                   T.C. Summary Opinion 2007-96



                      UNITED STATES TAX COURT



                     JIN XIONG, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2795-06S.              Filed June 14, 2007.



     Jin Xiong, pro se.

     W. Lance Stodghill, for respondent.



     JACOBS, Judge:   This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

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

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

and this opinion shall not be treated as precedent for any other

case.   Unless otherwise indicated, subsequent section references

are to the Internal Revenue Code in effect for the year in issue,
                               - 2 -

and all Rule references are to the Tax Court Rules of Practice

and Procedure.

     Respondent determined a $5,850 deficiency in petitioner’s

2003 Federal income tax and a $1,170 penalty under section

6662(a).   The issues for decision are:   (1) Whether petitioner is

entitled to a deduction for claimed home office expenses; (2) the

amount, if any, of the excess unreimbursed employee and other

miscellaneous expenses deduction to which petitioner is

entitled;1 (3) whether petitioner is entitled to a deduction

under section 179 with respect to a motor vehicle; (4) the amount

of the deduction for charitable contributions to which petitioner

is entitled; and (5) whether petitioner is liable for a penalty

under section 6662(a).

                            Background

     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.    Petitioner resided in

College Station, Texas, at the time he filed the petition.




     1
      The excess unreimbursed employee and other miscellaneous
expenses deduction is claimed on Schedule A, Itemized Deductions.
The amount of the deduction equals the sum of: (1) Unreimbursed
employee expenses--job travel, union dues, job education, etc.;
(2) tax preparation fees; and (3) other expenses--investment,
safe deposit box, etc., less an amount equal to 2 percent (the 2-
percent floor) of the taxpayer’s adjusted gross income. See sec.
67(a).
                                - 3 -

     Petitioner timely filed a Form 1040, U.S. Individual Income

Tax Return, for 2003 in which he claimed:    (1) A deduction of

$12,509 for excess unreimbursed employee and other miscellaneous

expenses; and (2) a deduction of $7,250 for charitable

contributions.   On or about August 22, 2005, petitioner filed a

Form 1040X, Amended U.S. Individual Income Tax Return, for 2003,

in which he claimed a deduction under section 179 with respect to

a motor vehicle.   In his amended return, petitioner

recharacterized a portion ($8,585 of “vehicle used in business

travel” and $5,094 of “home office deduction”) of the excess

unreimbursed employee and other miscellaneous expenses that he

had previously reported on Schedule A, Itemized Deductions, as

“business profit/loss”.2    As a result of these amendments,

petitioner claimed a $2,482 refund.

     With respect to Form 1040, respondent disallowed:    (1) The

entire deduction for excess unreimbursed employee and other

miscellaneous expenses; and (2) all but $500 of the deduction for

charitable contributions.    Based on these disallowances,

respondent issued a notice of deficiency reflecting a $5,850

deficiency in tax and a $1,170 penalty under section 6662(a).




     2
      Petitioner’s 2003 tax return was not introduced into
evidence. However, the amended return was produced and shows
petitioner’s recharacterization of the amounts as indicated.
                               - 4 -

The notice of deficiency did not address petitioner’s claimed

deduction under section 179 or any other aspect of Form 1040X.3

     Petitioner was an assistant professor of biology at Texas

A&M University (the university) at all relevant times.

Petitioner’s duties consisted of teaching and scholarly research,

for which petitioner was provided an office at the university.

In 2003, petitioner entered into a contract with Cambridge

University Press to write a book on bioinformatics--the analysis

of information relating to biological structures with the aid of

computers.   The contract identified the parties thereto as the

Syndicate of the Press of the University of Cambridge and Dr. Jin

Xiong, Department of Biology, Texas A&M University.

     In the preface to the book, petitioner described the book as

based on a compilation of notes he developed over several years

of teaching bioinformatics in addition to supplemental research.

The book was published in 2006, and petitioner used it in courses

he taught at the university.

     Petitioner maintains that for tax purposes his book writing

project was a separate business activity.   Petitioner asserts,

without explaining or introducing corroborating evidence, that he


     3
      At trial, the parties addressed all items in Form 1040X;
counsel for respondent indicated that the notice of deficiency
did not take into account Form 1040X because the notice of
deficiency was probably in the process of being prepared when
petitioner filed that return. Nonetheless, the Court has
jurisdiction to determine the correct treatment of all items
affecting the tax year(s) before it (here, 2003). Sec. 6214(a).
                              - 5 -

was not permitted to write the book at his university office, but

rather, he was constrained to write the book at his home.

