                  T.C. Summary Opinion 2009-81



                      UNITED STATES TAX COURT



                  HATEM ELSAYED, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8935-07S.               Filed May 26, 2009.



     Peter A. Lowy, for petitioner.

     David B. Mora, for respondent.



     GOLDBERG, Special Trial 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
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the year in issue, and all Rule references are to the Tax Court

Rules of Practice and Procedure.

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

entitled to deduct unreimbursed employee business expenses in

excess of the amount that respondent allowed for 2004; and (2)

whether petitioner is entitled to a filing status of married

filing jointly for 2004.1

                            Background

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

The stipulations of facts and the attached exhibits are

incorporated herein by this reference.    At the time he filed his

petition, petitioner resided in Texas.

     Petitioner was employed as a truck driver in 2003, a job he

maintained through the end of 2004.    He did not own or lease a

truck; rather, he drove trucks owned by his employers.    In 2004

petitioner worked for two corporations, Swift Transportation

(Swift) and A-Z Transportation (A-Z).    Swift and A-Z were related

businesses in that Swift owned A-Z or leased its assets.

Consequently, their driver reimbursement policies, discussed

below, were identical.   Petitioner transported many types of



     1
      The notice of deficiency included a sec. 6662 accuracy-
related penalty for 2004. Petitioner did not dispute the penalty
in his petition or at trial. Therefore petitioner is deemed to
have conceded the issue. See Rule 34(b)(4); Swain v.
Commissioner, 118 T.C. 358, 364-365 (2002).
                                - 3 -

shipments, including regular freight and hazardous materials, and

he drove to destinations throughout the continental United

States.   Petitioner maintained a home in Texas, but he was an

active driver during 2004 logging 268 days away from home.

     Swift and A-Z reimbursed their drivers for certain expenses

including tolls, scales, showers, truck supplies, truck washes,

motels, lumpers (people hired to help unload the truck), and

truck repairs.   Swift and A-Z did not reimburse their drivers for

maps, tools, meals, clothing, bedding, coolers, batteries, office

supplies, first aid kits, or air fresheners.   Petitioner kept

receipts for his purchases in separate envelopes by category.

Petitioner used a home computer to help record his driver logs

and account for his expenses.

     Petitioner brought his two Forms W-2, Wage and Tax

Statement, and his receipts to a tax preparer who prepared

petitioner’s 2004 Federal income tax return.   Petitioner timely

filed his return using single filing status and reporting wages

of $45,919 and deductions totaling $21,808 on Schedule A,

Itemized Deductions.   Of the $21,808 in itemized deductions,

$18,755 are expenses that petitioner claimed on Form 2106,

Employee Business Expenses.

     The Internal Revenue Service (IRS) selected petitioner’s

2004 Federal income tax return for examination.   The sole

adjustment was the disallowance of $12,968 (or the allowance of
                                - 4 -

$5,787) of the $18,755 deduction for unreimbursed employee

business expenses.   Three categories of expenses made up the

$18,755:   (1) Vehicle expenses--$469; (2) meals--$619 ($1,237

times a 50-percent reduction); and (3) “other” expenses--

$17,667.   The examiner allowed in full petitioner’s deduction for

vehicle expenses.    The meal expenses that petitioner had listed

separately were for restaurant meals while petitioner was home,

which respondent disallowed.

     Petitioner could not reconcile the $17,667 deduction for

other expenses that he had claimed on the return.   However, a

significant component was for meals he had purchased while away

from home.   The examiner determined that petitioner incurred

$8,308 for meals and incidental expenses away from home based on

268 days times a per diem rate of $31.   The examiner then reduced

the $8,308 total by 50 percent to allow a deduction of $4,154

because section 274(n) generally permits only 50 percent of meals

and entertainment as a deduction.   The record is unclear as to

the specific expenses that make up the examiner’s remaining

allowance of $1,164 ($5,787 minus $469 and minus $4,154), other

than an electronic map for $223.37.

     During the audit petitioner raised the issue of his filing

status for 2004.    He claimed that he is entitled to use married

filing jointly rather than single status because by the end of

2004 he was in a common law marriage with Irma Angelica Cueto,
                                 - 5 -

whom he married in separate civil and religious ceremonies in

March 2005.

