                    T.C. Summary Opinion 2010-77



                        UNITED STATES TAX COURT



                    MING ZENG, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18492-08S.              Filed June 17, 2010.



     Ming Zeng, pro se.

     Nancy P. Klingshirn, for respondent.



     RUWE, Judge:     This case was heard pursuant to the provisions

of section 74631 of the Internal Revenue Code in effect when the

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




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

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

shall not be treated as precedent for any other case.

     Respondent determined a $2,256 deficiency in petitioner’s

2005 Federal income tax.   We must decide:   (1) Whether petitioner

is entitled to a deduction claimed on Schedule C, Profit or Loss

From Business, for meals and entertainment expenses of $312; (2)

whether petitioner is entitled to a Schedule C deduction for

travel expenses of $3,850; and (3) whether petitioner is entitled

to a Schedule C deduction for car and truck expenses of $2,283.

                            Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by reference.

     At the time the petition was filed, petitioner resided in

Ohio.

     Petitioner is a trained oncologist and cancer researcher.

In 2004 petitioner began a consulting business that he named

Zymenn, Inc.   The objectives of his consulting business were to

transfer retired medical equipment from the United States to

China and to train medical personnel from China.

     On his timely filed 2005 Form 1040, U.S. Individual Income

Tax Return, petitioner reported wage income of $288,276.

Included with petitioner’s Form 1040 was a Schedule C wherein he

reported a net loss of $12,110 from Zymenn, Inc.   Petitioner
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reported zero gross receipts and zero gross income from Zymenn,

Inc., during 2005.    Zymenn, Inc., was not profitable because

petitioner was not able to transfer any medical equipment to

China on account of a change in government regulations.

Petitioner testified that government regulations in China changed

in 2005 and when this happened he could not make any money.      The

$12,110 net loss was computed entirely from petitioner’s Schedule

C claimed expenses.    Petitioner claimed the following Schedule C

expenses related to Zymenn Inc.:

           Expense                                 Amount

      Advertising                                    $540
      Car and truck                                 2,283
      Commissions and fees                           -0-
      Contract labor                                 -0-
      Insurance                                       200
      Interest:
        Mortgage                                     -0-
        Other                                        -0-
      Legal and professional services                 375
      Office expense                                  100
      Rent or lease:
        Vehicles, machinery, and equipment           -0-
        Other business property                      -0-
      Repairs and maintenance                         250
      Supplies                                        100
      Taxes and licenses                              365
      Travel                                        3,850
      Deductible meals and entertainment              312
      Utilities                                       240
      Other expenses                                  860
      Business use of home                          2,635
        Total                                      12,110

     On June 10, 2008, respondent issued to petitioner a notice

of deficiency denying some, but not all, of petitioner’s Schedule

C deductions related to Zymenn, Inc.    Respondent disallowed
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petitioner’s claimed deductions for meals and entertainment of

$312, travel of $3,850, and car and truck of $2,283.   These

deductions were disallowed for lack of substantiation and/or

failure to establish a business benefit or purpose.

     During 2005 petitioner made seven trips to China.   Some of

the trips were for both business and personal purposes, but three

of the trips to China were pure business trips.   The purpose of

the three trips was to talk with the staff at a hospital in China

to determine how petitioner could help the hospital.   During

these three trips to China petitioner made contact with and

talked with medical professionals in an internal medicine

department, a cancer institute, and an oncology department.     The

business trips were taken in January, April, and August 2005.

Airfare receipts for the three business trips indicate that the

costs of the airfare were $1,400, $1,080, and $1,407.63,

respectively.   Receipts for the April and August 2005 trips

indicate issue dates during 2005; the receipt for the January

2005 trip indicates that it was issued on December 10, 2004.

                              Discussion

     A taxpayer must substantiate amounts claimed as deductions

by maintaining the records necessary to establish that he is

entitled to the deductions.    Sec. 6001; sec. 1.6001-1(a), Income

Tax Regs.   Section 162(a) allows as a deduction all the ordinary

and necessary expenses paid or incurred in carrying on a trade or
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business.    The determination of whether an expenditure satisfies

the requirements for deductibility under section 162 is a

question of fact.    Commissioner v. Heininger, 320 U.S. 467, 475

(1943).   In general, an expense is ordinary if it is considered

normal, usual, or customary in the context of the particular

business out of which it arose.    Deputy v. du Pont, 308 U.S. 488,

495 (1940).    Generally, an expense is necessary if it is

appropriate and helpful to the operation of the taxpayer’s trade

or business.    Commissioner v. Tellier, 383 U.S. 687, 689 (1966).

     Section 274(d) imposes heightened substantiation

requirements for any claimed deduction under section 162 or 212

for any traveling expense (including meals and lodging while away

from home) and for listed property.      See sec. 274(d)(1), (4).

Listed property includes passenger automobiles.      Sec.

