P-8-49, which was in effect when
this case was before Appeals (and is now part of Policy Statement
P-8-2 (Jan. 5, 2007)), Appeals is not supposed to raise a new
issue “unless the ground for such action is a substantial one and
the potential effect upon the tax liability is material.”
                                 - 8 -

Commissioner, supra; Suarez v. Commissioner, supra; see

Greenberg’s Express, Inc. v. Commissioner, supra.

     Although petitioner alleged retaliatory action in his

petition, he offered no independent evidence to support his

allegation.   Furthermore the record does not indicate that any of

respondent’s agents engaged in conduct that violated petitioner’s

rights.   As petitioner has not shown that respondent’s deficiency

determination was arbitrary or erroneous, or that the

determination was not supported by the proper foundation, it is

inappropriate for this Court to look behind the notice of

deficiency to examine the basis for, or reasons behind,

respondent’s determination.    See Riland v. Commissioner, supra.

The notice of deficiency, therefore, is valid, and respondent’s

deficiency determination is presumed correct.

III. Deductions

     A. General Rules

     Deductions are a matter of legislative grace, and the

taxpayer bears the burden of proving that he is entitled to any

claimed deductions.     INDOPCO, Inc. v. Commissioner, 503 U.S. 79,

84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440

(1934).   Taxpayers must maintain records relating to their income

and expenses and must prove their entitlement to all claimed

deductions, credits, and expenses in controversy.    See sec. 6001;
                               - 9 -

Rule 142(a); INDOPCO, Inc. v. Commissioner, supra; Welch v.

Helvering, supra.

     B. Substantiation Requirements of Section 274(d)

     Section 274(d) applies to:   (1) Any traveling expense,

including meals and lodging away from home; (2) entertainment,

amusement, and recreational expenses; (3) gift expenses; or (4)

the use of “listed property”, as defined in section 280F(d)(4),

including automobiles.   To deduct such expenses, the taxpayer

must substantiate by adequate records or sufficient evidence to

corroborate the taxpayer’s own testimony:    (1) The amount of the

expenditure or use, which includes mileage in the case of

automobiles; (2) the time and place of the travel, entertainment,

or use; (3) its business purpose; and in the case of an

entertainment or gift expense, (4) the business relationship to

the taxpayer of each expenditure or use.    Sec. 274(d).

     To satisfy the adequate records requirement of section

274(d), a taxpayer must maintain records and documentary evidence

that in combination are sufficient to establish each element of

an expenditure or use.   Sec. 1.274-5T(c)(2), Temporary Income Tax

Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985).    Although a

contemporaneous log is not required, corroborative evidence to

support a taxpayer’s reconstruction “of the elements * * * of the

expenditure or use must have a high degree of probative value to

elevate such statement” to the level of credibility of a
                              - 10 -

contemporaneous record.   Sec. 1.274-5T(c)(1), Temporary Income

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

     Under Cohan, if a factual basis exists to do so, the Court

may approximate the allowable expense, bearing heavily against

the taxpayer who failed to maintain adequate records.     Cohan v.

Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930).   However,

section 274(d) overrides the Cohan rule with respect to section

280F(d)(4) “listed property” and thus specifically precludes the

Court from allowing automobile expenses on the basis of any

approximation or the taxpayer’s uncorroborated testimony.    Sec.

1.274-5T(a)(4), Temporary Income Tax Regs., 50 Fed. Reg. 46014

(Nov. 6, 1985).

     C. Depreciable Assets

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

of any section 179 property, with certain dollar limitations,

that is acquired by purchase in the active conduct of a trade or

business and placed in service during the taxable year.

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

To deduct depreciation pursuant to section 179 for property

subject to section 280F, such as automobiles, a taxpayer must

establish that business use exceeds 50 percent.   Sec. 280F(b)(3);

sec. 1.179-1(d), Income Tax Regs.   If business use of listed

property falls to 50 percent or less, then it is subject to the

depreciation recapture rules of sections 179(d)(10) and
                               - 11 -

280F(b)(2), respectively.   The recapture rule of section

280F(b)(2) takes precedence.   Sec. 1.179-1(e)(1), Income Tax

Regs.