Petitioner posits that because he used a portion of his home

exclusively in connection with his book writing project, he is

entitled to deduct under section 280A expenses of $5,094 relating

to that portion of his home used as an office.   Further,

petitioner claims his book writing project required travel to

various libraries in the State for research purposes which

generated deductible business travel expenses.   Finally,

petitioner claims, driving from his home office to his university

office constituted a deductible business expense.   Petitioner

calculated that the expenses attributable to his book writing

project (which petitioner first deducted as itemized deductions

on his 2003 return and subsequently recharacterized as “business

profit/loss”) totaled $13,679.16.4

                           Discussion

     As a general rule, the Commissioner’s determinations in the

notice of deficiency are presumed correct, and the burden of

proving an error is on the taxpayer.    Rule 142(a); Welch v.



     4
      On his return, petitioner claimed, and respondent
disallowed, $13,916 of Schedule A unreimbursed employee and other
miscellaneous expenses deductions; petitioner recharacterized
$13,679.16 of this amount on Form 1040X as trade or business
expenses, leaving $137.16 still claimed as an unreimbursed
employee and other miscellaneous expenses deduction. As
discussed infra, at trial petitioner claimed that he was entitled
to the Schedule A deduction for more than this amount.
                               - 6 -

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

section 7491(a), the burden of proof with respect to any factual

issue relating to ascertaining the liability for tax shifts to

the Commissioner if the taxpayer:   (1) Maintained adequate

records; (2) satisfied the substantiation requirements; (3)

cooperated with the Commissioner’s agents; and (4) during the

Court proceeding introduced credible evidence with respect to the

factual issue involved.   As discussed infra, we find that

petitioner failed to satisfy these requirements.    Therefore, the

burden of proof does not shift to respondent.

     Expenses for business use of a taxpayer’s home are

deductible under limited circumstances.    For the expense to be

deductible, the taxpayer must show that the portion of the home

purported to be used for business is:    (1) The taxpayer’s

principal place of business; (2) a place where the taxpayer meets

or deals with customers, clients, or patients; or (3) a separate

structure used in connection with the business.    It must be used

exclusively on a regular basis for these things.    Sec.

280A(c)(1)(A)-(C).   Finally, in the case of an employee, the home

office must be for the convenience of the employer.    Sec.

280A(c)(1) (flush language).

     Petitioner seeks to satisfy the requirements of section 280A

by claiming that a portion of his home was his “principal place

of business” for purposes of the book writing project and that he
                                 - 7 -

did not have an “employer” with respect to his book writing

project.    It is for this reason that petitioner amended his 2003

return to recharacterize these expenses as “profit/loss from a

separate business activity.”

     Petitioner has not convinced us that his book writing

project is a separate activity rather than an outgrowth of his

university teaching and research.    While it may be true, as

petitioner suggests, that university professors generally are not

required to write books, it does not follow that a university

professor who writes a book is engaged in a separate business

activity.     Petitioner’s book is in the same academic discipline

as the one petitioner teaches at the university.    Petitioner’s

contract with Cambridge University Press clearly identifies

petitioner as a university professor.    Petitioner based his book,

at least in part, on teaching notes he had developed over the

years, and he used the book in teaching courses at the

university.    We find that petitioner’s book writing project is so

interconnected with his university teaching and research as to

not constitute an activity separate from that of his occupation

as a university professor.    See Topping v. Commissioner, T.C.

Memo. 2007-92.

     A taxpayer may have only one principal place of business for

each business activity in which he is engaged.     Curphey v.

Commissioner, 73 T.C. 766, 775-776 (1980).     Where a taxpayer’s
                                - 8 -

business is conducted in part in the taxpayer’s residence and in

part at another location, the following two primary factors are

considered in determining whether the home office qualifies under

section 280A(c)(1)(A) as the taxpayer’s principal place of

business:   (1) The relative importance of the functions or

activities performed at each business location, and (2) the

amount of time spent at each location.    See Commissioner v.

Soliman, 506 U.S. 168, 175-177 (1993).

     Because he was a university professor, petitioner’s teaching

and research functions at the university were of primary

importance.   Petitioner’s book writing project (which was

performed at his home) was of secondary importance.   Petitioner

did not show that as a university professor he spent more time

working at home than at the university.   Accordingly,

petitioner’s principal place of business as a university

professor was the university.   Moreover, we believe petitioner

maintained an office in his home not for the convenience of the

university, his employer, but rather for his own convenience.