280F(d)(4)(A)(i).   Under the heightened substantiation

requirements a taxpayer must substantiate his expenses by either

“adequate records” or “sufficient evidence corroborating the

taxpayer’s own statement”.   Sec. 274(d); sec. 1.274-5T(c)(1),

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

“To meet the ‘adequate records’ requirements of section 274(d), a

taxpayer shall maintain an account book, diary, log, statement of

expense, trip sheets, or similar record * * *, and documentary

evidence”.    Sec. 1.274-5T(c)(2)(i), Temporary Income Tax Regs.,

50 Fed. Reg. 46017 (Nov. 6, 1985).      Generally, corroborative
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evidence must be direct evidence, such as a statement in writing

or the oral testimony of witnesses involved in the event in

relation to which a deduction is claimed, or documentary evidence

such as described in section 1.274-5T(c)(2), Temporary Income Tax

Regs., supra.   Sec. 1.274-5T(c)(3)(i), Temporary Income Tax

Regs., 50 Fed. Reg. 46020 (Nov. 6, 1985).   In proving the

business purpose of an expenditure, the corroborative evidence

may be circumstantial.   Id.

Traveling Expenses (Including Meals and Entertainment)

     Under the heightened substantiation requirements for

traveling expenses (including meals and lodging while away from

home) a taxpayer must prove the following elements:    (i) The

amount of each separate expenditure for traveling away from home;

(ii) the dates of departure and return for each trip away from

home spent on business; (iii) the destinations or locality of

travel, described by name of city or town or other similar

designation; and (iv) the business reason for travel or nature of

the business benefit derived or expected to be derived as a

result of travel.   Sec. 1.274-5T(b)(2), Temporary Income Tax

Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).

     On his 2005 Federal income tax return, petitioner claimed

$312 of deductible meals and entertainment expenses.    See sec.

274(n).   Petitioner neither testified about nor proffered any

substantiation or other documentary evidence establishing the
                               - 7 -

claimed $312 of meals and entertainment expenses.   Respondent’s

determination to disallow the $312 of meals and entertainment

expenses is sustained.

     As to the $3,850 of traveling expenses, petitioner testified

that although he made seven trips to China during 2005 he claimed

a deduction only for the three trips which were “pure business

trips.”   Moreover, the only traveling expenses claimed were

expenditures for the airfare purchased for the three trips.

Petitioner provided copies of receipts, boarding passes, and his

passport to substantiate the expense and dates of travel to and

from China.   Petitioner’s receipts indicate that airfare for two

of the three so-called pure business trips was purchased during

2005; however, the airfare for the January 2005 trip was

purchased in 2004.   Section 461(a) provides that “The amount of

any deduction or credit allowed by this subtitle shall be taken

for the taxable year which is the proper taxable year under the

method of accounting used in computing taxable income.”    Because

petitioner used the cash method of accounting for his consulting

business and purchased the airfare for the January 2005 trip

during 2004, that expense is not properly deductible for the year

at issue.   With respect to the April and August 2005 trips to

China, petitioner credibly testified that the trips were

necessary for him to establish a working relationship with

hospitals and medical personnel in China for his consulting
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business.   We find that petitioner has demonstrated a business

purpose for the April and August 2005 trips to China and that he

has established the cost of the airfare, the dates of the travel,

and the location to which he traveled.   Therefore, we hold that

petitioner is entitled to deduct the traveling expenses of $1,080

and $1,407.63 for the April and August 2005 trips, respectively.

Car and Truck Expenses

     Under the heightened substantiation requirements for car and

truck expenses a taxpayer must prove the following elements:

(i)(A) The amount of each separate expenditure; (i)(B) the amount

of each business/investment use (i.e., mileage for automobiles)

and the total use for the taxable period; (ii) the date of the

expenditure or use with respect to the automobile; and (iii) the

business or investment purpose for an expenditure or use with

respect to the automobile.   Sec. 1.274-5T(b)(6), Temporary Income

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

     On his 2005 Federal income tax return petitioner claimed car

and truck expenses of $2,283.   To substantiate his business

expenses for the use of his vehicle petitioner prepared and

proffered a mileage summary, which indicates that he claimed to

have driven 5,000 miles for business during 2005.   Petitioner

testified that he prepared the mileage summary only after having

received correspondence from the Internal Revenue Service and

that he prepared it from “Memory, and some of it was from--well,
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my calendars and my memory.”   Furthermore, petitioner has not

established the dates of use2 or the business purpose for each

use of his automobile.   Thus, petitioner failed to establish

eligibility for a deduction for car and truck expenses.

Consequently, we sustain respondent’s determination to disallow

petitioner’s claimed car and truck expenses.

     In reaching our holdings herein, we have considered all

arguments made, and to the extent not mentioned above, we find

them to be moot, irrelevant, or without merit.

     To reflect the foregoing,


                                              Decision will be entered

                                         under Rule 155.




     2
      Petitioner’s mileage summary provides a total of the
business mileage for each month during 2005 but does not
otherwise indicate the date of use of petitioner’s automobile or
the business purpose for each use during the months represented
in the mileage summary.