     The examiner determined that petitioner’s filing status for

2004 was single.   Therefore, solely on the basis of the $12,968

disallowance, respondent determined a deficiency in petitioner’s

2004 Federal income tax of $2,435 and an accuracy-related penalty

under section 6662(a) of $487.

     Petitioner timely petitioned the Court for redetermination

of the deficiency, seeking an increased deduction for “other”

business expenses that he claimed on Form 2106.   Additionally,

petitioner asks the Court to recognize his common law marriage to

Ms. Cueto during 2004 and permit him to file as married filing

jointly.

     At trial petitioner called his wife and a friend, Ms. Brenda

Hernandez, as witnesses with respect to the common law marriage.

Petitioner did not call his tax preparer as a witness.

                            Discussion

     In general, the Commissioner’s determination set forth in a

notice of deficiency is presumed correct, and the taxpayer bears

the burden of showing that the determination is in error.   Rule

142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).    Under

section 7491(a) the burden may shift to the Commissioner

regarding a factual issue if the taxpayer produces credible

evidence and meets the other requirements of the section,
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including maintaining records required by the Internal Revenue

Code and cooperating fully with the Secretary’s reasonable

requests for witnesses, information, documents, meetings, and

interviews.   Petitioner did not fulfill the requirements of

section 7491(a), and therefore the burden of proof regarding the

unreimbursed employee business expense deductions and his marital

status remains on petitioner.   With respect to the accuracy-

related penalty, section 7491(c) places the burden of production

on respondent.

     The first issue for decision is whether petitioner is

entitled to a deduction for unreimbursed employee business

expenses in excess of the amount respondent allowed.

     Deductions are a matter of legislative grace, and taxpayers

bear the burden of proving their entitlement to a deduction.

INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New

Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).     Section

6001 requires taxpayers to maintain records sufficient to

establish the amount of each deduction.   See also Ronnen v.

Commissioner, 90 T.C. 74, 102 (1988); sec. 1.6001-1(a), (e),

Income Tax Regs.

     Section 162(a) allows a deduction for ordinary and necessary

expenses that a taxpayer pays in connection with the operation of

a trade or business.   Boyd v. Commissioner, 122 T.C. 305, 313

(2004).   To be “ordinary” the expense must be of a common or
                               - 7 -

frequent occurrence in the type of business involved.     Deputy v.

du Pont, 308 U.S. 488, 495 (1940).     To be “necessary” an expense

must be “appropriate and helpful” to the taxpayer’s business.

Welch v. Helvering, supra at 113.    Additionally, the expenditure

must be “directly connected with or pertaining to the taxpayer’s

trade or business”.   Sec. 1.162-1(a), Income Tax Regs.   Section

262(a) disallows deductions for personal, living, or family

expenses.

     Generally, the performance of services as an employee

constitutes a trade or business.     Primuth v. Commissioner, 54

T.C. 374, 377 (1970).   For such expenses to be deductible, the

taxpayer must not have the right to obtain reimbursement from his

employer.   See Orvis v. Commissioner, 788 F.2d 1406, 1408 (9th

Cir. 1986), affg. T.C. Memo. 1984-533.

     If a taxpayer establishes that an expense is deductible but

is unable to substantiate the precise amount, we may estimate the

amount, bearing heavily against the taxpayer whose inexactitude

is of his own making.   Cohan v. Commissioner, 39 F.2d 540, 543-

544 (2d Cir. 1930).   The taxpayer must present sufficient

evidence for the Court to form an estimate because without such a

basis, any allowance would amount to unguided largesse.      Williams

v. United States, 245 F.2d 559, 560-561 (5th Cir. 1957); Vanicek

v. Commissioner, 85 T.C. 731, 742-743 (1985).
                                - 8 -

     Section 274 overrides the Cohan rule with regard to certain

business expenses.    Sanford v. Commissioner, 50 T.C. 823, 827

(1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969); Sec. 1.274-

5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6,

1985).   Section 274 requires stricter substantiation for travel,

meals, and listed property such as cellular telephones.     Section

274(d) requires taxpayers to provide adequate records or

sufficient other evidence establishing the amount, time, place,

and business purpose of the expense to corroborate the taxpayer’s

statements.    Even if such an expense would otherwise be

deductible, section 274 may still preclude a deduction if the

taxpayer does not have sufficient substantiation.    Sec. 1.274-

5T(a), Temporary Income Tax Regs., supra.

