                         T.C. Memo. 2009-42



                       UNITED STATES TAX COURT



      ABDASSLAM AND SUSAN ALAMI EL MOUJAHID, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20795-07.               Filed February 23, 2009.



     Abdasslam and Susan Alami El Moujahid, pro sese.

     Michael W. Bitner, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:    Respondent determined a $2,480 deficiency

in petitioners Abdasslam (Mr. Alami) and Susan (Ms. Alami) Alami

El Moujahid’s Federal income tax for 2004 and a $9,021 deficiency

in petitioners’ Federal income tax for 2005.     After concessions
                              - 2 -

by both parties,1 the issues left for decision are:   (1) Whether

petitioners are entitled to unreimbursed employee business travel

expense deductions for 2004 and 2005; (2) whether petitioners are

entitled to other unreimbursed employee business expense

deductions for 2004 and 2005; (3) whether petitioners are

entitled to charitable contribution deductions for 2004 and 2005;

and (4) whether petitioners are entitled to an abandonment loss

deduction for 2005.




     1
        Petitioners conceded the following unreimbursed employee
business expenses: An education expense of $500 incurred in 2004
and a publication expense of $255 incurred in 2005.

     Respondent conceded the following unreimbursed employee
business expenses incurred by Mr. Alami: Union dues expenses of
$761 incurred in 2004 and $938 incurred in 2005, tool expenses of
$1,052 incurred in 2004 and $180 incurred in 2005, uniform
maintenance expenses of $552 incurred in 2004 and $140 incurred
in 2005, a license expense of $115 incurred in 2004, and a soccer
expense of $195 incurred in 2005.

     Respondent conceded the following unreimbursed employee
business expenses incurred by Ms. Alami: A license expense of
$85 incurred in 2004 and a uniform maintenance expense of $260
incurred in 2005.

     Respondent conceded $500 of petitioners’ claimed noncash
charitable contribution made in 2004. Respondent further
conceded that petitioners are entitled to a $250 charitable
contribution deduction in each of the years 2004 and 2005 for
hosting an exchange student for 5 months in 2004 and 2005
pursuant to sec. 170(g)(2).

     Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code), and all Rule references are to
the Tax Court Rules of Practice and Procedure.
                                - 3 -

      On the basis of the analysis herein, we find:   (1)

Petitioners are not entitled to a deduction for the employee

business travel expenses incurred in 2004 or 2005; (2)

petitioners are entitled to deductions for some of the other

unreimbursed business expenses incurred in 2004 and 2005; (3)

petitioners are entitled to deductions for some of the charitable

contributions claimed to have been made in 2004 and 2005; and (4)

petitioners are entitled to an abandonment loss deduction in

2005.

                         FINDINGS OF FACT

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   Petitioners resided in

Minnesota at the time their petition was filed.   For 2004 and

2005 petitioners filed joint Federal income tax returns.

I.   Expenses Incurred in Newark and Portland

      Mr. Alami worked as an airline mechanic for Northwest

Airlines, Inc. (NWA), from 1995 to July 2005.   Petitioners

claimed deductions on their 2004 and 2005 tax returns related to

Mr. Alami’s employment with NWA.   In both years petitioners

claimed deductions for vehicle, travel, meals, and entertainment

expenses arising from Mr. Alami’s work locations in Newark, New

Jersey, and Portland, Oregon.
                                - 4 -

     Mr. Alami was a member of the Aircraft Mechanics Fraternal

Association (AMFA) (a union that contracted with NWA), and he was

subject to a seniority-based employment displacement system.     Mr.

Alami was subject to displacement from employment should a member

with higher seniority bump him from his position.

     NWA began reducing the number of mechanics it employed at

the end of March 2003.   In May 2003 Mr. Alami lost his position

in Minneapolis, Minnesota, when a senior mechanic bumped him.

Pursuant to the system, Mr. Alami had 5 days to decide between

the options of being laid off or exercising his seniority to

displace a junior employee.   Mr. Alami wanted to stay in

Minneapolis but was unable to use his seniority to get a position

in Minneapolis.    Instead, he used his seniority to get a position

in Newark, New Jersey.

     A.   Newark

     Mr. Alami worked in Newark, New Jersey, from May 2003 to

July 2004.   At the time Mr. Alami took the position in Newark, he

did not know how long he would remain there.    In a written

statement, the AMFA said the duration of Mr. Alami’s employment

in Newark was “foreseeably limited” and “temporary”.    In a

written statement, NWA stated the position he took in Newark was

“temporary”.

     Mr. Alami rented a room in Newark, and his family stayed in

Minnesota while he worked in Newark.    Mr. Alami flew home to
                                  - 5 -

Minneapolis from Newark almost every weekend to see his family.

Petitioners claimed deductions for vehicle, travel, meals, and

entertainment expenses on Form 2106-EZ, Unreimbursed Employee

Business Expenses, in 2004.     Mr. Alami incurred these expenses

while working in Newark.      The following is a table of the Newark

expenses:

                       Item                       Amount

     Vehicle (6,410 miles @ $.375)                $2,404
     Travel expenses (while away from home)        3,200
     Meals and entertainment                       2,964
       Total                                      $8,568

     B.     Minneapolis

     In July 2004 Mr. Alami was recalled to Minneapolis to work

as a lead mechanic from July 2004 to June 2005.     In a written

statement, NWA stated the position he took in Minneapolis was

“temporary”.

     In June 2005 he was bumped again.     As before Mr. Alami had 5

days to decide between the options of being laid off or

exercising his seniority to displace a junior employee.     Mr.

Alami wanted to stay in Minneapolis but was unable to use his

seniority to get a position.     Instead, he used his seniority to

get a position in Portland, Oregon.

     C.     Portland

     Mr. Alami worked in Portland, Oregon, from June to July

2005.     At the time he took the position in Portland, he did not

know how long he would remain there.      In a written statement, the
                                - 6 -

AMFA said the duration of Mr. Alami’s employment in Portland was

“foreseeably limited” and “temporary”.