     Section 280F(b)(2) provides:

     (2) Recapture.--

          (A) Where business use percentage does not exceed
     50 percent.–-If--

                 (i) property is predominantly used in a
          qualified business use in a taxable year in which it is
          placed in service, and

                 (ii) such property is not predominantly
          used in a qualified business use for any subsequent
          taxable year,

     then any excess depreciation shall be included in gross
     income for the taxable year referred to in clause (ii),
     and the depreciation deduction for the taxable year
     referred to in clause (ii) and any subsequent taxable
     years shall be determined under section 168(g)
     (relating to alternative depreciation system).

A taxpayer must be able to substantiate the use of any “listed

property”, as prescribed in section 274(d)(4), for any taxable

year for which recapture under section 280F(b)(3) may occur.

Sec. 1.280F-3T(d)(3), Temporary Income Tax Regs., 50 Fed. Reg.

46038 (Nov. 6, 1985).8




     8
      Sec. 1.280F-3T(d)(3), Temporary Income Tax Regs., 49 Fed.
Reg. 42708 (Oct. 24, 1984), provides the following as an example:
“in the case of 3-year recovery property, the taxpayer shall
maintain a log, journal, etc. for six years even though the
taxpayer fully depreciated the property in the first three
years.”
                             - 12 -

     At trial petitioner testified that during 2003 he used the

Ford F-250 truck for 75 percent of his business mileage and the

GMC Suburban for 25 percent of his business mileage.

Petitioner’s estimation of the business use of the GMC Suburban

appears to be based on the fact that at least 4 of the 34 or 35

radio tower sites he visited in 2003 required an all wheel drive

vehicle to gain access to the site.   Those four sites, which

required the use of the all wheel drive GMC Suburban, were, on

average, approximately 150 miles from Chico, California.

According to petitioner, most of the sites that did not require

an all wheel drive vehicle, for which he normally used the Ford

F-250, were less than 150 miles from Chico, California.

Petitioner also used the GMC Suburban for “other things * * *

[he] was doing with * * * [his business, such as] taking a client

to an existing radio station”.

     While the Court finds petitioner’s testimony that he used

the GMC Suburban for business purposes in 2003 to be credible, it

does not establish that the GMC Suburban was used more than 50

percent of the time for business purposes.    Petitioner admitted

that the GMC Suburban was “used on a personal level to take my

spouse to her doctor’s appointments” and “[m]inimal trips, other

than medical appointments for my spouse”.    Unfortunately,
                              - 13 -

petitioner did not keep any records of the business or personal

use of his GMC Suburban in 2003.9

     Petitioner’s uncorroborated testimony and bare assertions on

brief, without other admissible evidence, do not establish that

he used the GMC Suburban more than 50 percent for business

purposes in 2003.   The Court views this testimony--provided some

4 years after the fact from memory--as little more than educated

speculation.   Consequently, petitioner has not met the strict

substantiation requirements of section 274(d).   Accordingly, the

Court sustains respondent’s determination that $23,756 of

depreciation claimed for the GMC Suburban was subject to

recapture in taxable year 2003.

     The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.   To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.




     9
      Petitioner attached to his brief a handwritten document,
dated Jan. 6, 2005, that contained his notes of a meeting on that
date with Internal Revenue Service Agent Dale Duttey
(Mr. Duttey). Attachments to briefs are not evidence if the
material therein was not contained in the joint stipulation of
facts or introduced as evidence at trial. See Rule 143(b). In
any event, the document is devoid of any information regarding
the business use or mileage of the GMC Suburban. Petitioner also
attached Mr. Duttey’s handwritten notes regarding the audit of
petitioner and Mrs. Birdsill’s 2003 joint Federal income tax
return. Mr. Duttey’s notes include only the following notation
regarding the GMC Suburban: “per TP’s OT [oral testimony] the
suburban did not meet business needs - TP now using a pickup
truck [Ford F-250] - Suburban is below 50% bus[iness] use”.
                        - 14 -

To reflect the foregoing and concessions by both parties,


                                   Decision will be entered

                              under Rule 155.
