                            T.C. Summary Opinion 2014-23



                        UNITED STATES TAX COURT



                    MARK PELOT, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 3791-13S.                        Filed March 11, 2014.



      Mark Pelot, pro se.

      Lawrence D. Sledz, for respondent.



                               SUMMARY OPINION


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

provisions of section 7463 of the Internal Revenue Code in effect when the
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petition was filed.1 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.

         Respondent determined a deficiency in petitioner’s Federal income tax for

2010 of $2,527. The sole issue for decision is whether petitioner is entitled to

deduct unreimbursed employee expenses reported on Schedule A, Itemized

Deductions.

                                       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 the State of Michigan at the time that the petition was

filed.

         Throughout 2010 petitioner was employed as a fire investigator by Certified

Investigations International, Inc. (Certified Investigations). Petitioner’s job

included conducting investigations regarding the causes of fires, interviewing fire

department employees and people who lived or worked where the fires occurred or

         1
        Unless otherwise indicated, all subsequent section references are to the
Internal Revenue Code in effect for the year in issue. All Rule references are to
the Tax Court Rules of Practice and Procedure.
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in the immediate area, and preparing and reviewing reports. The nature of

petitioner’s work often required that he travel to locations away from Certified

Investigations’ main office to examine the site of a fire or interview relevant

parties.

       Petitioner used one personal vehicle exclusively for work-related

transportation and a different personal vehicle for non-work-related transportation.

Certified Investigations did not reimburse employees for transportation, vehicle, or

any other expenses claimed by petitioner.

       Petitioner maintained a log containing information about fires investigated

by Certified Investigations during 2010 that included the address of each fire and

the investigator assigned to it. Petitioner also maintained a contemporaneously

prepared log of his daily activities that included (in part) the file number of each

fire, the street name, the activity performed, and his start and end times on each

activity. Petitioner recorded his odometer readings.

       On occasion petitioner attended conferences related to the science of fire

investigations. One such conference was held in Boston, Massachusetts, by the

National Association of Fire Investigators; another was sponsored by the Ohio

Department of Public Safety Private Investigator Security Guard Services.
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      Petitioner timely filed his 2010 Federal income tax return. On the Schedule

A petitioner claimed miscellaneous itemized deductions consisting of

unreimbursed employee expenses of $18,638 and tax preparation fees of $235. In

support of his Schedule A deductions for unreimbursed employee expenses

petitioner attached to his return Form 2106, Employee Business Expenses.

Petitioner elected to apply standard mileage rates for vehicle expenses for 2010.

Petitioner claimed deductions for unreimbursed employee expenses as follows:

      Vehicle Expenses                                            $13,929
      Parking Fees, Tolls, and Transportation                         141
      Travel Expenses While Away From Home Overnight                1,525
      Meals and Entertainment Expenses                                310
      Other Business Expenses                                       2,888
       Less: Multiply Meals and Entertainment by 50%                  155
         Total Unreimbursed Employee Expenses                      18,638

      In December 2012 respondent issued petitioner a notice of deficiency for

2010 determining a deficiency of $2,527. The notice of deficiency disallowed all

of the miscellaneous itemized deductions claimed by petitioner on his 2010

Schedule A. The notice is clear that unreimbursed employee expenses were

disallowed for lack of substantiation, whereas tax preparation fees were

disallowed only because of the 2% floor on miscellaneous itemized deductions

prescribed by section 67. Petitioner filed a timely petition for redetermination

with the Court.
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                                     Discussion

I. Burden of Proof

      The Commissioner’s determination of a taxpayer’s liability in a notice of

deficiency is normally presumed correct, and the taxpayer bears the burden of

proving that the determination is incorrect. Rule 142(a); Welch v. Helvering, 290

U.S. 111, 115 (1933). This burden includes substantiating the amounts of

deductions claimed. Hradesky v. Commissioner, 65 T.C. 87, 90 (1975), aff’d per

curiam, 540 F.2d 821 (5th Cir. 1976). Generally, a taxpayer must keep records

sufficient to establish the amounts of the items reported on his or her Federal

income tax return. Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs. Petitioner

has not asserted that the burden of proof as to any relevant factual issue should

shift to respondent under section 7491(a). See sec. 7491(a)(1) and (2); Higbee v.