      Petitioners claimed deductions for vehicle, travel, meals,

and entertainment expenses on Form 2106-EZ in 2005.       These were

expenses Mr. Alami incurred while working in Portland.      The

following is a table of the Portland expenses:

                   Item                          Amount

      Vehicle (5,135 miles @ $.405)              $2,080
      Travel expenses (while away from home)      1,400
      Meals and entertainment                       716
        Total                                    $4,196

      In July 2005 Mr. Alami’s position with NWA was eliminated,

he was unable to use his seniority to get another position with

NWA, and his employment with NWA ended.

II.   Other Unreimbursed Employee Business Expenses Claimed

      In 2004 and 2005 petitioners claimed deductions for other

unreimbursed employee business expenses they had incurred.

      A.   Mr. Alami’s NWA Employment Expenses

      Mr. Alami was employed by NWA during all of 2004 and in 2005

until July.    Petitioners claimed employee business expense

deductions for paying union dues, purchasing a computer, Internet

service, cell phone service, tools, maintaining Mr. Alami’s

uniforms, and depreciation.

      In both 2004 and 2005 petitioners claimed a deduction for

Mr. Alami’s union dues.    In 2004 petitioners claimed a $1,404

deduction for union dues, and respondent conceded that
                               - 7 -

petitioners were entitled to a $761 deduction for union dues.      In

2005 petitioners claimed a $1,044 deduction for union dues, and

respondent conceded that petitioners were entitled to a $938

deduction for union dues.   Petitioners submitted the “dues”

portion of Mr. Alami’s union contract and a “Dues Rate Increase -

Effective May 12, 2001” in support of such expenses.

     In 2004 petitioners claimed a deduction for purchasing a

computer for Mr. Alami to use in his Newark apartment in the

course of his employment with NWA.     NWA required employees to

check for flights and to submit their expenses online but did not

require employees to own a computer.     Petitioners also incurred

the expense of providing Internet service for the computer.

     In both 2004 and 2005 petitioners claimed a deduction for

cell phone use by Mr. Alami.   Among the reasons Mr. Alami needed

the cell phone was that it enabled him to be reached by NWA.

Specifically, in Newark Mr. Alami needed the cell phone because

he did not have a phone in the room he rented.     Mr. Alami was not

required by NWA to have a cell phone.

     In 2005 petitioners claimed a deduction for purchasing tools

to use in the course of Mr. Alami’s employment with NWA.

     In 2005 petitioners claimed a deduction for cleaning Mr.

Alami’s work uniforms.   Mr. Alami was issued a uniform by NWA to

wear in the course of his employment.     Mr. Alami was responsible

for cleaning his uniform.   Mr. Alami provided a uniform
                               - 8 -

maintenance schedule for 2005 that claimed he washed his work

shirts 10 times a month and his work pants 4 times a month for

the 12 months of 2005.   Each load had a unit cost of $1.50.

     Petitioners claimed a deduction in 2004 for depreciation in

the total amount of $685 for equipment in the amount of $156 and

a computer in the amount of $529.   Petitioners presented no

evidence of the use of such depreciated items.

     Petitioners claimed a deduction of $176 in 2005 for

depreciation of a computer.   Petitioners presented no evidence of

the use of the computer.

     B.   Mr. Alami’s Soccer Coach Employment Expenses

     Mr. Alami became employed as a soccer coach in the school

district of Lakeville, Minnesota, during 2005 and earned $2,398.

Petitioners claimed a deduction of $550 for unreimbursed soccer

coaching expenses Mr. Alami incurred in 2005.

     Petitioners did not produce receipts for expenses incurred

but did submit a photo showing the items Mr. Alami bought.

Petitioners did not produce any evidence that such purchases were

required by Mr. Alami’s employer.

     C.   Ms. Alami’s Nurse Employment Expenses

     Ms. Alami worked as a registered nurse during 2004 and 2005

in the pediatric intensive care unit of Children’s Hospital in

Minneapolis.   Ms. Alami was responsible for purchasing her

uniforms, and she was not reimbursed by her employer for such
                                - 9 -

purchases.   She was required to purchase and wear royal/marine

blue scrubs to work.    Ms. Alami was also responsible for cleaning

her own uniforms.

     Ms. Alami was periodically required by her employer to be on

call.   While on call, Ms. Alami had to arrive at the hospital

within a certain window of time.   Ms. Alami’s employer did not

require her to own a cell phone; but among the reasons she

purchased a cell phone was that she would not have to wait by her

home phone while on call.

     In 2004 petitioners claimed a $2,048 deduction for Ms.

Alami’s unreimbursed employee business expenses.   These claimed

expenses consisted of $360 in cell phone expenses, $500 in job-

related education expenses, $255 in financial publication

expenses, $88 in license expenses, $325 in uniform expenses, and

$520 in uniform maintenance expenses.   Respondent conceded the

license expenses and uniform maintenance expenses after the

expenses were combined with Mr. Alami’s uniform maintenance

expenses for 2004.

     In 2005 petitioners claimed a $775 deduction for Ms. Alami’s

unreimbursed employee business expenses.   These claimed expenses

consisted of $255 in publications expenses and $520 in uniform

maintenance expenses.   Respondent conceded $260 of the uniform

maintenance expenses.
                               - 10 -

III.   Charitable Contribution Deductions

       Petitioners claimed a charitable contribution deduction of

$2,735 in 2004.    Petitioners claim to have contributed $1,885 in

cash and $850 in noncash.    Petitioners claim to have made other

than cash contributions of clothing and miscellaneous household

goods with a value of $500 to the Goodwill Industries in Apple

Valley, Minnesota, and clothing and miscellaneous household goods

with a value of $350 to the Veterans Association in Minneapolis,

Minnesota.     Petitioners said they used the “thrift shop value”

method to determine the value of the contributions.    Respondent

conceded $500 of the noncash charitable contributions petitioners

claimed.

       Petitioners claimed a charitable contribution deduction of

$1,890 in 2005.    Petitioners claim to have contributed $1,000 in

cash and $890 other than cash.    Petitioners claim to have made

noncash contributions of clothing and miscellaneous household

goods with a value of $890 to the Veterans Association in

Minneapolis, Minnesota.    Again, petitioners used the “thrift shop

value” method to arrive at the amount of the contribution.

