                        T.C. Memo. 1997-183


                      UNITED STATES TAX COURT



         ROGER L. AND PATRICIA A. LAVALLEE, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1604-95.                      Filed April 21, 1997.


     Roger L. and Patricia A. Lavallee, pro sese.

     James F. Kearney, for respondent.


              MEMORANDUM FINDINGS OF FACT AND OPINION

     RUWE, Judge:   Petitioners are seeking an award of reasonable

administrative costs pursuant to section 7430(f)(2)1 and Rules

270-274.2

     1
      Sec. 7430(f)(2) provides that "A decision granting or
denying (in whole or in part) an award for reasonable
administrative costs under subsection (a) by the Internal Revenue
Service shall be subject to appeal to the Tax Court under rules
similar to the rules under section 7463 (without regard to the
amount in dispute)."
     2
      The petition for administrative costs in this case was
                                                   (continued...)
                                    - 2 -

                           FINDINGS OF FACT


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

Petitioners resided in Jacksonville, Florida, when they filed

their petition for administrative costs.      During the years 1985,

1986, and 1987, Mr. Lavallee was employed as a cross-country

truck driver for Paul Arpin Van Lines, Inc. (Paul Arpin), in East

Greenwich, Rhode Island.

     Petitioners filed untimely Federal income tax returns for

1985 and 1986 on July 23, 1987, and for 1987 on November 23,

1988.     Mr. and Mrs. Lavallee listed their occupations as "truck

driver" and "homemaker" on their returns for these years.     On

Schedule C of their returns, petitioners reported the following

amounts of gross receipts and deductions:


   Year               Gross receipts             Deductions

   1985                  $100,232                 $80,883
   1986                   102,288                  87,797
   1987                    98,582                  90,188



     On October 13, 1988, respondent's Office Auditor Linda

Barrow was assigned to examine petitioners' 1986 Federal income

tax return.     On October 20, 1988, Office Auditor Barrow sent

     2
      (...continued)
filed on Jan. 26, 1995, and, therefore, has been considered under
sec. 7430 as amended by sec. 6239(a) of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat.
3342, 3743-3744, effective for all civil tax proceedings
commenced after Nov. 10, 1988. All Rule references are to the
Tax Court Rules of Practice and Procedure.
                                - 3 -

petitioners an initial appointment letter, which proposed a

conference date of November 15, 1988.    Petitioners failed to

contact respondent and did not appear at the scheduled

conference.    On December 8, 1988, a second appointment letter was

sent to petitioners requesting that they call for a convenient

appointment.

     Petitioners met with Office Auditor Barrow on December 22,

1988.    At that time, petitioners provided information regarding

Mr. Lavallee's employment at Paul Arpin and his compensation and

expenses in connection therewith.   On December 23, 1988,

respondent sent a Letter 1995(DO) to Paul Arpin, requesting

employment-related information with respect to Mr. Lavallee.

Office Auditor Barrow also sent petitioners three Information

Document Requests (Form 4564), which were dated December 22,

1988, December 23, 1988, and January 9, 1989.    The documents

provided on December 22, 1988, were the only documents that

petitioners provided to respondent prior to respondent's issuance

of the notice of deficiency.

     On January 17, 1989, Office Auditor Barrow was assigned

petitioners' 1987 Federal income tax return, which had also been

selected for audit.3




     3
      Office Auditor Barrow had requested information with
respect to petitioners' 1987 year in the initial appointment
letter she sent petitioners on Oct. 20, 1988, and in the Forms
4564 that she issued to petitioners on Dec. 23, 1988, and Jan. 9,
1989.
                                 - 4 -

     On February 24, 1989, petitioners' 1985 return was assigned

to Office Auditor Barrow.   On that date, Office Auditor Barrow

sent petitioners a Form 4564 with respect to their 1985 return.

A second Form 4564 was sent to petitioners on April 4, 1989.

     Respondent sent Reports of Individual Income Tax Examination

Changes (Form 4549) to petitioners, which reflected proposed

adjustments.4   The proposed adjustments to petitioners' Schedule

C deductions for 1985, 1986, and 1987 were in the amounts of

$2,930, $10,379, and $15,363, respectively.5

     In a letter dated May 19, 1989, respondent requested that

petitioners respond to the Forms 4549 that had been sent to them

and informed petitioners that they could have their case

transferred to respondent's Appeals Office.    The letter also

stated that respondent would issue a notice of deficiency if

petitioners failed to respond within 15 days.

