                  T.C. Memo. 2009-213



                UNITED STATES TAX COURT



          LESLIE FREEMAN, JR., Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket Nos. 12761-08, 12793-08.   Filed September 16, 2009.



     In 1999 and 2000 P worked as a courier for an auto
parts delivery business. Each workday, P drove his own
vehicle from a warehouse to several customers in a loop
through Maryland and Delaware, dropping off auto parts
and picking up cash and returned auto parts to deliver
back to the warehouse. P drove from the location of
his last customer to his home in the evening and then
drove from his home to the warehouse in the morning to
deliver the cash and returned auto parts he had
collected the previous day. At trial P alleged for the
first time that his wife also worked as a courier for
the auto parts delivery business and earned some of the
income he reported as his own.

     Held: P is entitled to deduct his mileage
incurred in connection with the auto parts delivery
business, except for mileage added by his commute to
and from his home.
                                - 2 -

          Held, further, P is not entitled to exclude his
     wife’s alleged income from the auto parts delivery
     business or deduct her alleged mileage incurred in
     connection with that business.



     T. Keith Fogg, for petitioner.

     Gary J. Merken, Keith L. Gorman, and Kelly Anne Hicks, for

respondent.




               MEMORANDUM FINDINGS OF FACT AND OPINION


     GUSTAFSON, Judge:    The Internal Revenue Service (IRS) issued

to petitioner, Leslie Freeman, Jr., two statutory notices of

deficiency on February 21, 2008, pursuant to section 6212,1

showing determinations of the following deficiencies in income

tax and accompanying failure-to-file additions to tax under

section 6651(a)(1) for tax years 1999 and 2000:

                                                Addition to Tax
         Tax Year            Deficiency         Sec. 6651(a)(1)
           1999                $16,058             $4,014.50
           2000                  8,514              2,128.50




     1
      Unless otherwise indicated, all citations of sections refer
to the Internal Revenue Code of 1986 (26 U.S.C.), as amended, and
all citations of Rules refer to the Tax Court Rules of Practice
and Procedure.
                                - 3 -

     After concessions,2 the issues for decision are whether

Mr. Freeman is entitled to (i) a deduction under section 162 for

his mileage between his personal residence and job locations, and

(ii) either an exclusion of his wife’s alleged portion of the

delivery business income or a deduction for his wife’s alleged

business mileage.    We find that Mr. Freeman is entitled to a

deduction for his mileage, except for the mileage added by his

commute to and from his residence.      We also find that Mr. Freeman

is not entitled to an exclusion for his wife’s alleged income or

a deduction for her alleged business mileage.

                          FINDINGS OF FACT

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

The stipulation of facts filed February 23, 2009, and the

attached exhibits are incorporated herein by this reference.

Trial of this case was held in Philadelphia, Pennsylvania, on

February 23, 2009.   Mr. Freeman was the only witness who

testified.   At the time that Mr. Freeman filed his petition, he

resided in Delaware.




     2
      Mr. Freeman concedes that   to the extent he is required to
show tax on his Form 1040, U.S.   Individual Income Tax Return, for
either or both of the tax years   at issue, he is liable for the
failure-to-file addition to tax   under section 6651(a)(1).
                               - 4 -

Mr. Freeman’s Residence and Job at PDX

     During tax years 1999 and 2000, Mr. Freeman resided with his

wife, Cheryl Freeman,3 in a house in Lincoln, Delaware, and

worked as a courier for Parts Distribution Xpress, Inc. (PDX), an

auto parts delivery company.   Mr. Freeman’s job as a courier

involved picking up auto parts at PDX’s warehouse in Baltimore,

Maryland, and delivering those parts to 15 or more of PDX’s

customers on a route that went through several cities in Maryland

and Delaware.   Mr. Freeman also collected cash and returned auto

parts from PDX’s customers at each stop along his route.