       Petitioners produced a copy of a $100 check donation to the

Islamic Relief Fund in 2004.    They also produced the following:

(1) An undated receipt for a bag of clothing and miscellaneous

items donated to the Vietnam Veterans of America, (2) a receipt

for a bag of clothing and miscellaneous items donated to the
                               - 11 -

Lupus Foundation in September 2004, (3) a blank donation receipt

from the Veteran’s Thrift Store with a “10-01” date, (4) a

handwritten list of what was included in 2004 for noncash

donations with an estimate of each item’s value, (5) a

handwritten list of what was included in 2005 for noncash

donations with an estimate of each item’s value, and (6) a 2002

value guide for used clothing and other items commonly donated to

charity.

IV.   Quiznos Franchise

      Petitioners paid a $25,000 nonrefundable franchise fee to

Quiznos Franchising, L.L.C. (Quiznos), on October 27, 2003, with

the intent of opening up a Quiznos restaurant.   The Quiznos

franchise agreement stated that petitioners would execute a lease

for a location within 1 year from the date the agreement was

signed.    It also allowed the franchisor (Quiznos) to extend this

period by 3 months when events outside of the franchisees’

(petitioners’) control occurred in selecting a location.    In

January 2004 petitioners paid $750 to form the limited liability

corporation Casa Star, Inc., to run their Quiznos restaurant.

      Pursuant to petitioners’ franchise agreement, petitioners

were to begin looking for potential store locations but were not

permitted to have any direct contact with owners or real estate

agents in arranging the store location.   Quiznos was to handle

the leasing arrangements.
                              - 12 -

     Petitioners began looking for a location for their Quiznos

restaurant immediately after paying their franchise fee.     The

location of petitioners’ Quiznos restaurant was supposed to be in

Lakeville, Minnesota (a suburb of Minneapolis where petitioners

resided).   After two Quiznos restaurants had opened in Lakeville,

petitioners expanded their search for a location in the entire

Twin Cities area because petitioners did not think there was a

sufficient business base to support a third (their) Quiznos

restaurant in Lakeville, Minnesota.

     Petitioners began working with a representative of Quiznos

(Quiznos representative) to find and make arrangements for a

location for their store in October 2003 and continued their

efforts through 2004.   Petitioners would call the Quiznos

representative to try and get a location for their Quiznos

restaurant, and weeks, sometimes months, would go by without a

response.   Petitioners would also e-mail the Quiznos

representative and would not receive a response.

     In 2005 petitioners discovered many Quiznos restaurants were

bankrupt or were close to filing for bankruptcy.   Petitioners

also discovered a class action lawsuit had been filed against

Quiznos by some Quiznos restaurant owners.   The lawsuit’s

allegations focused on Quiznos’s “conduct in selling franchises

throughout the United States and its post-contractual efforts to

bilk its franchisees through a scheme to overcharge for the
                               - 13 -

essential goods, supplies, services and equipment necessary to

run a Quiznos franchise.”

     When Quiznos did respond to petitioners’ inquiries, Quiznos

encouraged petitioners to buy an existing restaurant that was for

sale by the owner.   Petitioners had already learned that similar

existing locations were not turning a profit, failing, and close

to bankruptcy.   Petitioners had spoken with other Quiznos owners

and discovered the other franchise owners had put $250,000 into

their store, in addition to the franchise fee of $25,000, only to

have it go bankrupt.

     Petitioners believed that Quiznos’s structure prevented the

restaurants from being profitable because Quiznos required store

owners to purchase everything through specific suppliers.   As of

December 5, 2005, petitioners no longer wanted to open a Quiznos

restaurant because they thought it was not worth the additional

$250,000 investment necessary to actually open the restaurant.

     Petitioners contacted the Quiznos representative in 2005 to

ask that their $25,000 franchise fee be refunded.   The Quiznos

representative refused to refund petitioners’ money.    Petitioners

asked for Quiznos’s refusal to refund the franchise fee to be put

in writing, but the Quiznos representative would not provide the

refusal in writing and told petitioners to contact Quiznos’s

corporate office.    Petitioners contacted Quiznos’s corporate

office and did not receive a response.
                               - 14 -

     When petitioners did not receive a response to their request

for a refund of the franchise fee, petitioners contacted the

attorney general of Minnesota (attorney general).   Petitioners

did not hire an attorney because they could not afford one.

Petitioners did not attempt to join in the class action lawsuit

because the participants were Quiznos restaurant owners who had

already opened a store, and there was a fee for joining the

lawsuit.

     The attorney general wrote a letter to Quiznos on October 4,

2005, requesting a written response to petitioners’ request for a

refund in 10 days.   Quiznos did not timely respond, and the

attorney general wrote another letter to Quiznos requesting a

response.   Quiznos responded on October 31, 2005, but did not

address whether petitioners would be refunded their money.

Petitioners contacted the attorney general after receiving a copy

of Quiznos’s response, and petitioners’ letter was forwarded to

Quiznos by the attorney general on November 14, 2005.   In a

letter dated December 2, 2005, Quiznos refused to refund

petitioners’ franchise fee of $25,000.   The attorney general

forwarded this letter to petitioners on December 5, 2005.

Petitioners have taken no further action to try to procure a

refund of the franchise fee.

     Petitioners claimed a $25,750 abandonment loss deduction on

their 2005 tax return for the $25,000 Quiznos franchise fee and
                               - 15 -

for the $750 they paid to incorporate Casa Star, Inc.

Petitioners also claimed a $1,667 depreciation deduction for

their Quiznos franchise.   Petitioners did not take any actions to

formally dissolve Casa Star, Inc.   Petitioners were unaware that

any action had to be taken to dissolve Casa Star, Inc., and do

not know whether or not Casa Star, Inc., remains active today.

                               OPINION

      Petitioners have not claimed that they satisfied the

requirements of section 7491(a) to shift the burden of proof to

respondent with regard to any factual issue.    Accordingly,

petitioners bear the burden of proof.    See Rule 142(a).

     Deductions are a matter of legislative grace, and the

taxpayer has the burden of showing that he is entitled to any

deduction claimed.   Id.; New Colonial Ice Co. v. Helvering, 292

U.S. 435, 440 (1934).