     Petitioners, through their daughter-in-law, requested that

their case be sent to Appeals.    On July 21, 1989, petitioners'

case was transferred to respondent's Appeals Office in

Jacksonville, Florida.   On July 25, 1989, Appeals Officer Sandra

G. Holder sent petitioners a letter advising them that the case

had been referred to her and that she would call or write to



     4
      Respondent's Forms 4549 for petitioners' 1986 and 1987
years are both dated Jan. 18, 1989; her report for petitioners'
1985 year is dated May 1, 1989.
     5
      A listing of each of Office Auditor Barrow's adjustments
for 1985, 1986, and 1987 is contained in the appendix.
                                 - 5 -

arrange a mutually satisfactory conference date.         In a letter

dated September 19, 1989, Appeals Officer Holder wrote

petitioners to inform them that she had scheduled a conference

for October 11, 1989, with respect to their 1985, 1986, and 1987

tax years.   After petitioners failed to respond to this letter,

Appeals Officer Holder wrote to petitioners on October 12, 1989,

scheduling another conference date for October 24, 1989.           On

October 20, 1989, Mrs. Lavallee contacted the office of Appeals

Officer Holder to advise her that petitioners would be out of

town for 3 to 4 weeks.     On March 20, 1990, after petitioners had

failed to contact respondent requesting another conference date,

respondent issued a notice of deficiency.         In the notice,

respondent determined the following deficiencies and additions to

tax:


                                    Additions to Tax
  Year   Deficiency   Sec. 6651(a)(1) Sec. 6653(a)(1)     Sec. 6653(a)(2)

  1985     $868           $317             $244           50 percent of
                                                          the interest
                                                          due on $868

                                  Additions To Tax

 Year Deficiency Sec. 6651(a)(1) Sec. 6653(a)(1)(A) Sec.
6653(a)(1)(B)

 1986    $3,038        $665              $296           50 percent of the
                                                        interest due on
                                                        $3,038

 1987     4,104         843               261           50 percent of the
                                                        interest due on
                                                        $4,104
                              - 6 -

Petitioners failed to file a petition with this Court with

respect to the notice of deficiency.

     After respondent instituted collection procedures with

respect to these deficiencies, petitioners retained Steven W.

Conner, a certified public accountant in Orange Park, Florida.

In January 1991, Mr. Conner filed amended Federal income tax

returns for petitioners for 1985, 1986, and 1987.6   In Part II

(Explanation of Changes to Income, Deductions, and Credits) of

each amended return, Mr. Conner included the following statement:


     Taxpayers' originally filed return was audited and
     changes requiring payment of additional tax were made.
     The taxpayer [sic] was not able to contact the revenue
     officer before the case was closed to contest the
     changes. The taxpayers are long haul truckers. The
     changes on this amended return convert the audited
     numbers back to the return as filed. The taxpayer
     believes the return was correct as filed. * * *


In a letter dated March 25, 1991, respondent indicated that the

claims in petitioners' amended returns would not be considered

unless petitioners first paid the tax and then filed a claim for

refund.

     On October 31, 1991, respondent received an Offer in

Compromise (Form 656), prepared by Mr. Conner, with reference to

petitioners' 1985, 1986, and 1987 Federal income tax liabilities.

In an October 21, 1991, letter accompanying the Form 656, Mr.

Conner explained that petitioners made the offer "because of

     6
      The amended returns for 1986 and 1987 were filed on Jan. 3,
1991, and the amended return for 1985 was filed on Jan. 14, 1991.
                               - 7 -

doubt as to any liability".   The Form 656 proposed a reduction in

petitioners' Federal income tax deficiencies for 1985, 1986, and

1987 in the amounts of $870, $2,987, and $4,104, respectively.7

     Revenue Agent Kim Lovell was assigned to review petitioners'

Form 656.   In a telephone conference on May 7, 1992, Revenue

Agent Lovell informed Mr. Conner that petitioners needed to

present additional information if their case was to be closed.