Following the last stop on his route, Mr. Freeman returned to his

residence in Lincoln, Delaware, without going back to PDX’s

warehouse in Baltimore.   After he arrived home, he filled out

invoices.   The following day he delivered the previous day’s

invoices, cash, and returned auto parts to the warehouse in

Baltimore, where he picked up the next shipment of auto parts and

repeated his route.   Mr. Freeman made these deliveries for PDX 5

days each week, 50 weeks each year, during the tax years at




     3
      Mr. Freeman is still married to Cheryl Freeman. However,
he separated from Mrs. Freeman after their house in Lincoln,
Delaware, was destroyed by an accidental fire on November 13,
2004. She did not testify at trial.
                                - 5 -

issue.4   He used his own vehicles to make these deliveries and

was not reimbursed by PDX for his mileage.5

Mr. Freeman’s Delivery Route6

     During tax years 1999 and 2000, Mr. Freeman’s delivery route

took the form of a loop through Delaware and Maryland, with 15 or

more stops at automobile dealers and repair shops.   Mr. Freeman

started his delivery route at 5 a.m. each workday by driving 98

miles west and north from his house in Lincoln, Delaware, to

PDX’s warehouse in Baltimore, Maryland.   (At mile 12 on that 98-

mile route, he passed through Harrington, Delaware, which would

later be the last stop on his delivery route.)   When Mr. Freeman

arrived at the Baltimore warehouse, he dropped off the invoices,

cash, and returned auto parts that he had collected from

customers the day before, picked up the next shipment of auto


     4
      Mr. Freeman alleged that he worked as a courier for PDX 5
days for every week of the year, except “Christmas and Easter” or
when he was “gravely sick”. Thus, we find that the record shows
that Mr. Freeman did take some workdays off, and that he worked 5
days each week for only 50 weeks each year, for a total of 250
workdays in each of 1999 and 2000.
     5
      Mr. Freeman credibly testified that he purchased and used
three vehicles for his work as a courier for PDX (of which he
used one at any given time) and that he was not reimbursed for
the purchase or use of his vehicles.
     6
      The distances given in this opinion were not proved at
trial, but we take judicial notice of them pursuant to Fed. R.
Evid. 201(b). Mr. Freeman testified that traffic or other
considerations sometimes caused him to take alternate routes; but
he did not substantiate these alternates, and in this opinion we
assume the shortest distances between the cities on his route.
                                - 6 -

parts, and drove 58 miles northeast from Baltimore to Elkton,

Maryland, then 36 miles southward to Chestertown, Maryland, then

36 miles eastward to Dover, Delaware, then 18 miles southward to

Harrington, Delaware.   Along each of these legs of his route,

Mr. Freeman left the highway to make stops at various locations,

but he did not testify about the particular locations.   As a

result, the record shows only the main cities along his route,

between which the mileages are as follows:

          Baltimore to Elkton            58
          Elkton to Chestertown          36
          Chestertown to Dover           36
          Dover to Harrington            18
          Total                         148

The total minimum for this route from warehouse to last stop was

therefore 148 miles.    Mr. Freeman apparently drove more than 148

miles to make his individual stops; but as we explain below, he

did not substantiate the greater number of miles he actually

drove on this route.

     After his last stop in Harrington, Mr. Freeman drove

12 miles east to his house in Lincoln, Delaware.   Thus, he drove

a total of no less than 258 miles each workday (i.e., 98 miles to

the warehouse, plus a minimum of 148 miles on his route, plus 12

miles to his house).    It should be noted that if Mr. Freeman had

driven directly from his last delivery stop in Harrington,

Delaware, back to PDX’s warehouse in Baltimore, Maryland--a trip

of 86 miles--rather than first driving the 12 miles to his house
                               - 7 -

in Lincoln plus the 12 miles back to Harrington--then he would

have driven a total of 234 miles each work day, rather than the

258 miles he actually drove.   His drive to his house and back

therefore constituted a 24-mile side trip from the route he

otherwise would have driven; but 234 miles of his daily circuit

were the same miles that he would have driven (and on the same

highways on which he would have driven them) if he had never

veered from his delivery route.

Mr. Freeman’s Forms 1099

     During tax years 1999 and 2000, Mr. Freeman was an

independent contractor with respect to PDX.    PDX paid Mr. Freeman

weekly with bank checks.   PDX issued to Mr. Freeman (in his sole

name) Forms 1099-MISC, Miscellaneous Income, which showed non-

employee compensation of $52,904 for 1999 and $35,986 for 2000.