I.   Traveling Expenses Incurred in Newark and Portland

      A taxpayer’s expenses for his own food and lodging are

“personal, living, and family expenses” within the meaning of

section 262(a) and therefore nondeductible unless a deduction is

expressly permitted by some other section.     See sec. 1.262-

1(b)(3), (5), Income Tax Regs.   Section 162(a) permits a taxpayer

to deduct ordinary and necessary traveling expenses (including

meals and lodging) incurred during the taxable year in carrying

on any trade or business if:   (1) The expense is incurred “while
                                - 16 -

away from home”, and (2) the expense is incurred in the pursuit

of a trade or business.    See also Commissioner v. Flowers, 326

U.S. 465, 470 (1946).

     In order to determine whether an expense is incurred away

from home, it is necessary to determine the location of the

taxpayer’s home.     Hantzis v. Commissioner, 638 F.2d 248 (1st Cir.

1981), revg. T.C. Memo. 1979-299.    In the context of section

162(a)(2), a taxpayer’s home generally refers to the area of a

taxpayer’s principal place of employment, whether or not in the

vicinity of the taxpayer’s personal residence.     Daly v.

Commissioner, 72 T.C. 190, 195 (1979), affd. 662 F.2d 253 (4th

Cir. 1981); Kroll v. Commissioner, 49 T.C. 557, 561-562 (1968).

Accordingly, when a taxpayer’s principal place of employment

changes but the taxpayer does not change the location of his

permanent personal residence, the taxpayer’s home for purposes of

section 162 generally changes to the taxpayer’s new principal

place of business.

     An exception to the general rule in defining a taxpayer’s

home may exist where the taxpayer has accepted “temporary”

employment away from his permanent personal residence.       Peurifoy

v. Commissioner, 358 U.S. 59, 60 (1958).    In that event the

taxpayer’s tax home may remain in the area of his permanent

personal residence so that he is “away from home” while stationed

at the temporary job site.    If such employment is found to be
                               - 17 -

“indefinite” or “indeterminate” rather than temporary, the

general rule will classify a taxpayer’s tax home as the area of

the taxpayer’s principal place of employment.    Kroll v.

Commissioner, supra at 562.    Whether employment is temporary,

indefinite, or indeterminate is a question of fact.    Peurifoy v.

Commissioner, supra at 61.    However, section 162(a) provides that

a taxpayer shall not be treated as being temporarily away from

home during any period of employment if such period exceeds 1

year.

     “[I]n the pursuit of a trade or business” has been read to

mean:   “The exigencies of business rather than the personal

conveniences and necessities of the traveler must be the

motivating factors.”   Commissioner v. Flowers, 326 U.S. at 474.

     This Court previously has dealt with the question of whether

bumped NWA airline mechanics are entitled to deduct

vehicle/lodging/meal expenses incurred while working away from

their primary residences.    See Riley v. Commissioner, T.C. Memo.

2007-153; Wilbert v. Commissioner, T.C. Memo. 2007-152, affd. 553

F.3d 544 (7th Cir. 2009); Farran v. Commissioner, T.C. Memo.

2007-151; Bogue v. Commissioner, T.C. Memo. 2007-150; Stockwell

v. Commissioner, T.C. Memo. 2007-149.    In all five aforementioned

NWA cases, we disallowed deductions claimed by taxpayers because

in each case there were no business exigencies for the taxpayers

to maintain their primary residence in the Minneapolis area away
                                - 18 -

from their place of employment.    Accordingly, the taxpayers had

not maintained their residences    in the pursuit of business.     See

Riley v. Commissioner, supra; Wilbert v. Commissioner, supra;

Farran v. Commissioner, supra; Bogue v. Commissioner, supra;

Stockwell v. Commissioner, supra.    This conclusion was recently

affirmed by the Court of Appeals for the Seventh Circuit in

Wilbert v. Commissioner, 553 F.3d 544 (7th Cir. 2009).

     A.   Newark

     Mr. Alami’s employment in Newark lasted approximately 14

months (May 2003 through July 2004).     Section 162(a) provides

that a taxpayer shall not be treated as being temporarily away

from home during any period of employment if such period exceeds

1 year.   Because Mr. Alami was not temporarily away from home

when he was working in Newark, his tax home shifted to Newark.

See Peurifoy v. Commissioner, supra at 60-61.     Accordingly, Mr.

Alami was not away from home when he incurred the Newark expenses

and petitioners may not deduct the Newark expenses as section

162(a)(2) traveling expenses.

     B.   Portland

     After Mr. Alami was bumped from Newark, New Jersey, he

became employed with NWA in Minneapolis and worked there from

July 2004 until June 2005.   In June 2005 when Mr. Alami was

bumped again from his position in Minneapolis, he was able to

secure a position in Portland.    He worked in Portland from June
                               - 19 -

to July 2005, when he lost his job with NWA.    During 2005 Mr.

Alami also worked in the Minneapolis area as a soccer coach for

the Independent School District of Lakeville, Minnesota.

     Whether his position in Portland was temporary is a question

of fact.    Mr. Alami’s position in Portland lasted less than 2

months.    However, we need not decide whether Mr. Alami’s

employment in Portland was temporary because he did not maintain

his Minneapolis residence in the pursuit of business.

     In order for Mr. Alami’s Portland expenses to be deductible,

he must have maintained his Minneapolis area residence in the

pursuit of a trade or business.    In Wilbert, Stockwell, Bogue,

Farran, and Riley, we concluded that none of the taxpayers had

maintained their Minneapolis area homes in the pursuit of

business.    In all five cases, after the taxpayers had been bumped

from Minneapolis to places of employment outside of Minneapolis,

we noted that the taxpayers’ chances of becoming employed by NWA

in Minneapolis (again) depended on NWA’s needs.    We concluded it

was unforeseeable that any of the taxpayers would be able to

return to employment in Minneapolis at any time because of the

seniority system.    Accordingly, we concluded that the taxpayers

maintained homes in the Minneapolis area for personal reasons.

This reasoning recently was affirmed by the Court of Appeals for

the Seventh Circuit in Wilbert v. Commissioner, 553 F.3d at ___

(slip op. at 10), when the court stated:    “We might well have a
                               - 20 -

different case if Wilbert had had a firm, justified expectation

of being restored to his job at the Minneapolis airport within a

short time of his initial layoff.”