     On May 11, 1992, Revenue Agent Lovell and Mr. Conner met to

review additional documentation and to determine the extent of

any adjustments to petitioners' Federal income tax liabilities

for 1985, 1986, or 1987.   In a Form 4549, which was proposed by

Revenue Agent Lovell and dated July 29, 1992, she determined that

petitioners were entitled to additional Schedule C deductions for

1985 and 1987 in the amounts of $430 and $621, respectively.8

This resulted in a reduction of petitioners' Federal income taxes

for 1985, 1986, and 1987 in the amounts of $123, $2,9 and $166,

respectively.   Revenue Agent Lovell prepared a rejection


     7
      These amounts were the same as the reductions in Federal
income tax liability listed by petitioners on their amended
returns.
     8
      Revenue Agent Lovell increased petitioners' Schedule C
deduction in 1985 by $430 to reflect petitioners' payment of a
highway use tax. For 1987, Revenue Agent Lovell increased
petitioners' Schedule C deductions for car/truck expenses, travel
and entertainment expenses, and uniforms in the amounts of $127,
$56, and $438, respectively.
     9
      This $2 reduction in petitioners' Federal income tax
liability for 1986 resulted from respondent's determination that
petitioners were entitled to use income averaging in computing
their tax liability for that year.
                                   - 8 -

  memorandum on July 29, 1992, with respect to petitioners' Form

  656.

          In a letter dated November 23, 1992, Mr. Conner informed

  respondent of petitioners' disagreement with the rejection of

  their Form 656 and the limited extent of Revenue Agent Lovell's

  proposed adjustments.     Mr. Conner's letter included eight

  attachments which provided substantiation for several of the

  deductions discussed therein.     With the exception of three

  documents, petitioners had not previously provided this

  information to respondent during her examination of their

  returns.

          In his letter, Mr. Conner proposed the following adjustments

  to petitioners' Schedule C deductions:


                                   1985

                                    Per             Per
                           Office Auditor Barrow    Appeal
  Adjustment

Depreciation                     $11,831           $11,957        ($126)
Repairs                           10,275            10,275            0
Travel & entertainment             4,676             8,218       (3,542)
Claims/chargebacks                   697               697            0
Interest on truck loans                0             5,473       (5,473)
All other expenses                50,474            50,474            0

  Total                          $77,953           $87,094   ($9,141)
                                     - 9 -

                                     1986

                                    Per             Per
                           Office Auditor Barrow    Appeal    Adjustment

Depreciation                        $12,499        $12,625      ($126)
Repairs                               9,753         14,206     (4,453)
Travel & entertainment                8,891          8,891          0
Claims/chargebacks                      413            413          0
Interest on truck loans                   0          5,473     (5,473)
All other expenses                   45,862         45,862          0

  Total                             $77,418        $87,470    ($10,052)


                                     1987

                                    Per             Per
                           Office Auditor Barrow    Appeal    Adjustment

Depreciation                        $25,904        $37,864   ($11,960)
Repairs                               5,399          8,579     (3,180)
Travel & entertainment                2,519          7,100     (4,581)
Claims/chargebacks                      737            767        (30)
Interest on truck loans                   0          4,685     (4,685)
All other expenses                   40,266         40,266          0

  Total                             $74,825        $99,261   ($24,436)


  Thus, petitioners were now claiming Schedule C deductions for

  1985 and 1987 in excess of the amounts reported on their returns

  for those years, as well as a smaller deduction for 1986:


            Year      Amount per return       Amount per appeal

            1985          $80,883                  $87,094
            1986           87,797                   87,470
            1987           90,188                   99,261



          On or about May 24, 1993, petitioners' case was reassigned

  to Revenue Agent Michael L. Roberts who determined that Mr.
                                 - 10 -

Conner's November 23, 1992, letter raised additional issues and

provided additional information.    In his examination workpapers,

Revenue Agent Roberts stated that petitioners had adequately

substantiated the amounts of their Schedule C deductions as

listed in Mr. Conner's letter.    However, Revenue Agent Roberts

also concluded that he lacked the authority to allow petitioners

to claim Schedule C deductions in excess of the greater of the

amounts originally reported on the returns for those years or the

amounts allowed by Office Auditor Barrow during her examination

of petitioners' returns.10   Revenue Agent Roberts then

transferred petitioners' case to respondent's Appeals Office for

a determination as to the total amount of Schedule C deductions

which petitioners were entitled to claim.

     In a letter dated May 17, 1994, Appeals Officer Robert W.

Whittle advised Mr. Conner that he had scheduled a conference for

June 29, 1994, in Jacksonville, Florida.    However, after

reviewing the workpapers of Revenue Agent Roberts, Appeals

Officer Whittle contacted Mr. Conner to advise him that a meeting

was unnecessary, as Appeals Officer Whittle was prepared to allow

the amounts of Schedule C deductions originally reported on

petitioners' Federal income tax returns for 1985, 1986, and 1987.