Mr. Freeman’s Substantiation of His Expenses

     Mr. Freeman testified that during his work with PDX in 1999

and 2000, he drove the delivery route described above each

workday.   Mr. Freeman kept a daily log of that delivery route, in

part because he needed to verify his auto part deliveries to PDX

and its customers:

     You almost had to keep a log, and especially when you
     took a part and a customer said that you didn’t bring
     it, you could say, yes, I did, and you would keep the
     amount that the part was so that you could have our tax
     record. You would also keep your mileage in your logs
     so that you could refer to them.
                               - 8 -

Mr. Freeman kept this log by recording daily his vehicles’

odometer readings and his stops in a spiral-bound logbook, the

pages of which were formatted to include dates and spaces for

different entries.   However, Mr. Freeman did not present this

logbook, or any other log, calendar, diary, work or leave record,

or written record to corroborate his testimony.

Destruction of Mr. Freeman’s House and Records

     On November 13, 2004, Mr. Freeman’s house in Lincoln,

Delaware, in which he had resided with his wife during the tax

years at issue, was destroyed by an accidental fire.   The fire

was caused by water leakage that short circuited Mr. Freeman’s

clothes dryer.   This fire and its cause were both confirmed by a

“Statement of Verification” issued by the Office of the State

Fire Marshal of the State of Delaware on January 2, 2008.

     Mr. Freeman credibly testified that he kept his PDX logbook

in his house in Lincoln, Delaware, and that the logbook was

destroyed along with his house in the 2004 fire.

Mr. Freeman’s Forms 1040 and the IRS’s Notices of Deficiency

     Mr. Freeman did not timely file his Forms 1040 for 1999 and

2000.   However, Mr. Freeman had begun to self-prepare his Forms

1040 for 1999 and 2000 before the occurrence of the 2004 fire

that destroyed the daily log of his mileage for PDX along with

his house.   Mr. Freeman used entries from his daily log to
                               - 9 -

calculate his business mileage for PDX for purposes of filling

out the drafts of his Forms 1040 for 1999 and 2000.

     Mr. Freeman kept those drafts in a small briefcase, which he

used to transport the drafts to and from a library where he

worked on them.   On the day of the 2004 fire, that briefcase and

the partially completed Forms 1040 were behind the seat of one of

Mr. Freeman’s vehicles and therefore were not destroyed.   After

the 2004 fire Mr. Freeman discovered the partially completed

Forms 1040 with the business mileage for PDX already listed on

Schedule C, Profit or Loss From Business.   He completed and filed

those forms using the status of married filing separately on

October 27, 2006.

     On the 1999 Form 1040, Mr. Freeman claimed a deduction of

$57,900 on Schedule C under the heading “Car and truck expenses”.

He claimed $48,7007 on the Form 1040 for 2000.   Mr. Freeman

calculated these claimed deductions by multiplying 30 cents8 per

     7
      Mr. Freeman acknowledges that he miscalculated the amount
shown on Schedule C of the 2000 Form 1040, i.e., 30 cents
multiplied by 129,000 equals $38,700, not $48,700 as
claimed.
     8
      Section 1.274-5(g)(1), Income Tax Regs., provides that the
Commissioner may prescribe (in pronouncements of general
applicability) a standard mileage rate that a taxpayer may use to
determine a deduction with respect to the business use of a
passenger automobile. This rate is set forth in a revenue
procedure published by the IRS each year. For 1999 the rate was
32.5 cents per mile from January 1 through March 31 and 31 cents
per mile for the remainder of the year. Rev. Proc. 98-63, sec.
2.01, 1998-2 C.B. 818, 818; Announcement 99-7, 1999-1 C.B. 306.
                                                   (continued...)
                              - 10 -

mile by the 193,000 business miles he reported on the Schedule C

for 1999 and the 129,000 business miles he reported for 2000.9

     In the two notices of deficiency dated February 21, 2008,

the IRS disallowed Mr. Freeman’s claimed deductions for car and

truck expenses and determined the resulting deficiencies.

                              OPINION

     At issue is Mr. Freeman’s entitlement to deductions for job-

related expenses.   Section 162(a) allows a deduction for all the

ordinary and necessary expenses paid or incurred during the

taxable year in carrying on a trade or business.   Section 262,

however, provides that no deduction is allowed for personal,

living, or family expenses.   Deductions are strictly a matter of

legislative grace, and taxpayers must satisfy the specific

requirements for any deduction claimed.   See INDOPCO, Inc. v.

Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.

Helvering, 292 U.S. 435, 440 (1934).    Furthermore, taxpayers are

required to maintain records sufficient to substantiate their



     8
      (...continued)
For 2000 the rate was 32.5 cents per mile. Rev. Proc. 99-38,
sec. 2.01, 1999-2 C.B. 525, 525. Mr. Freeman rounded the
standard mileage rate down to 30 cents for both 1999 and 2000.
Mr. Freeman alleged that he did so in order to simplify the
calculations on his Forms 1040.
     9
      Mr. Freeman alleged that he arrived at these numbers by
adding his own business mileage for PDX to his wife’s alleged
business mileage for PDX, discussed below, and rounding up or
down to the nearest thousand miles.
                              - 11 -

claimed deductions.   See sec. 6001; sec. 1.6001-1(a), Income Tax

Regs. (26 C.F.R.).

I.   Mr. Freeman’s Vehicle Expenses

     A.    Personal Commuting Versus Business Travel

     Mr. Freeman contends that he is entitled to deduct the

standard mileage rate for the miles he drove on his delivery

route for PDX between his residence in Lincoln, Delaware, and his

job locations in Delaware and Maryland.10   In general, the cost

of daily commuting to and from work is a nondeductible personal

expense.   See Commissioner v. Flowers, 326 U.S. 465, 473-474

(1946); sec. 1.162-2(e), Income Tax Regs.   However, “[c]ertain

types of business-related travel have been found to be

deductible”, including “local travel incurred while performing a

job, Lopkoff v. Commissioner, T.C. Memo. 1982-701; [and] travel

between jobs or job locations, Fausner v. Commissioner, 55 T.C.

620 (1971)”.   Pollei v. Commissioner, 87 T.C. 869, 872 (1986),

revd. on another issue 877 F.2d 838 (10th Cir. 1989).    In order


     10
      At trial Mr. Freeman also contended for the first time
that he is entitled to deduct the tolls he allegedly paid on his
delivery route. However, Mr. Freeman did not claim deductions
for tolls on his 1999 and 2000 Forms 1040, nor did he place
deductions for tolls in issue in his petition. Therefore, we
need not consider this contention. See Lewis v. Commissioner, 90
T.C. 1044, 1053-1054 (1988). Moreover, Mr. Freeman does not
allege, nor does the record show, that he ever kept any records
or otherwise kept track of the tolls he allegedly paid on his
delivery route. Therefore, even if the issue of deductions for
tolls were properly before this Court, Mr. Freeman has failed to
substantiate those expenses.
                              - 12 -

to prevail, Mr. Freeman must prove that his mileage arises from

deductible business-related travel rather than nondeductible

commuting.

     “Unreimbursable transportation expenses incurred between two

places of business are deductible.”    Gilliam v. Commissioner,

T.C. Memo. 1986-90 (citing Steinhort v. Commissioner, 335 F.2d

496, 503-505 (5th Cir. 1964), affg. and remanding T.C. Memo.

1962-233); see also Pollei v. Commissioner, supra at 872; Fausner

v. Commissioner, 55 T.C. 620 (1971).

     However, as is noted above, the cost of daily commuting to

and from work is a nondeductible personal expense.   See

Commissioner v. Flowers, supra at 473-474; sec. 1.162-2(e),

Income Tax Regs.   Respondent characterizes Mr. Freeman’s 12-mile

drive from the Harrington delivery stop to his house and the 98-

mile drive from his house to the Baltimore warehouse as personal

commutes and therefore as nondeductible.    Evaluating this

characterization requires attention to the purpose and occasion

of the miles driven.

     In Lopkoff v. Commissioner, T.C. Memo. 1982-701, we observed

that “[i]f traveling between two businesses is an allowable

section 162(a) deduction, traveling within a business is most

assuredly so.”   In Lopkoff, the taxpayer worked at a hospital as

an administrative employee and also ran her own x-ray delivery

business on the side.   In that case, the taxpayer picked up x-
                               - 13 -

rays at the end of her workday at the same hospital where she

worked, and then drove 27 miles to deliver them to a medical

center for interpretation by a radiologist.       Afterward, she drove

one-half mile from the medical center to her personal residence.