See Cadwallader v. Commissioner, T.C. Memo. 1989-356, affd. 919

F.2d 1273 (7th Cir. 1990); Mathes v. Commissioner, T.C. Memo.
                               - 9 -

1990-483.   Therefore, we hold that petitioner’s use of his home

for his book writing project does not qualify it as a home

office.5

     Consistent with his treatment of a portion of his home as a

home office, petitioner claimed an $8,585 deduction for the use

of his passenger vehicle for business travel and transportation.

The claimed “travel expense” consisted of expenses petitioner

incurred in driving from his home to various libraries in the

State in order to gather material for his book, as well as the

expenses he incurred in driving from his home to his office at

the university.   Even were we to hold that petitioner’s book

writing project was a separate business activity and that

petitioner maintained a home office, the deduction for these

claimed driving expenses would not be allowable because those

claimed deductions have not been adequately substantiated.

     In general, all ordinary and necessary expenses paid or

incurred in carrying on a trade or business during the taxable

year are deductible.   Sec. 162(a).    An expense is considered

ordinary for these purposes if it is normal or customary within a



     5
      Even were we to hold that petitioner’s book writing project
was separate from his employment as a university professor,
petitioner would still not be entitled to the claimed home office
deduction because sec. 280A(c)(5) would limit the amount of the
home office deduction to the amount of income produced from the
book. The parties do not dispute that in 2003, the tax year in
issue, petitioner had not yet written the book and therefore did
not have any income from the book writing project.
                                - 10 -

particular trade, business, or industry.      Deputy v. du Pont, 308

U.S. 488, 495 (1940).     An expense is considered necessary if it

is appropriate or helpful for the development of the business.

Commissioner v. Heininger, 320 U.S. 467, 471 (1943).      Personal,

living, or family expenses, on the other hand, are generally not

deductible.   Sec. 262.   If a taxpayer establishes that he or she

paid or incurred a deductible business expense but does not

establish the amount of the deduction, we may approximate the

amount of the allowable deduction, but we bear 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).      For

the Cohan rule to apply, however, a basis must exist on which

this Court can make an approximation.       Vanicek v. Commissioner,

85 T.C. 731, 742-743 (1985).    Without such a basis, any allowance

would amount to unguided largesse.       Williams v. United States,

245 F.2d 559, 560 (5th Cir. 1957).

     In the case of expenses paid or incurred with respect to

travel and certain listed property, section 274 overrides the

Cohan rule, and those expenses are deductible only if the

taxpayer meets the stringent 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).   For these expenses, only certain types of documentary

evidence will suffice.    Passenger automobiles are listed property
                                - 11 -

under section 280F, and strict substantiation is therefore

required.    Sec. 274(d).   No deduction is allowed for any travel

or transportation expense unless the taxpayer substantiates by

adequate records or by sufficient evidence corroborating the

taxpayer’s own statement the amount of the expense, the mileage

for each business use of the automobile and the total mileage for

all use of the automobile during the taxable period, the date of

the business use, and the business purpose for the use.      Sec.

1.274-5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 46016

(Nov. 6, 1985).    Adequate records include the maintenance of an

account book, diary, log, statement of expense, trip sheets,

and/or other documentary evidence, which, in combination, are

sufficient to establish each element of expenditure or use.      Sec.

1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017

(Nov. 6, 1985).

     Taxpayers may use a standard mileage rate established by the

Internal Revenue Service in lieu of substantiating the actual

amount of the expenditure.    See sec. 1.274-5(j)(2), Income Tax

Regs.    The standard mileage rate is generally multiplied by the

number of business miles traveled.       See Rev. Proc. 2002-61, 2002-

2 C.B. 616 (in effect for transportation expenses incurred during

2003).   The use of the standard mileage rate establishes only the

amount deemed expended with respect to the business use of a

passenger automobile.   Sec. 1.274-5(j)(2), Income Tax Regs.     The
                              - 12 -

taxpayer must still establish the actual mileage, the time, and

the business purpose of each use.     Nicely v. Commissioner, T.C.

Memo. 2006-172; sec. 1.274-5(j)(2), Income Tax Regs.