     Mr. Conner indicated that he still preferred to meet on the

     10
      In several instances, Office Auditor Barrow allowed
petitioners a deduction that was in excess of the amount claimed
on their return. See appendix.
                               - 11 -

scheduled date, and during his meeting with Appeals Officer

Whittle on June 29, 1994, Mr. Conner explained that petitioners

were claiming additional amounts of Schedule C deductions.

Appeals Officer Whittle originally believed that the period of

limitations was no longer open for 1985 and 1987.11

Nevertheless, despite finding that petitioners had a "weak case",

Appeals Officer Whittle ultimately agreed with Mr. Conner that

petitioners should be considered to have made an informal claim

for refund for which the period of limitations had not run and

that petitioners' claimed Schedule C deductions should be

allowed.

     Petitioners then filed a claim with respondent to recover

the administrative costs incurred in connection with their case.

In a letter dated December 14, 1994, respondent denied

petitioners' claim for such costs.   On January 26, 1995,

petitioners filed with the Court a petition for administrative

costs pursuant to section 7430(f)(2).   The petition stated that

respondent had denied petitioners' claim for $9,311.12 of

administrative costs.   The petition also stated that petitioners

were now claiming $13,586.12 of administrative costs.



     11
      Since petitioners' 1986 year involved only a negligible
deficiency under the terms of the settlement agreement, the
parties did not discuss whether the period of limitations
remained open with respect to that year.
                                - 12 -

                               OPINION


     Section 7430(a)(1) provides that a party that has prevailed

in any administrative proceeding against the United States may

recover reasonable administrative costs.   Section 7430(c)(2)

limits the term "reasonable administrative costs" to include only

costs incurred on or after the earlier of (i) the date of the

receipt by the taxpayer of the notice of the decision of the

Internal Revenue Service Office of Appeals, or (ii) the date of

the notice of deficiency.    Estate of Gillespie v. Commissioner,

103 T.C. 395, 396 (1994).

     To obtain an award of administrative costs, taxpayers must

establish that:   (1) They have "substantially prevailed" in the

controversy; (2) they satisfy certain net worth requirements; (3)

the position of the United States in the proceeding was not

substantially justified; (4) they have not unreasonably

protracted the proceedings; and (5) the amount of the costs

sought is reasonable.    Sec. 7430(b) and (c).   Petitioners must

prove that they satisfy each of these requirements.     Rule 232(e);

Gantner v. Commissioner, 92 T.C. 192, 197 (1989), affd. 905 F.2d

241 (8th Cir. 1990).12   The parties have stipulated that


     12
      In the Taxpayer Bill of Rights 2, Pub. L. 104-168, sec.
701(b), 110 Stat. 1452, 1463 (1996), sec. 7430(c)(4) was amended
to require the Government to establish that its position was
substantially justified. This amendment is effective for
                                                      (continued...)
                               - 13 -

petitioners satisfy the net worth requirements.     Respondent also

concedes that petitioners substantially prevailed with respect to

the amounts in controversy.

Whether the Position of the United States was Substantially
Justified


     Petitioners must prove that the position of the United

States in this administrative proceeding was not substantially

justified.   Sec. 7430(c)(4)(A)(i); Rule 232(e).    We apply the

"not substantially justified" standard as of the date that

respondent takes her position in the case.   For purposes of an

administrative proceeding, respondent generally takes her

position on the date she issues the notice of deficiency.     Sec.

7430(c)(7)(B); Han v. Commissioner, T.C. Memo. 1993-386.

     Whether respondent's position was "not substantially

justified" turns on an analysis of all the facts and

circumstances, as well as any relevant legal precedents.      Coastal

Petroleum Refiners, Inc. v. Commissioner, 94 T.C. 685, 688

(1990); Sher v. Commissioner, 89 T.C. 79, 84 (1987), affd. 861

F.2d 131 (5th Cir. 1988); see also H. Rept. 97-404, at 12 (1981).

We must consider the basis for respondent's position and the

manner in which that position was maintained.      Wasie v.