The next morning, the taxpayer would drive one-half mile from her

personal residence to the medical center to pick up the x-rays

she had delivered the previous day.     The taxpayer then drove

27 miles to deliver the interpreted x-rays to the hospital, where

she began her workday as an administrative employee.       In Lopkoff,

we held that the taxpayer’s nondeductible “commute was from her

home to where she began the first of her trades or businesses,”

i.e., the half mile from her personal residence to the medical

center, where she began to travel within her x-ray delivery

business.   A “[delivery] business is the travel itself.”      Id.

Therefore, any transportation expense incurred in a delivery

business is travel within a business, and “is most assuredly”

deductible.    Id.

     B.     Analysis of Mr. Freeman’s Mileage

     Mr. Freeman worked as a courier for PDX, and thus there is

no dispute that he was engaged in a delivery business during the

tax years at issue.    Any transportation expense that Mr. Freeman

incurred within that business “is most assuredly” deductible to

the extent that he substantiates it.     Id.    Therefore, the pivotal

question is whether the mileage reported on Mr. Freeman’s 1999
                                  - 14 -

and 2000 Forms 1040 was incurred in connection with his auto

parts delivery business or his personal commute from his house to

work.

             1.     Mileage Between PDX’s Warehouse and
                    Mr. Freeman’s Stops on His Delivery
                    Route

        PDX’s warehouse and the stops on Mr. Freeman’s delivery

route in Maryland and Delaware are indisputably places of

business for Mr. Freeman.      Respondent does not allege that

Mr. Freeman’s mileage between these locations was incurred in

connection with his personal commute.      It is clear that such

mileage (at least 148 miles per workday) arose from travel

between two job locations, discussed above, and travel within a

business, and is deductible under either rationale if

substantiated.      Therefore, Mr. Freeman is entitled to a deduction

for his substantiated mileage between those job locations (i.e.,

the 148 miles from Baltimore to Harrington).

             2.     Mileage To and From Mr. Freeman’s House

        In his brief, respondent contends that even if Mr. Freeman

substantiates his mileage in the tax years at issue, his mileage

“between home and the PDX warehouse and between the last stop of

the day and home represents commuting for which no deduction is

available.”       Respondent points out that on these legs of the trip

to and from his house, Mr. Freeman made no stops for any

customers; and respondent contends that Mr. Freeman’s mileage on
                              - 15 -

those legs therefore represents personal commuting.    However, as

to most of the pertinent miles, this last contention contradicts

the facts.   Unlike the taxpayer in Lopkoff v. Commissioner,

supra, who always dropped off the x-rays before her one-half-mile

commute to and from her personal residence, Mr. Freeman was

required to deliver from Harrington (his last stop) to the

Baltimore warehouse the invoices, cash, and returned auto parts

that he had collected along his delivery route.    Thus, any

mileage arising from this Harrington-to-Baltimore delivery was

incurred in connection with Mr. Freeman’s auto parts delivery

business, and its costs are deductible if substantiated.

     However, PDX did not require Mr. Freeman to live 12 miles

off his route in Lincoln, Delaware.    Rather, Mr. Freeman must

have had other reasons, sufficient to him, for living there.      He

is certainly free to live there and free to work wherever he

pleases, but his reasons for living in Lincoln were personal in

nature and unrelated to his job at PDX.    Cf. Tucker v.

Commissioner, 55 T.C. 783, 785-788 (1971).    Mr. Freeman

transported the invoices, cash, and returned auto parts in his

vehicle when he drove in the evening from his last stop of the

day in Harrington to his house in Lincoln, and when he drove the

next morning from his house in Lincoln, through Harrington, and

on to PDX’s warehouse in Baltimore.    Since Mr. Freeman was

required to return the cash and parts to Baltimore, but was not
                              - 16 -

required to do so via a side trip to and from his house, the

mileage he incurred in connection with that route arose from both

business-related and personal travel.   Thus, Mr. Freeman’s

mileage from that route arose from travel within a business (and

is therefore deductible) only to the extent that it did not

exceed the distance of the trip that PDX required him to make,

i.e., the distance between his last stop of the day and PDX’s

warehouse.   See Pollei v. Commissioner, 87 T.C. at 872; Lopkoff

v. Commissioner, T.C. Memo. 1982-701.   Any excess mileage is

nondeductible commuting that is attributable to Mr. Freeman’s

personal choice to live in Lincoln, Delaware.   Therefore,

Mr. Freeman is entitled to deduct--if substantiated--the costs of

234 miles per workday, which represents (i) the 148 miles between

PDX’s warehouse and the stops on his delivery route in Maryland

and Delaware; and (ii) the 86 miles between his last stop of the

day in Harrington, Delaware, and PDX’s warehouse.    The additional

24 miles, which he drove from his last stop to home and back,

constituted nondeductible commuting that arose from his personal

choice to live off his route in Lincoln, Delaware.