     Keeping in mind these well-established principles, we now

decide whether petitioner is entitled to additional unreimbursed

employee business expenses.

     With respect to the deduction for meals away from home,

respondent has already determined that petitioner is entitled to

use a per diem rate rather than actual expenses, and that 268 is

the proper number of days petitioner was away from home during

2004.    Petitioner does not challenge these determinations.

     Respondent also determined that $31 per day is the correct

per diem rate that petitioner should use for meals and

incidentals expenses (M&IE) while he was on the road in the
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continental United States (CONUS) during 2004.    We disagree.

While $31 is generally the correct standard CONUS rate per Rev.

Proc. 2003-80, secs. 3.02(1)(a) and 4.01, 2003-2 C.B. 1037, 1039,

the same revenue procedure provides a separate $41 CONUS per diem

rate for employees in the transportation industry.     Id. sec.

4.04(2), 2003-2 C.B. at 1040.    The definition of transportation

industry employee includes in pertinent part an individual whose

work “directly involves moving people or goods by * * * truck”

and “regularly requires travel away from home which, during any

single trip away from home, usually involves travel to localities

with differing Federal M&IE rates.”     Id. sec. 4.04(4), 2003-2

C.B. at 1040.   Petitioner meets the definition because he

directly moved goods by truck, his 268 days away from home

constitute regular travel, and he made trips away from home

involving numerous localities with varying Federal M&IE rates.

     Additionally, the 50-percent allowance for meals under

section 274(n) is superseded by a more generous 70 percent

allowance for 2004 under section 274(n)(3)(B) for individuals

subject to “the hours of service limitations of the Department of

Transportation”.   Sec. 274(n)(3)(A).   Truck drivers are subject

to Department of Transportation hours of service limitations,

e.g., generally truck drivers may not drive more than 60 hours in

any period of 7 consecutive days or more than 70 hours in 8
                               - 10 -

consecutive days.    See United States v. McCord, Inc.; 143 F.3d

1095, 1096 (8th Cir. 1998); 49 C.F.R. sec. 395.3 (2008).

     Thus, instead of the deduction of $4,154 that respondent

allowed, petitioner is entitled to a deduction of $7,691.60 for

meals and incidental expenses on the basis of 268 days away from

home at $41 per day times an allowance rate of 70 percent.

     With respect to the “other” expenses that petitioner seeks

to deduct in excess of the $1,174, the Court received into

evidence from petitioner a spreadsheet and copies of receipts

totaling $6,212.25, comprising three subcategories of expenses:

$2,161.51 for cellular telephone charges; $1,765.34 for

restaurant meals that petitioner purchased while in his hometown;

and $2,286.40 for unreimbursed supplies that petitioner bought

while on the road.

     With respect to the cellular telephone bills totaling

$2,161.51, petitioner’s employers suggested that drivers might

find cellular telephones useful but did not reimburse its drivers

for a cellular telephone.   Petitioner used the cellular telephone

to contact other truckers, shippers, and receivers to discuss,

among other things, the best routes for his particular

destination considering his load type, load weight, and vehicle

size, information that is not readily available from typical road

maps.   Petitioner also used the cellular telephone for personal
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calls.   Petitioner did not keep a log of his calls, but he

estimated that 80 percent of the calls had a business purpose.

     Section 274(d)(4) governs the substantiation requirements

related to listed property, which under section 280F(d)(4)(A)(v),

includes cellular telephones.    Under section 274(d) the taxpayer

must maintain adequate records or present corroborative evidence

to support:   (1) The amount of the expense; (2) the time and

place of use of the listed property; and (3) the business purpose

of the use.   Sec. 1.274-5T(b)(6), Temporary Income Tax Regs., 50

Fed. Reg. 46016 (Nov. 6, 1985).    The Court may not use the Cohan

doctrine to estimate expenses governed by section 274(d).     Boyd

v. Commissioner, 122 T.C. at 320.