     The circumstances in this case are most analogous to those

in Wilbert.    The taxpayer in Wilbert had a real estate business2

in addition to his employment with NWA, and the taxpayer’s wife

was employed intermittently in the Minneapolis area.    We

concluded that because the taxpayer’s principal employment was

with NWA and not his real estate business, the latter was not a

significant factor in our analysis.     Wilbert v. Commissioner,

T.C. Memo. 2007-152 n.5.    This reasoning was affirmed by the

Court of Appeals, which noted that if selling real estate had

been Mr. Wilbert’s main business, it would have provided Mr.

Wilbert a good argument that he had a business reason to maintain

his Minneapolis area residence (Mr. Wilbert’s real estate

business was based in the Minneapolis area).     Wilbert v.

Commissioner, 553 F.3d at ___ (slip op. at 10-11).     Here, in

circumstances similar to those in Wilbert, it does not appear

that Mr. Alami’s soccer coaching job was his main business in

2005.    There is no evidence that Mr. Alami considered his soccer

coaching employment his main employment when he accepted

employment in Portland.    Rather, Mr. Alami worked for NWA and


     2
        Mr. Wilbert’s income from the real estate business was
$2,000 in the relevant tax year but he did not actually receive
the money (a commission) until the following year.
                                - 21 -

accepted employment outside the Minneapolis area in order to stay

employed with NWA as long as possible.    Accordingly, the soccer

coaching job did not provide Mr. Alami with a business reason to

maintain his Minneapolis area residence during the period of his

employment with NWA.

     The Court of Appeals considered whether Mrs. Wilbert’s

having a business in Minneapolis would provide a business reason

for Mr. Wilbert to maintain the Minneapolis area residence.

Wilbert v. Commissioner, 553 F.3d at ___ (slip op. at 12).     The

court noted that her employment would make it more reasonable for

Mr. Wilbert to not move away from Minneapolis but would not

permit a deduction of traveling expenses.     Id.   Mr. Wilbert’s

decision to live with his wife would be a personal rather than

business decision.     Id. (“‘in this respect, Mr. and Mrs. Hantzis’

situation is analogous to cases involving spouses with careers in

different locations.    Each must independently satisfy the

requirement that deductions taken for travel expenses incurred in

the pursuit of a trade or business arise while he or she is away

from home’” (quoting Hantzis v. Commissioner, 638 F.2d at 254

n.11)).   Here, although Ms. Alami was employed in Minneapolis,

this does not provide a business reason for Mr. Alami’s

maintenance of the Minneapolis area residence.

     Similar to the taxpayers in Wilbert, Stockwell, Bogue,

Farran, and Riley, Mr. Alami did not appear at any point to have
                                - 22 -

a realistic prospect of resuming working for NWA in Minneapolis

after he was bumped from his Minneapolis employment for the

second time in June 2005.     Accordingly, Mr. Alami did not have a

business reason to maintain his Minneapolis area residence, and

he is not entitled to deduct the Portland expenses.

II.   Other Unreimbursed Business Expenses Claimed

      The Commissioner’s determinations are generally presumed

correct, and the taxpayer bears the burden of proving the

determinations erroneous.     Rule 142(a).   The taxpayer bears the

burden of proving that he is entitled to the deduction claimed,

and this includes the burden of substantiation.      Id.; Hradesky v.

Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d

821 (5th Cir. 1976).    A taxpayer must substantiate amounts

claimed as deductions by maintaining the records necessary to

establish he or she is entitled to the deductions.     Sec. 6001.

      A taxpayer may deduct ordinary and necessary expenses paid

or incurred in carrying on a trade or business during the year.

Sec. 162(a).    Personal, living, or family expenses are not

deductible.    Sec. 262.   Services performed by an employee

constitute a trade or business, and, accordingly, a taxpayer may

deduct unreimbursed employee business expenses incurred.

O’Malley v. Commissioner, 91 T.C. 352, 363-364 (1988); sec.

1.162-17(a), Income Tax Regs.
                              - 23 -

     If a taxpayer establishes that he or she paid or incurred a

deductible business expense but does not establish the amount of

the expense, we may approximate the amount of the allowable

deduction, bearing heavily against the taxpayer whose

inexactitude is of his or her own making.    Cohan v. Commissioner,

39 F.2d 540, 543-544 (2d Cir. 1930).    However, for the Cohan rule

to apply, there must be sufficient evidence in the record to

provide a basis for the estimate.   Vanicek v. Commissioner, 85

T.C. 731, 743 (1985).   Certain expenses may not be estimated

because of the strict substantiation requirements of section

274(d).   See sec. 280F(d)(4)(A); Sanford v. Commissioner, 50 T.C.

823, 827 (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969).

     A.   Mr. Alami’s Other NWA Employee Expenses

     The expenses petitioners claim as employee business expense

deductions in 2004 which are still in dispute are as follows:

Union dues expenses, a computer expense, cell phone and Internet

expenses, and a depreciation expense.

     The expenses petitioners claim as employee business expense

deductions in 2005 which are still in dispute are as follows:

Union dues expenses, cell phone expenses, tool expenses, uniform

maintenance expenses, and a depreciation expense.

           1.   Union Dues

     The amounts of union dues expenses still in dispute for 2004

and 2005 are $643 and $106, respectively.
                                - 24 -

     Petitioners have failed to present any evidence that they

actually paid such union dues.     Petitioners have submitted

evidence as to the amounts of dues required in 2004 and 2005;

however, they have failed to substantiate that they actually paid

them.     Accordingly, petitioners are not entitled to employee

business expense deductions for union dues in 2004 and 2005 above

those respondent conceded.

             2.   Computer

        A computer is “listed property” and subject to the strict

substantiation requirements of section 274(d).     Sec.

280F(d)(4)(A)(iv).     Petitioners introduced a Gateway receipt

dated September 2, 2003, as substantiation for the computer

expense.

        Mr. Alami claimed to have used the computer to check on job-

related information.     However, he was not able to produce any

evidence that he was required by his employer NWA to have a

computer, nor did he prove how much of the computer’s overall use

was for business (as distinct from personal) purposes.     Mr.

Alami’s purchase of the computer was not shown to be an ordinary

and necessary business expense of being an employee of NWA.       See

Riley v. Commissioner, T.C. Memo. 2007-153; Wasik v.

Commissioner, T.C. Memo. 2007-148.

