                       T.C. Memo. 1998-441



                     UNITED STATES TAX COURT



  ALBERT WILLIAM DEHR, III AND YOENG YOEP DEHR, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 24869-96.                Filed December 15, 1998.



     Albert William Dehr III and Yoeng Yoep Dehr, pro sese.

     Christian Speck, for respondent.



                       MEMORANDUM OPINION


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

the provisions of section 7443A(b) of the Code and Rules 180,

181, and 182.1



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


     Respondent determined a deficiency of $9,347 in petitioners'

1994 Federal income tax.

     After a concession by respondent, the issues remaining for

decision are whether petitioners are entitled to claim car and

truck transportation expenses and telephone expenses as business

expenses on Schedule C.2

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

Petitioners resided in Yuba City, California, at the time they

filed their petition.

                            Background

     During the taxable year Albert William Dehr III (petitioner)

was self-employed as a "financial litigation consultant", engaged

in "RICO investigations, [and] financial investigations in major

civil litigations" for attorneys in San Francisco, Denver,

Washington, and Florida.   Petitioner's consulting activities

included reviewing financial records, conducting interviews,

assisting attorneys with depositions, locating individuals, and

drafting reports.

     Petitioner was also a member of a real estate partnership,

Bakos & Dehr Realty (Bakos & Dehr).    Mr. Bakos was "an attorney


     2
      The parties agree that petitioners' gross receipts for the
year 1994 are $24,838 as reported on Schedule C of the return.
Respondent determined that petitioners are not entitled to claim
the earned income credit. This is a computational adjustment
that will be resolved by our decision on the other issues in this
case.
                                - 3 -


friend in Sacramento", California.      Petitioner and Mr. Bakos

planned to develop a ranch that belonged to Mr. Bakos' father

into a public golf course.    The development of the golf course at

the ranch "did not pan out."

     Petitioner's primary client for the year at issue was a

company named RO-TILE Roofing Co. (Ro-Tile).      Of petitioner's

total gross receipts of $24,838 for the year reported on

Schedule C, Ro-Tile paid $23,186 to him for services that

included accounting, financial analysis, document drafting, court

appearances, and repairing a kiln.      Petitioners also reported, on

Schedule A of their return, $3,780 in interest income from

Ro-Tile.    Other clients paid another $1,652 to petitioner for his

services.

     Petitioner maintained an office in his home in Yuba City for

his consulting business.    Ro-Tile was located in Lodi,

California, south of Yuba City.

     Petitioners' home had only one telephone line.      Petitioner

used the telephone in his home as his business telephone.      There

was also at least some limited personal use of the home

telephone.

     Petitioners owned both a Ford pickup truck and a Lincoln

Continental automobile.    Yoeng Yoep Dehr primarily used the

Lincoln as her personal vehicle.    Petitioner used the truck to

drive from his home to and from Ro-Tile and other locations in
                                 - 4 -


rendering services to Ro-Tile.    Petitioner also used the truck

"to do a lot of hauling out to the ranch" in connection with his

real estate partnership activity.    He did, in addition, "some

computer work" for his real estate partner "Doc" Bakos.

     Petitioners' daughter was enrolled at the University of the

Pacific, near but south of Lodi in Stockton, California.

Stockton is near enough to Lodi that a telephone call from one

town to the other is a local call.       Petitioner, from time to

time, visited his daughter in Stockton when driving the truck to

or from a Ro-Tile trip.

     Petitioners, on Schedule C of their 1994 Federal income tax

return, claimed "utilities" expenses that were actually telephone

expenses of $1,137.31, and car and truck expenses of $13,049.

     Using the optional standard mileage rate, petitioners'

claimed car and truck expenses were based upon 100 percent

business use of the truck for a total of 34,748 miles, and 48.31

percent business use of the Lincoln for 7,289 business miles.

Petitioners also included, in their claimed car and truck

expenses, small amounts for parking fees, tolls, property taxes,

and interest.

     After examining their return, respondent determined that

petitioners are not entitled to claim as business expenses either

their telephone expenses, because they are personal expenses, or
                                - 5 -


their car and truck expenses, because they are unsubstantiated

commuting expenses.