     Thus, while petitioner has substantiated that he paid

cellular telephone charges and he has established that he had a

business purpose for a cellular telephone, he has provided no

contemporaneous log or any other credible evidence of the portion

of the cellular telephone use that was business related.    The

burden is on petitioner to support the business usage.    Because

Congress has decided that a cellular telephone is listed

property, we may not estimate.    Accordingly, petitioner is not

entitled to a deduction for his cellular telephone expenses for

2004.

     With respect to the hometown meals, petitioner provided

receipts to show that he paid $1,765.34 for restaurant meals in
                              - 12 -

between work assignments.   Petitioner contends that although his

employers did not require the meals, the meals had a business

purpose in that they gave him an opportunity to meet with other

drivers to gain their wisdom as to how best to advance his

driving skills, e.g., learning safety tips, the rules for hours

worked, and how to increase his earnings.    Petitioner wrote on

the backs of the receipts the first but not last names of the

person(s) with whom he ate.   He did not record the business

purpose of the meals.   Included in the total were payments of

$225 and $200 to purchase meals for several other drivers as

appreciation for their advice.

     In instances where section 162(a) trade or business expenses

overlap with section 262(a) personal expenses, section 262 takes

precedence.   Heineman v. Commissioner, 82 T.C. 538, 542 (1984).

Further, a deduction for meals and entertainment expenses,

similar to the deduction for travel expenses, is subject to

strict substantiation requirements.    Sec. 274(d)(2).   Moreover,

the individual must show more than a tangential connection with

the business; he must show that the expense is “directly

connected” with the trade or business.    Sec. 1.162-1(a), Income

Tax Regs.

     Petitioner has not sufficiently connected the meals with a

bona fide trade or business purpose.    Moreover, the receipts that

petitioner submitted, while showing dates and prices, did not
                              - 13 -

show last names or document a business purpose.    See sec. 274(d)

(flush language).   Thus petitioner did not establish a business

purpose that transcends the ordinary personal benefit of eating

an enjoyable meal with colleagues.     Sec. 1.274-5T(b), Temporary

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

Accordingly, for the foregoing reasons we find the hometown meals

are a personal expense, and we sustain respondent’s disallowance.

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

     With respect to the $2,286.40 in unreimbursed supplies, many

of the receipts just showed dollar amounts with a cryptic

description, e.g., a credit card purchase for $26.97 for “Luggage

Ro EAC” from an unidentified store, and $43.29 for “G-R-O-C” from

the Drivers Travel Mart in Anna, Texas.    Many other receipts had

no description at all, such as a $323.83 credit card receipt from

Wal Mart in Houston, Texas; $23.46 from the Flying J Travel Plaza

in Carmel Church, Virginia; and $13.65 from Travel Centers of

America in Tallulah, Louisiana.   A few receipts had an apparent

business purpose:   $75.73 for a CB radio, $59.95 for an atlas

map, and $5.76 for a small map.   However, most of the other

identifiable purchases were for seemingly personal purposes:

$115.26 from a Wal Mart in Humble, Texas, for shampoo and office

supplies; and $99.86, $188.84, and $19.99 from a Sam’s Club for

an executive chair, an L-shaped desk, and Nike tennis sneakers.
                                - 14 -

     Examining these receipts we find that petitioner did not

provide adequate substantiation establishing a business purpose

under section 274(d).    In many cases the receipts did not

describe and petitioner did not furnish an explanation of what he

purchased.    Therefore, even if we were to provide an estimate

under the Cohan doctrine, the amount that we would estimate as

business rather than section 262(a) personal expenses would be

far less than the nearly one-half, or $1,164 that respondent

allowed.     Accordingly, we find no ground to increase petitioner’s

deduction for “other” expenses beyond the $1,164 that respondent

has already allowed.

     The second issue for decision is whether petitioner is

entitled to a filing status of married filing jointly for 2004.