Commissioner, 86 T.C. 962, 968-969 (1986).   A position is

substantially justified if the position is "justified to a degree


     12
      (...continued)
proceedings commenced after July 30, 1996.
                               - 14 -

that could satisfy a reasonable person."   Pierce v. Underwood,

487 U.S. 552, 565 (1988); Powers v. Commissioner, 100 T.C. 457,

470-471 (1993).   The fact that respondent loses or concedes a

case, without more, does not establish an unreasonable position.

Sokol v. Commissioner, 92 T.C. 760, 767 (1989).   Rather, the

reasonableness of respondent's position is determined by

considering the information available to her at the time the

notice of deficiency was issued.   Sharer v. Commissioner, T.C.

Memo. 1996-90; see also Rutana v. Commissioner, 88 T.C. 1329,

1334 (1987).

     The adjustments made by Office Auditor Barrow during her

exmaination of petitioners' Federal income tax returns for 1985,

1986, and 1987 formed the basis of respondent's notice of

deficiency in this case.   However, neither petitioners' testimony

at trial nor their post-trial brief clearly identified the

particular adjustments that petitioners contend were not

substantially justified.   For instance, the only adjustments

which Mr. Lavallee made specific reference to in his testimony

were Officer Auditor Barrow's purported adjustments for trip

sheets and oil.   However, Office Auditor Barrow's examination

workpapers do not discuss an adjustment for trip sheets.    While

the adjustments for oil may have been contained within the

nominal adjustments of petitioners' Schedule C deductions for

car/truck expenses, the amounts allowed by Office Auditor Barrow

were determined on the basis of the substantiation provided by
                                - 15 -

Mr. Lavallee himself.    In addition, Mr. Conner never disputed

these adjustments during his discussions with respondent.

     Deductions from gross income are a matter of legislative

grace, and taxpayers bear the burden of proving that they are

entitled to the deductions they claim.     Rule 142(a); New Colonial

Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).     This includes

the burden of substantiation.    Hradesky v. Commissioner, 65 T.C.

87, 89-90 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).

Taxpayers are required to maintain records sufficient to

establish the amounts of their deductions.    Sec. 6001.

     Following our review of the record, we conclude that

petitioners have not proven that respondent's position was not

substantially justified.    Rule 232(e).   We have reviewed Office

Auditor Barrow's workpapers and find her adjustments to be

justified given the information available.    In addition, we note

that respondent provided petitioners with Forms 4549 for 1985,

1986, and 1987, which contained the proposed adjustments made by

Office Auditor Barrow.    Respondent requested that petitioners

respond to the proposed adjustments, and she informed petitioners

that they could have their case reviewed by respondent's Appeals

Office.   Moreover, after petitioners' daughter-in-law advised

respondent that petitioners wanted their case sent to Appeals,

Appeals Officer Holder attempted to schedule two Appeals

conferences with them.    Petitioners did not attend either

conference, nor did they ever attempt to arrange another meeting
                                 - 16 -

date.     Thus, petitioners had several opportunities to meet with

respondent in order to discuss respondent's proposed adjustments,

as well as to present any additional documentation that they had.

They simply failed to take advantage of the opportunities

respondent afforded them.13

     For the foregoing reasons, we hold that petitioners are not

entitled to an award of reasonable administrative costs.    As a

result of our disposition, we express no opinion as to whether

any of the remaining requirements of section 7430 have been

satisfied.14


                                           Decision will be entered

                                      that petitioners are not

                                      entitled to administrative

                                      costs.




     13
      Mr. Conner's letter and most of the documents provided
therein were not submitted until Nov. 23, 1992, more than 2-1/2
years after the notice of deficiency had been issued. Mr.
Conner's letter also proposed Schedule C deductions for 1985 and
1987 that were in excess of the amounts petitioners had reported
on their returns for those years.
     14
      Respondent also argues that petitioners are seeking costs
incurred in connection with a "collection action", which
respondent maintains does not constitute an "administrative
proceeding" under sec. 7430(c)(5) and sec. 301.7430-3(a)(4),
Proced. & Admin. Regs. Since we have found that petitioners have
failed to prove that the position of the United States was not
substantially justified, we leave the resolution of this question
for another day. See Ball v. Commissioner, T.C. Memo. 1995-520
(also declining to reach this issue).
                                    - 17 -

                                  Appendix

                                    1985

                                             Per        As
                                           Return    Corrected   Adjustment