     Petitioner submitted a travel log, consisting of a

collection of preprinted forms which he had filled in, showing

the details of travel on particular dates.    The travel log was

not prepared contemporaneously with the claimed business travel

but rather was a reconstruction based on petitioner’s

recollection of travel during 2003.     The travel log was prepared

after petitioner had been contacted by respondent’s agents in

connection with an audit of petitioner’s 2003 tax return.    The

travel log was unsupported by any other documentation, such as a

calendar or receipts, and petitioner admitted that the log

contained several errors.   Even if petitioner maintained an

office in his home for the convenience of the university (which

we find he did not), the travel log does not meet the

substantiation requirements of section 274, and petitioner’s use

of his automobile for his trips to libraries around the State did

not generate any business deduction.6

     Petitioner’s claimed transportation expenses reflecting the

use of his vehicle to drive from his home to the university were



     6
      At trial, respondent conceded that other expenses for trips
out of State and abroad for the purpose of attending conferences
and the like are adequately substantiated and are therefore
deductible.
                                - 13 -

supported only by petitioner’s testimony that his office at the

university was 5 to 10 miles from his home.      We would not allow

any deduction for transportation expenses due to this lack of

substantiation.    Petitioner’s use of his vehicle to drive from

his home to the university was simply a cost of commuting, a

nondeductible expense.     See sec. 1.262-1(b)(5), Income Tax Regs.

     Most of the excess unreimbursed employee and other

miscellaneous expenses deduction petitioner claimed pertains to

his home office.     The remainder of the deduction consists of

expenses incurred for subscriptions to scholarly journals, which

respondent conceded at trial are deductible, the cost of meals

petitioner shared with colleagues while discussing work-related

matters, and the cost of trading stocks petitioner held in his

Roth IRA account.7

     All of the claimed expenses for meals were for meals

consumed in College Station, where petitioner worked and resided.

Therefore, they were not traveling expenses potentially allowable

under section 162(a)(2) as expenses incurred while away from home

in pursuit of a trade or business.       Furthermore, a deduction for

meals and entertainment expenses, like the deduction for travel



     7
      In his notice of deficiency, respondent disallowed
petitioner’s claimed $1,550 other miscellaneous expenses
deduction (apparently relating to gambling losses) and a $1,950
deduction for a capital loss. Petitioner did not dispute these
items in his pleadings or at trial, and we therefore treat these
items as conceded by petitioner. See Rule 34(b).
                                 - 14 -

expenses, is subject to the strict substantiation requirements of

section 274.   Sec. 274(d)(2).    Petitioner submitted receipts for

restaurant meals which show the dates and amounts of the meals

but not the business purpose of the meals or the business

relationship to petitioner of persons with whom he shared the

meals.   See sec. 274(d) (flush language); sec. 1.274-5T(b),

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

Petitioner’s testimony in this regard was vague and unconvincing,

and the record does not meet the statutory requirements for

substantiation, even if the claimed expense might be allowable if

incurred while away from home in pursuit of a trade or business.

The claimed deduction for meals represents a personal expense and

is not allowable.   See sec. 1.262-1(b)(5), Income Tax Regs.

     Petitioner deducted the trading costs he incurred in

purchasing and selling securities held in his Roth IRA.

Petitioner does not claim to be a dealer in securities, nor does

he point to any statutory provision that might justify treating

his trading costs other than in the usual manner, as additions

to, or subtractions from, his basis for purposes of computing

gain or loss on sale.   See sec. 1221; Woodward v. Commissioner,

397 U.S. 572, 575 (1970); sec. 1.263(a)-2(e), Income Tax Regs.

These trading costs are not deductible.

     In his amended return, petitioner sought to deduct $16,561

under section 179 with respect to the business use of a motor
                              - 15 -

vehicle.   The vehicle is the same one petitioner used for travel

and transportation, and the business use claimed is the book

writing project.

     Amounts paid to acquire machinery, equipment, and similar

property having a useful life substantially beyond the taxable

year are capital expenditures and generally are not deductible.

Sec. 263(a)(1); sec. 1.263(a)-2, Income Tax Regs.    If the capital

expenditure is for property used in a trade or business or held

for the production of income, the taxpayer may be allowed a

deduction for depreciation under section 167.   See, e.g.,

INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 83-84 (1992).

Alternatively, the cost may be expensed pursuant to section 179

if the requirements of that section are satisfied.   The cost may

not be expensed, however, in the absence of an election.     Sec.

179(c); Visin v. Commissioner, T.C. Memo. 2003-246; sec. 1.179-5,

Income Tax Regs.   Furthermore, section 179 limits the amount of

the deduction to the amount of taxable income derived from the

trade or business, although a disallowed deduction may be carried

over to later tax years.   Sec. 179(b)(3)(A) and (B).