     State law determines a person’s marital status for Federal

income tax purposes.     Von Tersch v. Commissioner, 47 T.C. 415,

419 (1967); Rev. Rul. 58-66, 1958-1 C.B. 60.     The State of Texas

recognizes common law marriages but requires that three

conditions be met:    (1) The parties must agree to marry, (2) they

must live together in Texas as husband and wife, and (3) they

must represent to others that a marriage exists.    Tex. Fam. Code

Ann. sec. 2.401 (Vernon 2006); Warren v. Sec. of HHS, 868 F.2d

1444, 1446 (5th Cir. 1989).

     Petitioner and Ms. Cueto agreed to marry, and in fact they

did marry in 2005.    We find credible their testimony that they
                                 - 15 -

had lived together since 2002.     The critical test then is the

third one, whether they represented to others that they were

married.    Representing to others means “holding each other out to

the public.”    Estate of Claveria v. Claveria, 615 S.W.2d 164, 166

(Tex. 1981); see also Russell v. Russell, 865 S.W.2d 929, 932

(Tex. 1993) (requiring “public representation”); Ex parte Threet,

333 S.W.2d 361, 364 (Tex. 1960) (isolated reference to a person

as his husband or wife, and similarly an introduction to two

close friends and telling two or three other persons does not

constitute sufficient evidence of a common law marriage) and

Grigsby v. Reib, 153 S.W. 1124, 1130 (Tex. 1913) (“The

cohabitation must be professedly as husband and wife, and public,

so that by their conduct towards each other they may be known as

husband and wife.”).

     In Russell v. Russell, supra at 931-932, the Supreme Court

of Texas observed that although Texas has recognized common law

marriages since 1847, the recognition is a “grudging” one in

which the State “merely tolerates” but “does not favor” such

marriages.     In 1970 the Texas legislature enacted a statute to

allow a couple to file a declaration of informal marriage with

the county clerk.     Id.   In 1989 the legislature amended the

statute to make the proof of a common law marriage more

difficult, restricting the ability of courts to simply infer a

marriage.    Id.   Thus, the effect of the 1989 amendment is to
                               - 16 -

tighten the rules for inferring a common law marriage, requiring

the evidence to be more convincing than before the 1989

agreement.   Id.   Accordingly, in a society where nonmarital

cohabitation for extended periods is far more common than it once

was, the fact finder will have to weigh the evidence more

carefully than in the past.    Id.   Occasional uncontradicted

reference to “my wife” or “my husband” needs corroboration, and

the context of the reference requires greater scrutiny.     Id.   A

forthright assertion of marriage with the consequence of

liability, such as when an alleged spouse seeks admission of the

other to a hospital, is highly probative of a tacit agreement.

Id.

      Though Ms. Cueto and Ms. Hernandez testified on petitioner’s

behalf, their testimony was supportive but not decisive.

Ultimately, four factors weigh against petitioner’s claim that he

was in a common law marriage in 2004.    First and importantly,

petitioner purchased a home in 2004 which became the couple’s

primary residence.   Petitioner could have titled the home and

mortgage note jointly in his and Ms. Cueto’s names, but he did

not do so.   This omission is highly probative because under

Russell v. Russell, supra, it was an opportunity for a forthright

assertion of marriage when there was a significant consequence of

liability.   Second, petitioner did not add Ms. Cueto to the

utility bills or his bank account, and she did not change her
                              - 17 -

driver’s license to her married name until 2005.    Third, as noted

above, the State of Texas provided residents with the opportunity

to register their common law marriage with the local county

clerk, but again, petitioner chose not to do so.    Fourth and also

significant, petitioner reported his filing status as single on

his 2004 Federal income tax return.    He had the opportunity to

alert the world, or at least the IRS, that he believed he was

married, but he chose not to do so.    Only later when his return

was audited did petitioner raise the issue of a common law

marriage.   For the foregoing reasons, we sustain respondent’s

determination of petitioner’s filing status as single for 2004.

                            Conclusion

     To reflect our disposition of the issues,


                                           Decision will be entered

                                       under Rule 155.
