                  T.C. Summary Opinion 2010-164



                     UNITED STATES TAX COURT



                  AMY L. HARTMAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

         JAMES JENNINGS AND AMY HARTMAN, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 197-06S, 374-06S.       Filed October 28, 2010.



     James Jennings and Amy L. Hartman, pro sese.

     Beth A. Nunnink, for respondent.



     CARLUZZO, Special Trial Judge:     Each of these consolidated

cases was heard pursuant to the provisions of section 7463.1




     1
      Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, in effect for the
relevant period. Rule references are to the Tax Court Rules of
Practice and Procedure.
                               - 2 -

Pursuant to section 7463(b), the decision to be entered in each

case is not reviewable by any other court, and this opinion shall

not be treated as precedent for any other case.

     In a notice of deficiency dated November 30, 2005,

respondent determined the following deficiencies in and penalties

with respect to petitioners’ Federal income taxes:

                                               Penalty
           Year            Deficiency        Sec. 6662(a)

           2002              $4,566            $913.20
           2003               3,970             794.00

In a notice of deficiency dated December 6, 2005, respondent

determined a $1,337 deficiency in Amy L. Hartman’s 2004 Federal

income tax and imposed a $267.40 section 6662(a) accuracy-related

penalty.

     After concessions by the parties, the issues for decision

are as follows:   (1) Whether petitioners are entitled to

deductions for unreimbursed employee business expenses for 2002

and/or 2003; (2) whether Amy L. Hartman (Ms. Hartman) is entitled

to a deduction for unreimbursed employee business expenses for

2004; (3) whether petitioners are liable for a section 6662(a)

accuracy-related penalty for 2002 and/or 2003; and (4) whether

Ms. Hartman is liable for a section 6662(a) accuracy-related

penalty for 2004.
                                - 3 -

                             Background

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

Petitioners resided in Tennessee at the time that the petitions

in these consolidated cases were filed.

Employment Status of Each Petitioner

     James Jennings (Mr. Jennings) began employment as a

firefighter for the City of Franklin, Tennessee, in 1994, and he

was so employed at all times relevant to this proceeding.       He was

also a member of the Franklin Firefighters Association, Local No.

3758 (the association).   As a firefighter, Mr. Jennings worked

24-hour-on, 48-hour-off shifts.   While on duty Mr. Jennings was

permitted to leave the fire station to purchase takeout meals,

but he was otherwise required to eat his meals at the fire

station.   In addition to the expenses he incurred for the take-

out meals, Mr. Jennings contributed $10 a month towards a common

meal fund for meals, usually breakfast, prepared and eaten at the

fire station.   According to the association, its members were

required to contribute to the meal fund.

     Starting in 1995 and at all relevant times, on his days off

as a firefighter Mr. Jennings was employed as a fire investigator

by Southern Fire Analysis (Southern).     His employment with

Southern required him to travel “all over the Southeast, as far

north as Virginia and West Virginia, Illinois, and as far south

as Florida”.    As part of his responsibilities with Southern, he
                                - 4 -

typically traveled by car from his residence in Tennessee to

various locations.    As part of a fire investigation, he routinely

photographed the scene of the fire.     Upon the submission of a

travel voucher to Southern, he was reimbursed for the use of his

car at the rate of 45 cents per mile.     He was also reimbursed by

Southern for expenses incurred for “supplies”, “photos”, and

“copies”.

     Southern required that Mr. Jennings wear “business casual”

clothing while meeting with a client and business attire (i.e., a

suit and tie) when attending a deposition or testifying in court.

When investigating at the scene of a fire, he generally wore

steel-toe boots and clothing suitable for what he needed to do,

such as crawling around in tight spaces, etc.     Often the clothing

that he wore during a fire scene investigation was damaged.

     During the years in issue Ms. Hartman was employed as a

sales representative for Interior Design Services (Design).

     During 2002 and 2003 her primary responsibilities related to

Design’s contract with the State of Tennessee.     Pursuant to that

contract, Design supplied furniture and design services for State

offices and other buildings, many of which were in Knoxville,

Tennessee, where Ms. Hartman spent much of her time as an

employee of Design.   During those years her residence was

approximately 218 miles from Knoxville.     She routinely drove back
                                - 5 -

and forth between her residence and Knoxville, but she seldom, if

ever, stayed overnight in Knoxville.