                             Discussion

Telephone Expenses

     Petitioners argue that in 1994 their home telephone was

strictly for business use.    According to petitioner, he had some

business partners, including one in Japan, who needed immediate

access to him by fax with respect to some litigation.    Petitioner

testified that he connected a computer to his telephone line for

the entire year so it could receive any fax that his business

associates might send to him concerning the litigation.

     Petitioner testified that the amounts paid for telephone

service in 1994 are shown on a computer printout he presented at

trial.   The actual telephone bills are in storage with his

attorneys and unavailable, explained petitioner.    Respondent

objects to the admission of the computer printout, arguing that

it lacks relevance.   We disagree, and find the document to be

relevant to the issues of whether petitioners made expenditures

for telephone service and the amount expended.    Our resolution of

this evidentiary issue does not, however, dispose of the issue of

the deductibility of the expenses.

     Personal, living, and family expenses are not generally

deductible.   Sec. 262(a).   In the case of an individual, the

basic charge for the first telephone line provided to any
                                 - 6 -


residence "shall be treated as a personal expense."     Sec. 262(b).

Since petitioners had only one telephone line provided to their

home in 1994, they may not claim as a business expense their

basic monthly charge.     The amount claimed by petitioners,

however, suggests the charges claimed as expenses for the

telephone were beyond the basic monthly charge.     Petitioners must

show that they incurred any such expenses primarily for business

rather than social reasons.     Rule 142(a); Walliser v.

Commissioner, 72 T.C. 433, 437 (1979).

     To the extent that there was an amount for telephone calls

beyond the basic monthly charge, petitioners have not proven that

the charges were attributable to the business, and therefore they

may not claim them as expenses.     See Irwin v. Commissioner, T.C.

Memo. 1996-490, affd. without published opinion 131 F.3d 146 (9th

Cir. 1997).

Car and Truck Expenses

     Commuting Expenses

     Respondent argues that petitioners are not entitled to claim

car and truck expenses for their Ford truck or their Lincoln

automobile because petitioner's transportation costs incurred

traveling between his home in Yuba City and Ro-Tile in Lodi are

commuting expenses.   Even if they are not commuting expenses,

respondent disputes that petitioners have properly substantiated

them as business expenses.
                                 - 7 -


     Petitioner argues that his home is "the base of my

operation" and that his only business office is in his home.

Petitioners claimed office-in-home expenses on Schedule C and

filed Form 8829, Expenses for Business Use of Your Home,

reporting expenses associated with the home office.    No issue was

raised by respondent with respect to whether, and respondent did

not contest that, petitioner's business was run from his office

in his home.

     Generally, expenses that a taxpayer incurs in commuting

between his home and place of business are personal and

nondeductible.     Commissioner v. Flowers, 326 U.S. 465 (1946);

Heuer v. Commissioner, 32 T.C. 947, 951 (1959), affd. per curiam

283 F.2d 865 (5th Cir. 1960); secs. 1.162-2(e), 1.262-1(b)(5),

Income Tax Regs.    Expenses incurred, however, in going between

two or more places of business may be deductible as ordinary and

necessary business expenses under section 162 if incurred for

business reasons.     Steinhort v. Commissioner, 335 F.2d 496, 503-

504 (5th Cir. 1964), affg. T.C. Memo. 1962-233; Heuer v.

Commissioner, supra.     A taxpayer may deduct the expenses of

traveling between two places of business, one of which is an

office in his home that is the taxpayer's principal place of

business for the trade or business conducted by the taxpayer at

those other work locations.     Curphey v. Commissioner, 73 T.C.

766, 777-778 (1980).
                                - 8 -


     Since it is uncontested that petitioner's home office was

his principal place of business, we find that car and truck

expenses shown to have been incurred by petitioner in traveling

between his business office in his home and other business

locations are business expenses.   See Walker v. Commissioner, 101

T.C. 537, 545 (1993); Wicker v. Commissioner, T.C. Memo. 1986-1.