Commissioner, 116 T.C. 438, 442-443 (2001).

      Deductions are a matter of legislative grace, and, as just indicated, the

taxpayer bears the burden of proving entitlement to any deduction claimed. Rule

142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Deputy v. du

Pont, 308 U.S. 488, 493 (1940); New Colonial Ice Co. v. Helvering, 292 U.S. 435,

440 (1934); see sec. 7491(a)(2) (requiring compliance with statutorily imposed

substantiation and recordkeeping requirements for the burden to shift). A taxpayer
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must substantiate deductions by keeping and producing adequate records that

enable the Commissioner to determine the taxpayer’s correct liability. Sec. 6001;

Hradesky v. Commissioner, 65 T.C. at 89-90; Meneguzzo v. Commissioner, 43

T.C. 824, 831-832 (1965).

      When a taxpayer establishes that he or she paid or incurred a deductible

expense but fails to establish the amount of the deduction, the Court normally may

estimate the amount allowable as a deduction. Cohan v. Commissioner, 39 F.2d

540, 543-544 (2d Cir. 1930); Vanicek v. Commissioner, 85 T.C. 731, 742-743

(1985). There must be sufficient evidence in the record, however, to permit the

Court to conclude that a deductible expense was paid or incurred in at least the

amount allowed. Williams v. United States, 245 F.2d 559, 560 (5th Cir. 1957). In

addition, and as discussed infra, deductions for certain expenses are subject to

strict substantiation requirements and an allowance therefore may not be estimated

by the Court.

II. Unreimbursed Employee Expenses

      A taxpayer who is an employee may deduct unreimbursed employee

expenses as an ordinary and necessary business expense under section 162. Sec.

162(a)(2); Lucas v. Commissioner, 79 T.C. 1, 6 (1982). The term “trade or

business” includes performing services as an employee. Sec. 162(a)(2); Lucas v.
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Commissioner, 79 T.C. at 6. In contrast, personal expenses, such as commuting

expenses, are not deductible. Sec. 262; sec. 1.162-2(e), Income Tax Regs.; see

also secs. 1.212-1(f), 1.262-1(b)(5), Income Tax Regs. Whether an expenditure

satisfies the requirements for deductibility under section 162 is a question of fact.

See Commissioner v. Heininger, 320 U.S. 467, 475 (1943).

      Section 274(d) prescribes more stringent substantiation requirements to be

met before a taxpayer may deduct certain categories of expenses, including travel

expenses, meals and entertainment expenditures, and expenses related to the use of

listed property as defined in section 280F(d)(4)(A). See Sanford v. Commissioner,

50 T.C. 823, 827 (1968), aff’d, 412 F.2d 201 (2d Cir. 1969). As relevant here, the

term “listed property” includes passenger automobiles. Sec. 280F(d)(4)(A)(i). To

satisfy the requirements of section 274(d), a taxpayer generally must maintain

adequate records or produce sufficient evidence corroborating his own statement,

establishing the amount, date, and business purpose of an expenditure or business

use of property. Sec. 1.274-5T(b)(6), (c)(1), Temporary Income Tax Regs., 50

Fed. Reg. 46016-46017 (Nov. 6, 1985).

      Section 1.274-5T(c)(2), Temporary Income Tax Regs., supra, provides in

relevant part that “adequate records” generally consist of an account book, a diary,

a log, a statement of expense, trip sheets, or a similar record made at or near the
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time of the expenditure or use, along with supporting documentary evidence.

Section 1.274-5(j)(2), Income Tax Regs., provides that the strict substantiation

requirements of section 274(d) for vehicle expenses must be met even where the

optional standard mileage rate is used. Moreover, the Court may not use the

Cohan doctrine to estimate expenses covered by section 274(d). Sanford v.

Commissioner, 50 T.C. at 827; sec. 1.274-5T(a), Temporary Income Tax Regs., 50

Fed. Reg. 46014 (Nov. 6, 1985).