     Sometime during 2004, although still employed by Design, Ms.

Hartman was no longer required to travel as frequently or as far

from her residence.    Her reduced travel schedule was due in part

to the birth of a child in 2003 and in part to a change in the

location of the clients of Design that she was serving.

Petitioners’ Federal Income Tax Returns

     Petitioners filed timely joint Federal income tax returns

for 2002 and 2003.    Ms. Hartman timely filed her Federal income

tax return for 2004.   The returns were prepared by a professional

income tax return preparer.

     1. 2002

     As relevant here, petitioners’ 2002 return includes a

Schedule A, Itemized Deductions, and two Forms 2106, Employee

Business Expenses, one relating to Mr. Jennings’ employment as a

fire investigator, and the other to Ms. Hartman’s employment as a

Design sales representative.

     Among other things, on the Schedule A petitioners claimed a

$21,293 deduction for unreimbursed employee business expenses.2

Of this amount, $9,437 relates to Mr. Jennings and $11,856




     2
      Totals referenced in this opinion for unreimbursed employee
business expense deductions are before the application of sec.
67(a).
                               - 6 -

relates to Ms. Hartman.   The amount relating to Mr. Jennings

($9,437) is attributable to claimed expenses for meals consumed

at the firehouse ($3,862, after the application of section

274(n)), uniforms ($5,125), and union dues ($450).   The amount

relating to Ms. Hartman ($11,856) is attributable to claimed

expenses for vehicle expenses ($6,655), otherwise unidentified

business expenses ($6,425), meals and entertainment ($2,329,

after the application of section 274(n)), and her home office

($1,375).

     2. 2003

     As relevant here, petitioners’ 2003 return includes a

Schedule A and two Forms 2106, one relating to Mr. Jennings’

employment as a fire investigator and the other to Ms. Hartman’s

employment as a Design sales representative.

     Among other things, on the Schedule A petitioners claimed a

$16,877 deduction for unreimbursed employee business expenses.

Of this amount, $9,609 relates to Mr. Jennings and $7,268 relates

to Ms. Hartman.   The amount relating to Mr. Jennings ($9,609) is

attributable to claimed vehicle expenses ($12,667), and union

dues ($450).   The amount relating to Ms. Hartman ($7,268) is

attributable to claimed vehicle expenses ($4,015), and otherwise

unidentified business expenses ($6,264).
                               - 7 -

     3. 2004

     As relevant here, Ms. Hartman’s 2004 return includes a

Schedule A and a Form 2106 relating to her employment as a Design

sales representative.

     Among other things, on the Schedule A she claimed a $10,651

deduction for unreimbursed employee business expenses.   Ms.

Hartman’s unreimbursed employee business expenses are

attributable to vehicle expenses ($2,811), parking fees and tolls

($150), Internet expenses ($312), meals and entertainment

expenses ($1,300, after the application of section 274(n)),

uniforms expenses ($4,920), and cell phone expenses ($1,158).

The Notices of Deficiency

     Some of the adjustments made in the notices have been agreed

to between the parties or conceded, and other adjustments are

computational.   Those adjustments will not be discussed.

     For 2002 and 2003 respondent disallowed all unreimbursed

employee business expenses, with the exception of union dues,

$300 of dry cleaning expenses, and $1,004 of Ms. Hartman’s

vehicle expenses.

     For 2004 respondent disallowed all unreimbursed employee

business expenses claimed on Ms. Hartman’s return.   Because

allowable itemized deductions were less than the standard

deduction, respondent disallowed otherwise allowable itemized
                               - 8 -

deductions claimed on the Schedule A and allowed Ms. Hartman the

standard deduction.

     For each year in issue respondent also imposed a section

6662(a) accuracy-related penalty on several grounds, including

“negligence or disregard of rules or regulations”.

                            Discussion

     As we have observed in countless opinions, deductions are a

matter of legislative grace, and the taxpayer bears the burden of

proof to establish entitlement to any claimed deduction.     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 burden requires the taxpayer to substantiate claimed

deductions by keeping and producing adequate records that enable

the Commissioner to determine the taxpayer’s correct tax

liability.   Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 90

(1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976); Meneguzzo

v. Commissioner, 43 T.C. 824, 831-832 (1965).   A taxpayer

claiming a deduction on a Federal income tax return must

demonstrate that the deduction is allowable pursuant to some

statutory provision and must further substantiate that the

expense to which the deduction relates has been paid or incurred.

