                          T.C. Summary Opinion 2014-49



                         UNITED STATES TAX COURT



                CHRISTOPHER STANBACK, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 2139-13S.                         Filed May 29, 2014.



      Christopher Stanback, pro se.

      Christopher J. Richmond, for respondent.



                              SUMMARY OPINION


      DEAN, Special Trial Judge: This case was heard pursuant to the provisions

of section 7463 of the Internal Revenue Code in effect when the petition was filed.

Pursuant to section 7463(b), the decision to be entered is not reviewable by any

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

Unless otherwise indicated, subsequent section references are to the Internal
                                          -2-

Revenue Code in effect for the years at issue, and Rule references are to the Tax

Court Rules of Practice and Procedure.

      Respondent issued a statutory notice of deficiency to petitioner determining

deficiencies in income tax of $2,718 for 2010 and $1,521 for 2011.

      The issues for decision are whether petitioner is entitled to deduct expenses

claimed on Schedule C, Profit or Loss From Business, for utilities and travel in

excess of those respondent allowed for 2010 and itemized deductions in excess of

the standard deduction for 2011.1

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

facts, the second stipulation of facts, the third stipulation of facts, and the exhibits

received in evidence are incorporated herein by reference. Petitioner resided in

California when the petition was filed.

                                      Background

      Since 2007 petitioner has worked as a production assistant in the film,

television, and commercial industry. A production assistant is a person in any

nonunion position assisting in the production of television shows, commercials, or

films, such as a “runner” or, for example, a person making copies or filing. “On-

      1
        The adjustment to petitioner’s itemized deductions for 2010 is
computational and will be resolved by the decision of the Court on the other
issues.
                                        -3-

set” production assistants might be responsible for getting lunches for actors and

performing other miscellaneous tasks. If a person is nonunion, he is always a

“local hire” and receives no payment for travel expenses.

      Petitioner is a member of Hawaii Local 665, the International Alliance of

Theatrical Stage Employees (local 665). He is also a member of the International

Cinematographers Guild Local 600 (local 600). Petitioner moved in 2008 from

Hawaii, where the work is sporadic, to New York, where he was still residing in

2010. Local 600, the cinematographer’s guild, is “international” but is divided

into three districts: western, central, and eastern. Petitioner had accumulated days

in the western district, but when he moved to New York, he transferred his local

600 membership there. He was unable to get union work, however, and ended up

doing nonunion work.

      Union jobs require a certain amount of experience and are usually paid by

the day and sometimes hourly. Some crafts are paid by contract; production

coordinators are paid a flat rate. Petitioner worked with a company making

commercials in Hawaii, and he flew there from New York. Since petitioner was a

member of the local 665 in Hawaii, they made him a local hire and did not pay his

travel expenses. Typically only “distant-hire” department heads are compensated

for travel: head of makeup, head of hair, production designers, all producers,
                                        -4-

camera “DP” (director of photography), and his first assistant. The union jobs in

Hawaii did pay union scale. Petitioner turned down jobs in Hawaii where he

could not at least break even, considering the cost of travel, but he was always

mindful of making contacts for potential future jobs. It is “who you know.”

      At the end of 2009, while petitioner was living in New York, he was offered

work on a movie in Hawaii. He went back to Hawaii and worked a union job as a

production coordinator. He then moved into a job as an art department

coordinator. He also worked on two commercials. In 2010 petitioner returned to

New York.

      Petitioner was then asked to come back to Hawaii to work on the pilot

episode of a television show. The show was selected for production, and

petitioner was offered a job as prop master’s assistant. Petitioner moved to Hawaii

in July 2010. Petitioner was unable to break his apartment lease in New York, and

he kept his Internet service there, “in case I needed it”. Because his ground floor

apartment had windows abutting an alley, petitioner feared leaving his personal

items there and instead put them in storage. He left the television show in Hawaii

in November 2010.

      From December 2010 to January 2011 petitioner went to Prague, Czech

Republic, to “teach and learn” at a film school under an exchange program
                                        -5-

affiliated with local 600. Petitioner was provided with room and board, but he had

to pay his own travel expenses. He was in Prague about three weeks.

      In March or April 2011 petitioner moved to California and attempted to join

Affiliated Property Craftspersons local 44. That union, however, was closed to

new membership, so petitioner had to take nonunion jobs. He went back to New

York for a few jobs and continued to pay for his New York storage unit through

November 2011. In November 2011 petitioner’s apartment lease was expiring.