        However, even if petitioners had shown the computer to be an

ordinary and necessary business expense of being an employee of
                                  - 25 -

NWA, petitioners have not substantiated the purchase of the

computer.    Petitioners submitted a receipt dated 2003 in support

of a deduction claimed for 2004.      Petitioners have not shown that

they incurred such an expense in 2004.     Petitioners’ deduction

for a computer expense is disallowed.

            3.   Cellular Phone

     A cellular phone is “listed property” and subject to the

strict substantiation requirements of section 274(d).     Sec.

280F(d)(4)(A)(v).    A taxpayer must establish the amount of

business use and the amount of total use for the property to

substantiate the amount of expenses for listed property.

Nitschke v. Commissioner, T.C. Memo. 2000-230; sec. 1.274-

5T(b)(6)(i)(B), Temporary Income Tax Regs., 50 Fed. Reg. 46016

(Nov. 6, 1985).    Petitioners introduced cellular phone bills and

checks used to pay these cellular phone bills that partially

substantiate the amounts of the claimed deductions.

     Mr. Alami claimed the cellular phone was a necessity in

Newark and Portland where he did not have a land phone line.      Mr.

Alami also stated that the amounts of the claimed deductions were

a quarter of the total of his phone bills for 2004 and 2005.

     Mr. Alami has failed to establish the amount of time he used

his cell phone for business and personal purposes.     Additionally,

Mr. Alami conceded that his employer did not require that he have

a cell phone.    See Riley v. Commissioner, supra; Stockwell v.
                                 - 26 -

Commissioner, T.C. Memo. 2007-149; Wasik v. Commissioner, supra.

Petitioners’ deductions for cellular phone expenses are

disallowed.

            4.   Internet

     Internet expenses have been characterized as utility

expenses.    See Verma v. Commissioner, T.C. Memo. 2001-132.

Strict substantiation therefore does not apply, and we may

estimate the business portion of utility expenses under the Cohan

rule.   See Pistoresi v. Commissioner, T.C. Memo. 1999-39.

     Petitioners introduced checks with Charter Communications as

payee which exceed the claimed amounts of Internet deductions,

but petitioners did not introduce evidence as to how much Mr.

Alami used the Internet for NWA employee matters and personal

matters.    Additionally, petitioners did not produce evidence that

NWA required Mr. Alami to have Internet access.      The Internet

expenses petitioners incurred were not ordinary and necessary

employee business expenses.      See Riley v. Commissioner, supra;

Stockwell v. Commissioner, supra.      Petitioners’ deductions for

Internet expenses are disallowed.

            5.   Tools

     The amount of the tool expenses deduction still in dispute

for 2005 is $1,100.      Petitioners submitted the following four

receipts to substantiate the tool expenses:      Sears, $179.91 on

07/13/05; Home Depot, $112.37 on 10/26/05 (but petitioners
                                - 27 -

claimed only $99.97 of that amount as a deductible employee

business expense); Fleet Farm, $41.48 with an unknown date, and

Home Depot, with an unknown amount and date.

     The strict substantiation requirements of section 274(d) do

not apply to these expenses, and the Cohan rule may apply;

however, petitioners must still provide minimum substantiation of

such expenses because petitioners bear the burden of proof.    See

sec. 6001; Rule 142(a).    We allow petitioners a $279.88 deduction

for tools (Sears receipt, $179.91 plus Home Depot receipt,

$99.97).   Petitioners were not able to provide the dates of the

Fleet Farm receipt or the Home Depot receipt, nor were they able

to provide further information about the other tool purchases

during 2005.

           6.   Uniform Maintenance

     The amount of uniform maintenance expense deductions still

in dispute for 2005 is $140.    Expenses for uniforms are

deductible if the uniforms are of a type specifically required as

a condition of employment, the uniforms are not adaptable to

general use as ordinary clothing, and the uniforms are not worn

as ordinary clothing.     Yeomans v. Commissioner, 30 T.C. 757, 767-

769 (1958); Wasik v. Commissioner, supra; Beckey v. Commissioner,

T.C. Memo. 1994-514.    Mr. Alami was required to wear a uniform

provided by NWA to work every day.
                               - 28 -

     Petitioners introduced a document on the letterhead of their

C.P.A. that purports to indicate how the sum was calculated, but

it suggests an excessive amount.   The document alleges that Mr.

Alami washed his uniform 14 times per month at $1.50 per wash and

dry cycle for 12 months in 2005.

     We may estimate the amount of these expenses using the Cohan

rule.    See Riley v. Commissioner, supra; Stockwell v.

Commissioner, supra.    We adopt the unit cost of $1.50 listed on

petitioners’ exhibit as the cost to wash and dry one load of

laundry.   We find that approximately eight loads of laundry for

each of the months Mr. Alami worked is a reasonable number to

yield 22 clean shirts, pants, and a jacket per month.      Mr. Alami

worked only 7 months for NWA in 2005.   This yields a deduction

for uniform maintenance that does not exceed the amount

respondent conceded.3   Accordingly, petitioners are not

entitled to deduct any uniform maintenance expenses above that

respondent conceded.

           7.   Depreciation

     Petitioners claimed a computer depreciation expense of $529

for 2004, an equipment depreciation expense of $156 for 2004, and

a computer depreciation expense of $176 for 2005.




     3
        $1.50 x eight loads per month equals $12 per month x 7
months equals $84.
                                - 29 -

     A deduction is allowed for depreciation of property used in

a trade or business or held for the production of income.       Sec.

167(a).    Petitioners have failed to show that the computer or the

equipment being depreciated was used in a trade or business or

held for the production of income.       Accordingly, petitioners’

depreciation deductions are disallowed.

     B.    Mr. Alami’s Soccer Coach Employment Expenses

     The amount of soccer coaching expenses still in dispute is

$355.     Petitioners did not produce any receipts but did produce a

photo of the items Mr. Alami purchased and a catalog of prices.

The photo showed 18 soccer balls, three soccer ball bags, a ball

pump, and other items which were unclear.       Mr. Alami testified he

purchased these items for his job as a soccer coach.

     Mr. Alami failed to present sufficient evidence that he

actually incurred the expenses of purchasing these items.

Accordingly, these expenses are not deductible.

     C.     Ms. Alami’s Nurse Employee Expenses

     The amount of Ms. Alami’s employee business expenses still

in dispute for 2004 is $1,440.     Petitioners claim this amount

resulted from cell phone expenses, job-related education

expenses, financial publication expenses, and uniform expenses.