     Substantiation

     Petitioners must show that the amounts claimed are

deductible business expenses.   Rule 142(a); New Colonial Ice Co.

v. Helvering, 292 U.S. 435, 440 (1934); Hradesky v. Commissioner,

65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d 821 (5th Cir.

1976).

     Failure to prove the exact amount of an otherwise deductible

item may not always be fatal, because generally, unless precluded

by section 274, we may estimate the amount of such an expense and

allow the deduction to that extent.     Finley v. Commissioner, 255

F.2d 128, 133 (10th Cir. 1958), affg. 27 T.C. 413 (1956); Cohan

v. Commissioner, 39 F.2d 540, 554 (2d Cir. 1930).

     Section 274(d) provides, however, that no deduction shall be

allowed with respect to any "listed property", as defined in

section 280F(d)(4), unless the taxpayer substantiates by adequate

records or sufficient evidence to corroborate the taxpayer's own

testimony:   (1) The amount of the expenditure or use based on the

appropriate measure (mileage may be used in the case of
                               - 9 -


automobiles), (2) the time and place of the expenditure or use,

(3) the business purpose of the expenditure or use, and (4) the

business relationship to the taxpayer of each expenditure or use.

     "Listed property" includes any passenger automobile and "any

other property used as a means of transportation".     Sec.

280F(d)(4)(A)(i) and (ii).   Generally, a passenger automobile is

any four-wheeled vehicle made for use on public roads, weighing

less than 6,000 pounds.3   Sec. 280F(d)(5)(A).   Property used as a

"means of transportation" includes trucks and any other vehicle

for transporting persons or goods.     Sec. 1.280F-6T(b)(2),

Temporary Income Tax Regs., 49 Fed. Reg. 42713 (Oct. 24, 1984).

Because both petitioners' Lincoln and their pickup truck fall

within the definition of listed property, expenses for the use of

both must meet the substantiation requirements of section

274(d)(4).

     To meet the adequate records requirements of section 274(d),

a taxpayer must maintain some form of records and documentary

evidence that in combination are sufficient to establish each

element of an expenditure or use.    Sec. 1.274-5T(c)(2), Temporary

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

1.274(d)-1, Income Tax Regs., in part, grants to the Commissioner

authority to prescribe rules for mileage allowances for ordinary


     3
      Certain special use vehicles are excluded.    Sec.
280F(d)(5)(B).
                                - 10 -


and necessary expenses for local transportation, and rules were

prescribed for the year 1994.    See Rev. Proc. 93-51, 1993-2 C.B.

593.

       As part of their attempt to meet the substantiation

requirements, petitioners provided the Court with a handwritten

document that petitioner testified is a record of starting and

ending mileage for each of the vehicles, the pickup truck and the

Lincoln.    The document indicates the total miles driven for the

year for each vehicle:    34,748 miles for the truck and 15,089

miles for the Lincoln.4

            The Lincoln

       Of the total mileage for the Lincoln, petitioners claimed

7,289 as business miles on a statement attached to their return.

On the same statement petitioners indicated that they possessed

written evidence to support the claimed business use.    No such

written evidence was offered at trial.    Petitioner instead

testified that to determine business mileage he took the total

mileage of 15,089 and reduced it by 7,800 for his wife's personal

use mileage.    When asked how he determined personal use mileage,

petitioner replied:    "That was a guesstimate by what [my wife]

was using to drive around".    Petitioner's use of a "guesstimate"

of personal mileage means that the number of business miles

       4
      Respondent noted a relevance objection to petitioners'
stipulated computation. We disagree and find the document to be
relevant.
                               - 11 -


remaining after his subtraction from the total mileage is also a

"guesstimate".

     We find that petitioner's "guesstimate" of business miles

driven in the Lincoln automobile does not constitute an adequate

record or other sufficient evidence with which to substantiate

the business use of listed property as required by section

274(d).   See sec. 1.274-5T(c)(2)(ii)(C), Temporary Income Tax

Regs., supra.

           The Pickup Truck

     Of the 34,748 total business miles claimed for the use of

the pickup truck, petitioner testified that he drove 29,001 miles

to, from, and for Ro-Tile.    The difference between the total

mileage and the Ro-Tile mileage was "probably" associated with

his Bakos & Dehr realty endeavor, petitioner testified.