 1.   Bank charges                            --        --         --
 2.   Car/truck expenses                   $16,751   $16,281       $470
 3.   Depreciation                          17,119    11,831      5,288
 4.   Dues and publications                   --        --         --
 5.   Insurance                              3,634     3,634          0
 6.   Office expense                           321       506       (185)
 7.   Mortgage interest                       --        --         --
 8.   Other interest                         5,473     5,473          0
 9.   Laundry & cleaning                      --        --         --
10.   Rent on business property                280       324        (44)
11.   Repairs                                7,882    10,275     (2,393)
12.   Supplies                                 412       377         35
13.   Taxes                                  1,530     1,100        430
14.   Travel & entertainment                 1,148     4,676     (3,528)
15.   Utility/telephone                        533       110        423
16.   Tolls                                    462       479        (17)
17.   Pick up charges                        1,570     1,495         75
18.   Claims/chargebacks                       863       697        166
19.   Wire charges                             648       648          0
20.   Miscellaneous                            587       100        487
21.   Service charges                        2,108     2,108          0
22.   Permits                                1,999     1,509        490
23.   Weights                                  802        47        755
24.   Handling costs                        16,257    15,962        295
25.   Tools                                    337       154        183
26.   Line haul adjustment                     167       167          0
27.   Uniforms                                --        --         --
28.   Postage & Federal Express               --        --         --
29.   Casual labor                            --        --         --

             TOTAL                         $80,883   $77,953     $2,930



                                    1986

                                             Per        As
                                           Return    Corrected   Adjustment

 1.   Bank charges                            --        --         --
 2.   Car/truck expenses                   $13,655   $13,360       $295
 3.   Depreciation                          15,730    12,499      3,231
 4.   Dues and publication                    --        -          --
 5.   Insurance                              3,641     3,641          0
 6.   Office expense                           571       255        316
 7.   Mortgage interest                       --        --         --
 8.   Other interest                         5,499     5,499          0
 9.   Laundry & cleaning                       400       400          0
10.   Rent on business property                420       324         96
11.   Repairs                               13,833     9,753      4,080
                                  - 18 -
12.   Supplies                              463        753        (290)
13.   Taxes                                 871        871           0
14.   Travel & entertainment             10,541      8,891       1,650
15.   Utility/telephone                     533        465          68
16.   Tolls                                 620        499         121
17.   Pick up charges                       963      1,106        (143)
18.   Claims/chargebacks                    647        413         234
19.   Wire charges                          579        673         (94)
20.   Miscellaneous                         330        137         193
21.   Service charges                     1,590      1,851        (261)
22.   Permits                             2,165      3,069        (904)
23.   Weights                               820        774          46
24.   Handling costs                     13,926     12,185       1,741
25.   Tools                                --         --          --
26.   Line haul adjustment                 --         --          --
27.   Uniforms                             --         --          --
28.   Postage & Federal Express            --         --          --
29.   Casual labor                         --         --          --

             TOTAL                       $87,797   $77,418     $10,379



                                  1987

                                           Per        As
                                         Return    Corrected   Adjustment

 1.   Bank charges                         $884        $36        $848
 2.   Car/truck expenses                 14,596     14,469         127
 3.   Depreciation                       25,904     25,904           0
 4.   Dues and publications                  48          0          48
 5.   Insurance                           6,401      4,249       2,152
 6.   Office expense                       --         --          --
 7.   Mortgage interest                   1,026        324         702
 8.   Other interest                      5,593        985       4,608
 9.   Laundry & cleaning                    922        200         722
10.   Rent on business property            --         --          --
11.   Repairs                             8,572      5,399       3,173
12.   Supplies                             --         --          --
13.   Taxes                                 465        771        (306)
14.   Travel & entertainment              1,089      2,519      (1,430)
15.   Utility/telephone                     369        157         212
16.   Tolls                                 653        668         (15)
17.   Pick up charges                     2,211      2,155          56
18.   Claims/chargebacks                  1,896        737       1,159
19.   Wire charges                          609        609           0
20.   Miscellaneous                        --         --          --
21.   Service charges                      --         --          --
22.   Permits                             2,815      2,234         581
23.   Weights                               990         25         965
24.   Handling costs                       --         --          --
25.   Tools                                --         --          --
26.   Line haul adjustment                 --         --          --
27.   Uniforms                              779        193         586
28.   Postage & Federal Express             816        564         252
29.   Casual labor                       13,550     12,627         923

             TOTAL                       $90,188   $74,825     $15,363