     C.   Substantiation

     Respondent contends that Mr. Freeman’s claimed deductions

under section 162 for car and truck expenses of $57,900 for 1999

and $48,700 for 2000 must be disallowed for the additional reason
                             - 17 -

that he has not substantiated the mileage he claims to have

driven in connection with his auto parts delivery business.

     In addition, section 274(d) imposes stringent substantiation

requirements for claimed deductions relating to the use of

“listed property”, which is defined under section

280F(d)(4)(A)(i) to include passenger automobiles.    Under this

provision any deduction claimed with respect to the use of a

passenger automobile, like Mr. Freeman’s vehicles, will be

disallowed unless the taxpayer substantiates specified elements

of the use by adequate records or by sufficient evidence

corroborating the taxpayer’s own statement.    See sec. 274(d);

sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg.

46016 (Nov. 6, 1985).

     The elements that must be substantiated to deduct the

business use of an automobile are:    (i) the amount of the

expenditure; (ii) the mileage for each business use of the

automobile and the total mileage for all uses of the automobile

during the taxable period; (iii) the date of the business use;

and (iv) the business purpose of the use of the automobile.    See

sec. 1.274-5T(b)(6), Temporary Income Tax Regs., supra.

     In lieu of substantiating the actual amount of an

expenditure relating to the business use of a passenger

automobile, a taxpayer may use a standard mileage rate
                              - 18 -

established by the Internal Revenue Service.11   See

sec. 1.274-5(j)(2), Income Tax Regs.   Use of the standard mileage

rate establishes the amount deemed expended with respect to the

business use of a passenger automobile, but such use does not

relieve a taxpayer of his burden of substantiating the other

elements required by section 274 and the regulations thereunder.

Sec. 1.274-5(j)(2), Income Tax Regs.

     Mr. Freeman kept a daily log for his auto parts delivery

business in a spiral-bound logbook that would have provided the

required information.   However, Mr. Freeman testified--and

provided a “Statement of Verification” from the Office of the

State Fire Marshal of the State of Delaware to prove--that his

house was destroyed, along with its contents, including his

logbook, in an accidental fire.   “It is well established that the

Tax Court may permit a taxpayer to substantiate deductions

through secondary evidence where the underlying documents have



     11
      As respondent notes, the so-called fleet rule may prohibit
the use of the standard mileage rate in the tax years at issue to
compute the deductible expenses of two or more automobiles used
simultaneously. Rev. Proc. 98-63, sec. 5.06, 1998-2 C.B. at 820;
Rev. Proc. 99-38, sec. 5.06, 1999-2 C.B. at 527; see also West v.
Commissioner, 63 T.C. 252, 254-255 (1974). Mr. Freeman makes
several arguments for the inapplicability of the fleet rule here.
However, as is discussed below, we do not accept Mr. Freeman’s
unsupported testimony that his wife or others also simultaneously
drove additional miles in connection with his auto parts delivery
business; we allow a deduction for only one driving of the
delivery route--by one vehicle--each day. Consequently, the
fleet rule is not applicable to this case and Mr. Freeman may use
the standard mileage rate.
                              - 19 -

been unintentionally lost or destroyed.”    Davis v. Commissioner,

T.C. Memo. 2006-272 (citing Boyd v. Commissioner, 122 T.C. 305,

320-321 (2004), Malinowski v. Commissioner, 71 T.C. 1120, 1125

(1979), Furnish v. Commissioner, T.C. Memo. 2001-286, Joseph v.

Commissioner, T.C. Memo. 1997-447, Watson v. Commissioner, T.C.