Petitioners substantiated $360 of cell phone expenses and

provided a catalog listing scrub prices (required work attire).
                                - 30 -

     The amount of Ms. Alami’s employee business expenses still

in dispute for 2005 is $515.    Petitioners claim this amount

resulted from $255 in publication expenses and $260 in unconceded

uniform maintenance expenses.    Petitioners substantiated $260 of

uniform maintenance expenses.

     A cellular phone is “listed property” for purposes of

section 274(d)(4) and subject to the strict substantiation

requirements of section 274(d).    Sec. 280F(d)(4)(A)(v).     A

taxpayer must establish the amount of business use and the amount

of total use for the property to substantiate the amount of

expenses for listed property.     Nitschke v. Commissioner, T.C.

Memo. 2000-230; sec. 1.274-5T(b)(6)(i)(B), Temporary Income Tax

Regs., supra.

     Petitioners provided copies of their cellular phone bills

but failed to establish that they incurred any expense to use Ms.

Alami’s cellular phone for employee business purposes in addition

to those expenses they would have incurred if she had used it

only for personal purposes.    Ms. Alami was not required by her

employer to have a cellular phone.       Accordingly, petitioners’

deduction for Ms. Alami’s cellular phone is disallowed.

See Riley v. Commissioner, T.C. Memo. 2007-153; Stockwell v.

Commissioner, T.C. Memo. 2007-149; Wasik v. Commissioner, T.C.

Memo. 2007-148.
                                  - 31 -

       Petitioners have failed to provide adequate substantiation

of the remaining expenses Ms. Alami claimed as business expense

deductions in 2004 and 2005.       Accordingly, the remaining employee

business expense deductions are disallowed.

III.    Charitable Contribution Deductions

       Petitioners claim deductions for cash and noncash charitable

contributions made in 2004 and 2005.       The amounts of charitable

contribution deductions still in dispute for 2004 and 2005 are

$1,985 and $1,640, respectively.

       A.     2004

       The amounts of cash and noncash charitable contributions

still in dispute for 2004 are $1,635 and $350, respectively.

       Substantiation of the disputed amounts is sparse at best.

Petitioners have produced a copy of a check written on

December 31, 2004, to the Islamic Relief Fund in the amount of

$100.       Petitioners have also produced receipts from the Vietnam

Veterans of America and the Lupus Foundation.       Neither receipt

contains the amount of the donation.       The Lupus Foundation

receipt is dated “09/04” and the Vietnam Veterans of America

receipt is not dated.       Petitioners submitted an undated

handwritten list of items that were donated to both organizations

in 2004.

       In general, a taxpayer is entitled to deduct charitable

contributions made during the taxable year to or for the use of
                              - 32 -

certain types of organizations.     Sec. 170(a)(1), (c).   A taxpayer

is required to substantiate charitable contributions; records

must be maintained.   Sec. 6001; sec. 1.6001-1(a), Income Tax

Regs.

     A contribution of money in an amount less than $250 made in

a tax year beginning before August 17, 2006, may be substantiated

with a canceled check, a receipt, or other reliable evidence

showing the name of the donee, the date of the contribution, and

the amount of the contribution.     Sec. 1.170A-13(a)(1), Income Tax

Regs.   The copy of the check to the Islamic Relief Fund submitted

by petitioners contains the name of the donee, the date, and the

amount of the contribution.   Respondent has not disputed the

status of this organization as a qualified charitable donee.

Accordingly, petitioners have substantiated a $100 cash

charitable contribution and are entitled to a charitable

contribution deduction in that amount.

     Contributions of cash or property in excess of $250 require

the donor to obtain contemporaneous written acknowledgment of the

donation from the donee.   Sec. 170(f)(8).    At a minimum, the

contemporaneous written acknowledgment must contain a description

of any property contributed, a statement as to whether any goods

or services were provided in consideration, and a description and

good faith estimate of the value of any goods or services

referred to.   Sec. 170(f)(8)(B).
                               - 33 -

     Petitioners claim to have made noncash charitable

contributions of clothing and miscellaneous items worth $500 and

$350 to Goodwill Industries and the Veterans Association,

respectively.    The receipts petitioners submitted to substantiate

the noncash charitable contributions do not meet the statutory

requirements.    Petitioners have submitted a Lupus Foundation

receipt as substantiation although they do not claim to have made

a charitable contribution to the Lupus Foundation.    Petitioners

have not submitted a contemporaneous written acknowledgment from

Goodwill Industries to substantiate a charitable contribution.

Petitioners submitted a receipt from the Vietnam Veterans of

America, but it is does not meet the statutory requirements of a

contemporaneous written acknowledgment because it does not

contain a description of the property contributed.    Moreover, the

receipt is undated and cannot be shown to be contemporaneous.

Accordingly, petitioners are not entitled to a deduction for

noncash charitable contributions claimed in 2004 above that

conceded by respondent.

     B.   2005

     The amounts of cash and noncash charitable contributions

still in dispute for 2005 are $750 and $890, respectively.

     Substantiation of petitioners’ claimed charitable

contributions is also sparse for 2005.    Petitioners have failed

to produce any evidence of the cash charitable contributions.
                               - 34 -

For the reasons stated supra, without substantiation we must

disallow petitioners’ deduction for cash charitable contributions

above that conceded by respondent.

     Petitioners claim to have made noncash charitable

contributions of clothing and miscellaneous items worth $890 to

the Veterans Association.    Petitioners submitted a receipt from

the Veteran’s Thrift Store as substantiation for the noncash

charitable contribution and a handwritten list of items

contributed.    The receipt did not contain an estimated amount

donated or a description of the items donated.    Further, it

listed “10-01” as the date acknowledged.    As stated supra, a

noncash contribution in an amount over $250 requires

contemporaneous written acknowledgment to substantiate the

contribution.   At a minimum, this acknowledgment must contain a

description of the property donated.    The receipt submitted from

the Veteran’s Thrift Store does not contain such a description.