     We have already found that petitioner’s book writing project

was not a separate trade or business.   The vehicle was not a

capital asset in petitioner’s hands, and therefore he is not

entitled to depreciate it or to expense any part of its cost

under section 179.   Even if petitioner’s book writing project had
                                  - 16 -

constituted a separate trade or business, the section 179

deduction would not be allowable because petitioner did not have

any income from the sale of the book in 2003.8      Respondent

properly disallowed the claimed deduction under section 179.

     Petitioner claimed a deduction of $7,250 for charitable

contributions--$7,050 of which was for contributions of property

and $200 was for cash contributions.       Respondent disallowed all

of the deduction for cash contributions and all but $500 of the

deduction for contributions of property.

     Section 170 allows a deduction for charitable contributions

during the taxable year if they are verified as provided in the

regulations.    Sec. 170(a)(1).    No deduction is allowed for any

contribution of $250 or more unless the taxpayer substantiates

the contribution by a contemporaneous written acknowledgment of

the contribution by the qualified donee organization.      Sec.

170(f)(8)(A).    This written acknowledgment must state the amount

of cash and a description (but not necessarily the value) of any

property other than cash the taxpayer donated and whether any

consideration was given to the taxpayer.      Sec. 1.170A-13(f)(2),

Income Tax Regs.




     8
      Furthermore, petitioner failed to substantiate the portion
of the use of the vehicle that could be attributed to business
rather than personal use.
                                - 17 -

     Although petitioner did not present any documentary

substantiation of his cash charitable contributions, he testified

that he had made such contributions to his local church.     We find

this part of petitioner’s testimony credible.     Therefore, the

claimed cash contributions totaling $200 are deductible.     The

claimed deduction for charitable contributions of property was

substantiated by receipts from a charitable organization and by

receipts showing the acquisition cost to petitioner of some

donated property, such as a bicycle and artwork.     But petitioner

did not substantiate the date-of-donation value of the property

donated to charity.    We therefore sustain respondent’s

determination that the date-of-donation value of the donated

property did not exceed $500.     Petitioner is therefore entitled

to a deduction for contributions of property only in the amount

of $500.

     As noted supra, respondent determined a section 6662(a)

penalty for 2003.     Pursuant to section 6662(a) and (b)(1) and

(2), a taxpayer is liable for a penalty of 20 percent of the

portion of an underpayment of tax attributable to (1) negligence

or disregard of rules or regulations, or (2) any substantial

understatement of tax.     In addition, a taxpayer is liable for the

section 6662(a) penalty with respect to the portion of the

underpayment of tax attributable to any substantial valuation

misstatement under chapter 1.     Sec. 6662(b)(3).
                              - 18 -

     Petitioner’s claimed $5,094 deduction for home office

expenses was based on his belief that his book writing project

was a separate activity from his occupation as a university

professor.   We are unable to find that petitioner was negligent

or disregarded rules or regulations in claiming this deduction.

Therefore, while that part of the underpayment of tax

attributable to the $5,094 claimed deduction for home office

expenses is not subject to the section 6662(a) penalty under

section 6662(b)(1), it is part of the substantial understatement

of income tax subject to the section 6662(a) penalty under

section 6662(b)(2).   The applicability of section 6662(b)(2) to

the underpayment attributable to the home office expenses

deduction will depend on the magnitude of the understatement of

tax as calculated under Rule 155.

     Petitioner claimed deductions for business travel and

transportation, and for meals and entertainment expense for which

he apparently maintained no contemporaneous records.    At trial,

petitioner submitted records in support of these deductions that

were patently unreliable.   Petitioner further claimed deductions

for the trading cost of securities in the absence of any

statutory authority for such treatment.   He also claimed a

deduction for a vehicle under section 179 even though he had no

income from the claimed business activity in which the vehicle

allegedly was used.   These deductions were claimed in the absence
                                - 19 -

of a reasonable attempt to comply with the rules and/or

regulations.   Therefore, under section 6662(b)(1), that part of

the underpayment attributable to these disallowed deductions is

subject to the section 6662(a) penalty even if the parties’ Rule

155 computation establishes that there was not a substantial

understatement of income tax.

     Petitioner claimed a deduction for charitable contributions

of property in excess of the $500 we found to be the value of the

contributed property.   Again, independently of the outcome of the

parties’ Rule 155 computation, that part of the underpayment

attributable to this substantial valuation misstatement is

subject to the section 6662(a) penalty under section 6662(b)(3).

     To reflect the foregoing and concessions by the parties,



                                         Decision will be entered

                                   under Rule 155.
