                  T.C. Summary Opinion 2010-178



                     UNITED STATES TAX COURT



                   IRAJ MAHDAVI, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23188-09S.              Filed December 29, 2010.



     Iraj Mahdavi, pro se.

     Mistala G. Merchant, for respondent.



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

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1   Pursuant to section

7463(b), the decision to be entered is not reviewable by any




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

other court, and this opinion shall not be treated as precedent

for any other case.

     Respondent determined a deficiency in petitioner’s 2006

Federal income tax of $3,185.    The issue for decision is whether

petitioner is entitled to a deduction for car and truck expenses

claimed on a Schedule C, Profit or Loss From Business.    We hold

that petitioner is not entitled to such deduction.

                             Background

     Some of the facts have been stipulated, and they are so

found.    We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.    Petitioner resided in Orange

County, California, when the petition was filed.

     During 2006 petitioner worked as a university professor for

two different for-profit institutions in southern California

teaching business management at the graduate and undergraduate

levels.    Most of the courses petitioner taught were on an

accelerated basis with some courses lasting 1 month and others 7-

1/2 weeks.

     In addition to his teaching, petitioner had a Schedule C

property management and real estate brokerage business.

Petitioner obtained his real estate license in 1989 and his real

estate brokerage license in 1991.    Since petitioner has been
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pursuing his real estate business he has never turned a profit.2

At trial petitioner explained that his real estate business “is

not a * * * regular real estate business * * * [but] a brokerage

for investment and large property.”      Petitioner further explained

that he must

     look for important, large properties, investigate them,
     put as much information about them as possible
     together, and then present it to clients, clients who
     may be all over California. Some of them are even
     outside of California. But in order to do that, I need
     to have a good look at the property.

Most of the time petitioner would “look for property and then

find a client to match it”, but sometimes he “had some clients

who would be looking for certain things” and then he “would go

out and look for those kinds of things.”

     As a result of his real estate activity, petitioner drove

from his home in Orange County, California, to various locations

throughout the State of California.      Petitioner maintained a

calendar on which he listed the purported destinations of his

travel and total miles driven.    For example, in the month of

January petitioner’s calendar shows he drove from his home in

Orange County to San Francisco, Ventura, Palmdale, Redding, San




     2
        At trial respondent conceded that petitioner’s real
estate business was not an activity not engaged in for profit
within the meaning of sec. 183 and that the expenses in issue
were not startup expenses as defined in sec. 195.
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Jose, Julian, Apple Valley, Santa Barbara, and Fresno and made

two trips to Palm Springs for a claimed total of 5,498 miles.3

     During 2006 petitioner used three vehicles for both business

and personal purposes.    For the first part of the year petitioner

drove a Ford Thunderbird; the Ford Thunderbird was later traded

in for a Dodge Magnum, which was used for the remainder of the

year.    In the latter part of the year petitioner also drove, in

addition to the Dodge Magnum, a Honda Civic, which was his

daughter’s vehicle.

     On his 2006 Federal income tax return petitioner reported

wages of $60,566 attributable to his teaching activities.

Attached to petitioner’s return was a Schedule C for his property

management and real estate brokerage business.   On the Schedule C

petitioner reported income of $1,980 but claimed a net loss of

$16,962, which resulted from a number of deductions, specifically

including $13,636 of car and truck expenses that consisted

entirely of mileage for petitioner’s real estate brokerage

activity.    All of the income reported on the Schedule C was from

petitioner’s property management activity as petitioner did not

have any income from his real estate brokerage activity.



     3
        Petitioner’s calendar shows that on Jan. 13 he drove from
Orange County to Redding and that he returned to Orange County on
Jan. 14 for a claimed total of 1,280 miles. At an average of 60
miles per hour this would have necessitated driving over 21 hours
in a 2-day period; thus the Court wonders how petitioner could
have had “a good look at the property”.
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     In the notice of deficiency, respondent disallowed the

deduction of $13,636 claimed by petitioner for car and truck

expenses on the Schedule C.