      A. Vehicle Expenses

      Petitioner elected to apply standard mileage rates and claimed deductions

for vehicle expenses of $13,929 for 2010. The record includes a log containing

petitioner’s daily work assignments and addresses to which he drove in connection

with his employment with Certified Investigations.

      Petitioner’s testimony at trial describing his daily activities and

responsibilities during the course of his employment with Certified Investigations

was forthright and credible. We are satisfied from his testimony and other

evidence in the record that he traveled regularly from Certified Investigations’

office to various locations of fires and back within the scope of his employment.

We likewise are convinced that the logs that petitioner provided were prepared

contemporaneously and are generally representative of the miles that he drove for
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business purposes. Under the circumstances, recognizing that mileage for

commuting is not deductible, and giving appropriate weight to petitioner’s

contemporaneously made logs of his daily assignments and time, as well as his

testimony, we conclude that he has adequately substantiated that he drove a total

of 21,058 business miles in connection with his work for Certified Investigations

during 2010. See, e.g., Steinhort v. Commissioner, 335 F.2d 496 (5th Cir. 1964),

aff’g and remanding T.C. Memo. 1962-233; Heuer v. Commissioner, 32 T.C. 947

(1959), aff’d per curiam, 283 F.2d 865 (5th Cir. 1960).

      B. Parking Fees, Tolls, and Transportation Expenses

      Petitioner claimed a deduction of $141 for unreimbursed employee parking

fees, tolls, and transportation expenses. Petitioner failed to provide any receipts,

canceled checks, bank records, or similar records to substantiate any of these

expenditures, and he did not testify or offer secondary evidence regarding the

expenditures. Accordingly, petitioner is not entitled to deductions for

unreimbursed employee parking fees, tolls, and transportation expenses.

      C. Travel Expenses While Away From Home Overnight

      Petitioner claimed a deduction of $1,525 for travel expenses while away

from home overnight, including lodging, airplane, car rental, and other expenses.

Petitioner attended a conference in Boston, Massachusetts, related to the science
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of fire investigations; however, the record does not include documentation or other

persuasive evidence regarding the cost of the flight or other travel expenses.

Because petitioner did not substantiate these expenses, he is not entitled to any

travel expense deductions relating to the Boston trip.

      Petitioner did not offer any documentation or other persuasive evidence

regarding any other travel expense. Accordingly, petitioner is not entitled to

deductions for travel expenses while away from home overnight.

      D. Meals and Entertainment Expenses

      Petitioner claimed a deduction of $310 for unreimbursed employee meals

and entertainment expenses. As previously mentioned, meals and entertainment

expenses are subject to the strict substantiation requirements of section 274(d).

Petitioner failed to provide any receipts, canceled checks, bank records, or similar

records to substantiate any expenditures for meals and entertainment, and he did

not testify or offer secondary evidence regarding such expenditures. Accordingly,

petitioner is not entitled to any deduction for meals and entertainment expenses.

      E. Other Business Expenses

      Petitioner claimed a deduction of $2,888 for other unreimbursed employee

business expenses not deducted elsewhere.
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      As discussed above, petitioner attended a conference in Boston,

Massachusetts, hosted by the National Association of Fire Investigators.

Accordingly, petitioner is entitled to a deduction of $500 for the cost of the

conference. See Cohan v. Commissioner, 39 F.2d at 543-544. Petitioner also

attended a seminar sponsored by the Ohio Department of Public Safety Private

Investigator Security Guard Services. At trial petitioner introduced

documentation of a seminar fee of $65, a registration fee of $35, and a fingerprint

check for $22, for a total of $122.

      Petitioner did not introduce any documentation or other persuasive evidence

regarding any other business expenses. Therefore, of the $2,888 claimed on his

tax return, petitioner is entitled to a deduction of $622 (i.e., $500 + $122) for other

business expenses.

                                      Conclusion

      In holding on the disputed issue, we have considered all of the arguments

advanced by the parties, and, to the extent not expressly addressed, we conclude

that those arguments do not support a result contrary to that reached herein.
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In order to give effect to the foregoing,


                                                Decision will be entered under

                                           Rule 155.