Petitioners provided no other records or corroborating evidence

to substantiate the business use of the truck in the alleged real

estate activity.5   Petitioners may not claim as a business




     5
      Petitioners reported no partnership income or deductions
for the taxable year. We assume that petitioner's real estate
activities generated, at best, startup or preopening expenses.
Sec. 195(c)(1). Startup or preopening expenses are not
deductible under either sec. 162 or sec. 212. Hardy v.
Commissioner, 93 T.C. 684 (1989); Goodwin v. Commissioner, 75
T.C. 424, 433 (1980) affd. without published opinion 691 F.2d 490
(3d Cir. 1982); Polachek v. Commissioner, 22 T.C. 858, 863
(1954). Even if substantiated, deduction of such expenses is
specifically denied by sec. 195(a).
                                - 12 -


expense the unsubstantiated portion of the truck mileage related

to the alleged real estate activity.

     As substantiation for petitioner's remaining 29,001-mile

business use of the truck, for his work with Ro-Tile, he provided

two calendars for the year 1994.6    Petitioner testified that he

kept one calendar "that was thrown into the car, that I would run

around in the car with"7 and one at home "on the wall".   For days

when he expected to travel to Ro-Tile, a 162-mile round trip,

petitioner testified that he made a notation of the letters "RT"

on the calendars.   Petitioner said that sometimes he failed to

make notations in the calendar that he kept at home, and indeed

there are many fewer "RT" notations on that calendar than on the

one he carried with him in the "car".    Petitioner testified that

he made the "RT" notations in advance, because "I tried to plan

my month".   There are crossed out "RT" notations that represent

days he thought he was going to Ro-Tile but for some reason did

not, according to petitioner.    Petitioner made 162 "RT" notations

(that were not crossed out) on his "car" calendar.




     6
      Respondent notes a relevance objection to these stipulated
items. We find them, however, clearly relevant to whether
petitioner has substantiated the business use of his truck under
sec. 274(d).
     7
      In the context of the other evidence in this case, we
assume petitioner was referring to his pickup truck when he
testified that the calendar was kept in his "car".
                               - 13 -


     Petitioner also testified that on certain days, he "had to"

travel an additional distance to Concord and to Pleasant Hill,

California, to pick up Ro-Tile's payroll and return to Ro-Tile.

On each of those occasions, according to petitioner, he would

visit a "hamburger joint" called Fuddruckers located in Concord.

For that reason, petitioner stated that he made the notation

"FUDD" on calendar days when he went to Concord.   Petitioner gave

no testimony on the additional distance he traveled on "FUDD", or

payroll, days.   He did supply an adding machine tape on which

several entries of various amounts of mileage are added to

produce the sum of 2,757.   No other explanation or evidence was

provided for the "FUDD" trips.

     Section 274(d)(4) and the regulations thereunder call for

substantiation of "each element" of every business use of listed

property.   The level of detail required for adequate

substantiation, however, depends on the facts and circumstances

of each case.    Where the taxpayer makes regular trips to a fixed

location, he may satisfy the adequate record requirement by

recording the total number of miles driven, the length of the

route once, and the date of each trip at or near the time of the

trips.   Sec. 1.274-5T(c)(2)(ii)(C), Temporary Income Tax Regs.,

supra.

     Petitioners failed to provide an adequate record of

substantiation or other sufficient evidence for the 2,757 miles
                             - 14 -


of travel denoted as "FUDD", or payroll travel, or for claimed

parking fees, tolls, property taxes, and interest.    Sec. 1.274-

5T(c)(3)(iii), Temporary Income Tax Regs., 50 Fed. Reg. 46016

(Nov. 6, 1985).

     We find, however, that petitioners, under the facts and

circumstances of this case, have provided an adequate record of

substantiation for the use of their truck for 162 round-trips of

162 miles each, or 26,244 miles of business transportation, from

petitioner's home office to and from Ro-Tile in 1994.

     To reflect the foregoing,

                                      Decision will be entered

                                 under Rule 155.