Additionally, the date listed as “10-01” is unclear; it could

either mean October 1 (year unknown) or October 2001.    Without a

clear date, we are unable to determine whether petitioners made

the charitable contribution in 2005 or another tax year or

whether petitioners received the contemporaneous acknowledgment

required.   Accordingly, petitioners are not entitled to a

deduction for noncash charitable contributions in 2005.
                                - 35 -

IV.   Quiznos Franchise

      Petitioners claim a $25,750 abandonment loss for their

Quiznos restaurant franchise.    This includes the amount

petitioners paid to incorporate Casa Star, Inc., for the purpose

of running petitioners’ Quiznos restaurant.

      Section 165(a) allows a deduction for any uncompensated loss

sustained during the taxable year.       The loss must be incurred in

a trade or business, in any transaction entered into for profit,

or in a casualty or theft.   Sec. 165(c).     The amount of the loss

is the adjusted basis of the property.      Sec. 165(b).   The loss is

allowed for the year in which the act of abandonment takes place.

See Buda v. Commissioner, T.C. Memo. 1999-132, affd. without

published opinion 230 F.3d 1357 (6th Cir. 2000); sec. 1.165-

1(d)(1), Income Tax Regs.

      In order for the loss of an intangible asset to be

deductible, there must be (1) an intention on the part of the

owner to abandon the asset and (2) an affirmative act of

abandonment.   JHK Enters. Inc. v. Commissioner, T.C. Memo. 2003-

79 (quoting A.J. Indus., Inc. v. United States, 503 F.2d 660, 670

(9th Cir. 1974)).   An affirmative act of abandonment must be

ascertained from all the facts and circumstances, United Cal.

Bank v. Commissioner, 41 T.C. 437, 451 (1963), affd. per curiam

340 F.2d 320 (9th Cir. 1965), and “the Tax Court [is] entitled to

look beyond the taxpayer’s formal characterization”, Laport v.
                              - 36 -

Commissioner, 671 F.2d 1028, 1032 (7th Cir. 1982), affg. T.C.

Memo. 1980-355.   Abandonment of an intangible property interest

should be accomplished by some express manifestation.   Citron v.

Commissioner, 97 T.C. 200, 210 (1991).

     Losses claimed with respect to nondepreciable property must

also meet the requirements of section 1.165-2(a), Income Tax

Regs., which provides in part:

     A loss incurred in a business or in a transaction
     entered into for profit and arising from the sudden
     termination of the usefulness in such business or
     transaction of any nondepreciable property, in a case
     where such business or transaction is discontinued or
     where such property is permanently discarded from use
     therein, shall be allowed as a deduction under section
     165(a) for the taxable year in which the loss is
     actually sustained. * * *

JHK Enters. Inc. v. Commissioner, T.C. Memo. 2003-79.

     Conveyance or even tender of title is not necessary to

consummate an abandonment.   Echols v. Commissioner, 935 F.2d 703,

706 (5th Cir. 1991), revg. 93 T.C. 553 (1989).   When the taxpayer

has not relinquished possession of an asset, there must be a

concurrence of the act of abandonment and the intent to abandon,

both of which must be shown from the surrounding circumstances.

A.J. Indus., Inc. v. United States, 503 F.2d at 670.

     Petitioners claim an abandonment loss deduction of $25,750.

Of this amount, $25,000 is the initial amount paid for the

Quiznos franchise and $750 is the amount paid for incorporating

Casa Star, Inc., the limited liability corporation petitioners
                                  - 37 -

planned to use to operate their Quiznos restaurant.      Respondent

argues that petitioners should be denied the total abandonment

loss claimed because they took no action to formally dissolve

Casa Star, Inc.    We disagree.

     Petitioners expressed their intent to abandon their Quiznos

franchise by the end of 2005.      Throughout 2005 petitioners

clearly and repeatedly expressed to Quiznos representatives their

desire to have their franchise fee refunded because they no

longer sought to open a Quiznos restaurant.

     When Quiznos representatives failed to even respond to

petitioners’ repeated requests for a refund, petitioners filed a

complaint with the attorney general.       After the attorney general

was unable to procure a refund of petitioners’ franchise fee,

petitioners discontinued their attempts to open a Quiznos

restaurant and attempts to collect a refund.      Accordingly,

petitioners intended to abandon their Quiznos franchise.

     Petitioners actually abandoned their Quiznos franchise by

the end of 2005.   Petitioners repeatedly expressed to Quiznos

representatives that they were discontinuing their efforts to

open a Quiznos restaurant and that they were abandoning their

Quiznos franchise.   Petitioners did not contribute the additional

money needed to open a Quiznos restaurant or select a location

within the 1-year limit in the initial franchise agreement (or

request an extension of time because of circumstances beyond
                               - 38 -

their control).    These were clear and unequivocal indications to

Quiznos that petitioners were abandoning their franchise.     In

consideration of all the facts and circumstances of the

situation, particularly that petitioners’ communication with

Quiznos was primarily unilateral, these were sufficient signs of

actual abandonment by petitioners in 2005.

       Petitioners abandoned their Quiznos franchise by the end of

2005.    Neither the Code nor the regulations specify the physical

methods or legal procedures for abandoning a franchise.

Nevertheless, petitioners’ expression of their intent to abandon

and actual act of abandonment, both occurring by the end of 2005,

are sufficient proof of petitioners’ abandonment.   Accordingly,

petitioners are entitled to an abandonment loss of the Quiznos

franchise on their 2005 income tax return.

       At the end of 2005 petitioners also had abandoned Casa Star,

Inc.    Although petitioners had not formally dissolved Casa Star,

Inc., the surrounding facts and circumstances show petitioners’

abandonment.    Casa Star, Inc., existed solely for the purpose of

running petitioners’ Quiznos restaurant.   When petitioners

expressed their intent to abandon their Quiznos franchise,

petitioners also expressed their intent to abandon Casa Star,

Inc.    Under the facts of this case, petitioners’ abandonment of

their Quiznos franchise was also an abandonment of Casa Star,

Inc., because Casa Star, Inc., ceased to be of use to petitioners
                                - 39 -

once they abandoned their Quiznos franchise.      There is no

evidence that petitioners have taken any steps to use Casa Star,

Inc., for purposes other than running their Quiznos franchise;

rather, at trial petitioners were not even aware whether Casa

Star, Inc., was in existence.    Accordingly, petitioners are

entitled to an abandonment loss of Casa Star, Inc., on their 2005

income tax return.

     To reflect the foregoing,


                                             Decision will be entered

                                         under Rule 155.