                              Discussion

     Generally, the Commissioner’s determinations are presumed

correct, and the taxpayer bears the burden of proving that those

determinations are erroneous.    Rule 142(a); Welch v. Helvering,

290 U.S. 111, 115 (1933); cf. sec. 7491(a)(1) (applicable only

if, inter alia, the taxpayer has both complied with the

requirements to substantiate an item, sec. 7491(a)(2)(A), and

maintained all records required under the Internal Revenue Code,

sec. 7491(a)(2)(B)).

     Deductions are strictly a matter of legislative grace, and a

taxpayer bears the burden of proving his or her entitlement to

the deductions claimed.    Rule 142(a); INDOPCO, Inc. v.

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

Helvering, 292 U.S. 435, 440 (1934).       This includes the burden of

substantiation.   Hradesky v. Commissioner, 65 T.C. 87, 90 (1975),

affd. per curiam 540 F.2d 821 (5th Cir. 1976).

     Section 6001 further requires taxpayers to maintain books

and records sufficient to substantiate the amounts of the

deductions claimed.    Sec. 1.6001-1(a), (e), Income Tax Regs.    If

a taxpayer is unable to fully substantiate the expenses incurred,

but there is evidence that deductible expenses were incurred, the
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Court may under certain circumstances allow a deduction based

upon an approximation of expenses.      Cohan v. Commissioner, 39

F.2d 540, 544 (2d Cir. 1930).   But see Williams v. United States,

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

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

     However, in the case of expenses relating to the use of

listed property, specifically including any passenger automobile

or other property used as a means of transportation, section

274(d) imposes stringent substantiation requirements to document

the nature and amount of such expenses.     Sec. 280F(d)(4)(A)(i)

and (ii), (5); Sanford v. Commissioner, 50 T.C. 823, 827 (1968),

affd. per curiam 412 F.2d 201 (2d Cir. 1969); Larson v.

Commissioner, T.C. Memo. 2008-187; sec. 1.274-5T(a), Temporary

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

superseding the so-called Cohan rule and making it inapplicable).

Thus, in order to satisfy these strict substantiation

requirements, the taxpayer must maintain adequate records or

sufficient corroborating evidence to establish each element of an

expenditure.   Sec. 274(d); sec. 1.274-5T(b)(6), (c)(2)(i),

Temporary Income Tax Regs., 50 Fed. Reg. 46016, 46017 (Nov. 6,

1985).   Elements of an expenditure include:    (1) The amount of

such expense; (2) the time and place of the expense; and (3) the

business purpose of the expense.   Sec. 274(d).    If the listed

property is used for both personal and business purposes,
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deductions are disallowed unless a taxpayer establishes the

amount of the business use of the property in question.       Kinney

v. Commissioner, T.C. Memo. 2008-287; sec. 1.274-5T(b)(6)(i)(B),

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

     On his 2006 return, petitioner claimed a deduction for car

and truck expenses of $13,636.    The only documentation petitioner

maintained as a mileage log was the calendar on which he wrote

the destination to which he drove and the number of miles driven.

The destination descriptions are vague and generic in nature,

listing just a city name.   A business purpose for the miles

driven is noticeably absent, and no client identification is

provided.

     Undoubtedly, petitioner used his vehicles for business

purposes during the year in issue.       However, we are unable to

find that petitioner’s calendar is sufficient to constitute a

mileage log for purposes of section 274(d).       Thus, we conclude

that petitioner’s mileage log is not an adequate record, within

the meaning of section 274(d) and the regulations thereunder, of

mileage expenses and that petitioner has failed to provide other

corroborative evidence sufficient to establish that he has met

the requirements of that section.    See also Tokarski v.

Commissioner, 87 T.C. 74, 77 (1986).       Accordingly, we sustain

respondent’s determination disallowing the deductions for car and

truck expenses claimed by petitioner on his 2006 tax return.
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                           Conclusion

     We have considered all of the arguments made by petitioner

and, to the extent that we have not specifically addressed those

arguments, we conclude that they are without merit.

     To reflect our disposition of the disputed issue,


                                           Decision will be entered

                                      for respondent.