Petitioner traveled to New York to cancel his Internet service and to retrieve his

belongings from storage. Petitioner “went back and forth in the snow donating”

his storage items and throwing away other items. He then packed his remaining

items, including his tax information, in a large Craftsman trunk and flew back to

Los Angeles. Somewhere along the way petitioner’s trunk was damaged by the

airline or airport workers, and the contents were mostly lost or destroyed.

      Petitioner filed his Federal income tax return for 2010, attaching a Schedule

C claiming deductions for travel expenses of $6,306 and utilities expenses of

$3,230. Petitioner’s tax return for 2011 reported itemized deductions including

medical expenses of $10,006 before the reduction required by section 213(a),

charitable contributions of $10,400, and miscellaneous itemized deductions of

$16,265 before the application of the 2% floor required by section 67.
                                        -6-

                                    Discussion

      Generally, the Commissioner’s determinations in a notice of deficiency are

presumed correct, and the taxpayer has the burden of proving that those

determinations are erroneous. See Rule 142(a); Welch v. Helvering, 290 U.S. 111,

115 (1933). In some cases the burden of proof with respect to relevant factual

issues may shift to the Commissioner under section 7491(a). The Court finds that

petitioner has not argued or shown that he has met the requirements of section

7491(a), and the burden of proof does not shift to respondent.

      Deductions are strictly a matter of legislative grace, and a taxpayer bears the

burden of proving entitlement to any deduction claimed. Rule 142(a); New

Colonial Ice Co. v. Helvering, 292 U.S. 435 (1934); Welch v. Helvering, 290 U.S.

111. Moreover, taxpayers are required to maintain records that are sufficient to

substantiate their deductions. Sec. 6001.

      Section 162 generally allows a deduction for ordinary and necessary

expenses paid or incurred during the taxable year in carrying on a trade or

business.2 Generally, no deduction is allowed for personal, living, or family

expenses, except where specifically authorized by statute. See sec. 262. The


      2
      An employee’s performance of services is a trade or business. E.g.,
Primuth v. Commissioner, 54 T.C. 374, 377-378 (1970).
                                        -7-

taxpayer must show that any expenses for which business expenses are claimed

were incurred primarily for business rather than personal, living, or family

reasons. See Rule 142(a); See Walliser v. Commissioner, 72 T.C. 433, 437

(1979). To show that the expense was not incurred for personal reasons, the

taxpayer must show that the expense was incurred primarily to benefit his

business, and there must have been a proximate relationship between the claimed

expense and the business. See Walliser v. Commissioner, 72 T.C. at 437.

Schedule C Expenses

      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 prevented by section 274, the Court may

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), aff’g 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).
                                        -8-

      Petitioner presented copies of electric bills from his New York apartment

for 2010 totaling $56.88 as evidence of his utilities expense deduction of $3,230.

Petitioner explained that the expenses for utilities were business expenses because

he had to maintain his apartment in New York while living in Hawaii. Petitioner

had to maintain his apartment, he testified, because he had “unfinished business”

in New York, and he needed the Internet service and electricity to run it. Also, he

could not afford to break his lease.

      The Court finds that petitioner has not substantiated his utilities expenses

and has not shown that they were business as opposed to personal expenses.

Respondent’s determination on this issue is sustained.

      Certain business deductions described in section 274 are subject to strict

rules of substantiation that supersede the doctrine in Cohan v. Commissioner, 39

F.2d at 543-544. See sec. 1.274-5T(c)(2), Temporary Income Tax Regs., 50 Fed.

Reg. 46017 (Nov. 6, 1985). Section 274(d) provides that no deduction shall be

allowed with respect to certain items, including: (a) any traveling expense,

including meals and lodging away from home; (b) any item related to an activity

of a type considered to be entertainment, amusement, or recreation; or (c) the use

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

substantiates certain elements.
                                        -9-

      For an expense described in one of the above categories, 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, applying the

appropriate measure (mileage may be used in the case of automobiles); (2) the

time and place of the expenditure or use; (3) the business purpose of the

expenditure or use; and in the case of entertainment, (4) the business relationship

to the taxpayer of each expenditure or use. See sec. 274(d).

      To meet the adequate records requirements of section 274, a taxpayer must

maintain some form of records and documentary evidence that in combination are

sufficient to establish each element of an expenditure or use. See sec. 1.274-

5T(c)(2), Temporary Income Tax Regs., supra. A contemporaneous log is not

required, but 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 contemporaneous record.

Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46016-46017

(Nov. 6, 1985).

      Petitioner prepared for trial, as evidence of his travel expenses for 2010, a

document titled “Work Related Travel Expenses”, a summary list of locations with

the categories “REASON/JOB”, arrival and departure dates, and round number
                                        - 10 -

estimated costs that included airfare and hotel costs. Petitioner testified that he

could not obtain any of his pertinent records because small banks and credit card

companies get sold to bigger companies and “they dissolve the assets and keep the

records God knows where”.

      Petitioners’ documentation for travel expenses3 does not meet the standard

of substantiation required by section 274. The Court sustains respondent’s

determination on this issue.

Itemized Deductions

      Because petitioner’s allowable itemized deductions, after respondent’s

adjustments, were less than the standard deduction, respondent allowed petitioner

the standard deduction of $5,800.

      Medical and Dental Expenses

      Petitioner deducted $10,006 of medical and dental expenses before

application of the statutory floor of 7.5% of adjusted gross income. See sec.

213(a). Respondent allowed petitioner a $3,080 deduction for medical expenses.

Petitioner testified that his union medical plan would pay for medical treatment


      3
       Petitioner’s summary of travel expenses lists $3,600 for travel in 2011,
although he did not claim a deduction for travel expenses on Schedule C for 2011.
Respondent did not adjust petitioner’s deduction from gross income for that year
of $10,900 of moving expenses, which included travel expenses of $7,500.
                                        - 11 -

only in Hawaii, otherwise he was required to pay out of pocket. Petitioner further

testified that he cannot get copies of his medical bills because the hospital in

Hawaii will mail medical records only to the street address he gave when he

received care from the hospital. He testified that he has only a post office box in

New York; he would have to go to Hawaii in person to get copies of his records,

because the hospital will not mail them to him. In any event, petitioner cannot

show that he actually paid any bills he might have received from any source in

excess of the amounts respondent allowed.

      Petitioner has not shown that he is entitled to medical and dental expense

deductions in excess of those respondent allowed.

      Charitable Contributions

      Also included in his itemized deductions were charitable contributions in

kind of $400 and carryover contributions of $10,000. Petitioner’s only

documentary evidence for these contributions was copies of four Goodwill

receipts that show the dates of donation but do not show the name of the donor or

the description or valuation of the items donated. Respondent allowed a deduction

for the $400 of noncash contributions. Petitioner reported that the carryover

contributions are from 2008, 2009, and 2010. Petitioner reported only $270 of

charitable contributions for 2010. Petitioner offered no evidence of the
                                        - 12 -

“carryover” contributions except for his testimony that his mother advised him by

telephone in late 2011 of her donations of his items, evidence of which was lost

when his trunk was damaged.

      Section 170(d)(1)(A) allows the carryover of deductions for contributions to

section 170(b)(1)(A) organizations that exceed 50% of the taxpayer’s

“contribution base” for the taxable year. The taxpayer’s contribution base is his

adjusted gross income computed without the deduction allowed by section 172.

Sec. 170(b)(1)(G). Petitioner has not shown that he is entitled to a charitable

contribution deduction for 2011 in excess of the $400 respondent allowed. And he

clearly cannot meet the requirements of section 170(d)(1)(A) with respect to

carryover contributions from 2008, 2009, and 2010.

      Unreimbursed Employee Business Expenses

      Petitioner deducted $16,265 of unreimbursed employee business expenses,

of which respondent allowed $1,766 for 2011. Included in the employee business

expense deductions were travel expenses of $3,200, parking fees, tolls, and

transportation expenses of $327, vehicle expenses of $8,245, meals and

entertainment expenses of $550, and other business expenses of $3,572. As

evidence of his employee business expenses petitioner provided copies of credit

card statements and some bank statements for 2011 that, without further
                                          - 13 -

explanation, appear overwhelmingly to show personal expenditures. Petitioner

offered no evidence of his $100 deduction for tax preparation fees4 and $546 for

attorney’s and accountant’s fees.

      Respondent’s determination that the standard deduction exceeds the sum of

petitioner’s substantiated itemized deductions for 2011 is sustained.

      To reflect the foregoing,


                                                         Decision will be entered

                                                   for respondent.




      4
          Petitioner’s tax return indicates it was “Self-Prepared”.