Memo. 1988-29).   Moreover, even though Congress imposed stringent

substantiation requirements for some business deductions by

enacting section 274, the regulations under that section allow a

taxpayer to “substantiate a deduction by reasonable

reconstruction of his expenditures or use” when records are lost

through circumstances beyond the taxpayer’s control, including a

fire.   Sec. 1.274-5T(c)(5), Temporary Income Tax Regs., supra.

If documentation is unavailable, we may accept the taxpayer’s

credible testimony to substantiate the deduction.   See Boyd v.

Commissioner, supra at 320; Watson v. Commissioner, supra.

     Having observed Mr. Freeman’s appearance and demeanor at

trial, we find him to be credible with respect to the route he

drove in connection with his auto parts delivery business.    We

find that Mr. Freeman at one time possessed adequate

documentation, in the form of a daily log, to establish the

required elements under section 274(d) for deducting his business

mileage.   His failure to produce that daily log stemmed from

circumstances beyond his control--namely, the accidental fire

that destroyed his house and the logbook.   Although he did not
                               - 20 -

testify about the details of the locations of each stop along his

route, Mr. Freeman did provide through his testimony a reasonable

reconstruction of his general route.    We therefore hold that

Mr. Freeman kept adequate records to substantiate his business

mileage for tax years 1999 and 2000, to the extent of 234 miles

per day.

II.   Mr. Freeman Is Not Entitled to Exclude His Wife’s Alleged
      Income From PDX Or Deduct Her Alleged Business Mileage
      Incurred In Connection With PDX

      At trial Mr. Freeman contended for the first time that his

wife also worked as a courier for PDX, and that half of the

income and business mileage shown on his 1999 and 2000 Forms 1040

is attributable to her.    Mr. Freeman explained that his wife was

contractually obligated to refrain from working for PDX, under a

covenant not to compete that she had entered into with a previous

employer.   To evade this contractual obligation, PDX allegedly

agreed to pay Mr. Freeman for Mrs. Freeman’s deliveries and to

issue one Form 1099 in Mr. Freeman’s name only for both of the

Freemans’ compensation.    On the basis of these alleged facts,

Mr. Freeman contends in the alternative that he is entitled

either (i) to exclude his wife’s income from PDX, or (ii) to

deduct the costs of his wife’s business mileage incurred in

connection with PDX.

      However, Mr. Freeman’s contention lacks merit for two

reasons.    First, this contention is not properly before the
                              - 21 -

Court, because Mr. Freeman failed to raise in his petition the

issue of his wife’s working for PDX.   See Lewis v. Commissioner,

90 T.C. 1044, 1053-1054 (1988).    Second, even if this issue were

properly before the Court, Mr. Freeman failed to prove that

portions of the income from PDX shown on his 1999 and 2000 Forms

1040 are the income of his wife (as opposed to income properly

his, even if paid by PDX for work done by his wife as his agent

or employee).   Neither Mrs. Freeman nor any personnel from PDX

attended the trial or testified.   Thus, the only evidence that

Mrs. Freeman worked independently for PDX, earned her own income

from PDX, or incurred business mileage expenses in connection

with PDX is Mr. Freeman’s unsupported testimony.   Moreover, this

testimony is contradicted by Mr. Freeman’s 1999 and 2000 Forms

1040, and the Forms 1099-MISC issued to Mr. Freeman by PDX, which

all identify the income from PDX as his and his alone.   Mr.

Freeman made no showing that his wife reported this income on tax

returns of her own.   On the record before us, we cannot find that

any portion of the income from PDX is attributable to Mrs.

Freeman, or that she incurred any additional business mileage

expenses in connection with PDX for which Mr. Freeman might be

entitled to a deduction.   Accordingly, Mr. Freeman is not

entitled to exclude his wife’s alleged income from PDX nor to

deduct any additional business mileage expenses allegedly

incurred by her in connection with PDX.
                             - 22 -

     Therefore, we hold that Mr. Freeman is entitled to

deductions under section 162 for 234 miles for each of his 250

workdays (i.e., 58,250 miles) in both 1999 and 2000 using the

applicable standard mileage rates.    We also hold that Mr. Freeman

is not entitled to exclude the portions of his income allegedly

attributable to his wife nor to deduct her alleged additional

mileage expenses incurred in connection with PDX deliveries.

     To reflect the foregoing,


                                      Decisions will be entered

                                 under Rule 155.