See sec. 6001; Hradesky v. Commissioner, supra; sec. 1.6001-1(a),

Income Tax Regs.   Certain expenses, such as the portions of the

disallowed unreimbursed employee business expense deductions
                                - 9 -

attributable to vehicle and meals expenses here in dispute are

subject to strict substantiation requirements.     See sec. 274(d).

In general, those expenses must be substantiated by adequate

written records.    That is, the taxpayer must maintain a diary, a

log, or a similar record and documentary evidence that, in

combination, are sufficient to establish the time, place,

business purpose, and amount of each expenditure or use.      Sec.

1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017

(Nov. 6, 1985).    In general, the substantiating records, or

combination of records, should be made at or near the time of the

expenditure or use.    Sec. 1.274-5T(c)(2)(ii)(A), Temporary Income

Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985).

     The types of deductions here in dispute are allowable, if at

all, under section 162(a).    That section generally allows a

deduction for ordinary and necessary expenses paid or incurred

during the taxable year in carrying on any trade or business.

The term “trade or business” as used in section 162(a) includes

the trade or business of being an employee.      Primuth v.

Commissioner, 54 T.C. 374, 377-378 (1970); Christensen v.

Commissioner, 17 T.C. 1456 (1952).      Certain types of business

expenses may be estimated if substantiating evidence does not

exist or is otherwise not available.     See Cohan v. Commissioner,

39 F.2d 540, 543-544 (2d Cir. 1930).     Business expense deductions
                                - 10 -

subject to section 274(d), however, may not be estimated.     See

sec. 280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827

(1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969).

     Under section 7491(a)(1), the burden of proof shifts from

the taxpayer to the Commissioner if the taxpayer produces

credible evidence with respect to any factual issue relevant to

ascertaining the taxpayer’s tax liability and the taxpayer has

satisfied certain conditions.    Accordingly, petitioners argue

that the burden of proof should be placed upon respondent with

respect to all issues here in dispute.    If for no other reason,

the procedural histories of these cases, which include

respondent’s use of formal discovery to attempt to obtain

documents and other information from petitioners, completely

undermines their argument.3   See sec. 7491(a)(2)(A) and (B).

Accordingly, the burden of proof remains on petitioners.

     With these fundamental principles in mind, we turn our

attention first to the deductions here in dispute.

I. Unreimbursed Employee Business Expense Deductions

     The unreimbursed employee business expense deduction in

dispute for each year in issue consists of one or more of the




     3
      The use of formal discovery in a deficiency proceeding
subject to sec. 7463 is less than routine. Through no fault of
respondent’s, respondent’s formal discovery attempts were not
successful.
                              - 11 -

following components:   (1) Vehicle expenses; (2) meals and

entertainment expenses; (3) uniform and uniform maintenance

expenses; (4) unidentified business expenses; (5) home office

expenses; (6) parking fees and tolls expenses; (7) Internet

expenses; and (8) cell phone expenses.   We consider each in the

order just listed.

     A. Vehicle Expenses

     According to petitioners, the amounts deducted for vehicle

expenses each year represent only the amounts that exceeded the

reimbursements that each received from his or her employer.    As

noted, deductions for vehicle expenses must be substantiated in

accordance with the requirements of section 274.   Secs. 162(a),

274(d).

     Petitioners provided a logbook maintained by Mr. Jennings to

substantiate his mileage as a Southern employee.   The documents

submitted, however, demonstrate that Mr. Jennings was reimbursed

for the mileage recorded in the logbook.   According to Mr.

Jennings he also maintained a second logbook of unreimbursed

miles, but this second logbook was not made part of the record.

Absent written substantiation for the additional mileage,

petitioners are not entitled to a deduction attributable to that

mileage.   See sec. 274(d).
                              - 12 -

     Except for 2003, no adequate substantiating records were

provided with respect to the mileage expense deductions

attributable to Ms. Hartman’s employment with Design.4

     It follows that petitioners are not entitled to a deduction

for vehicle expenses in each of the years in issue in excess of

the amounts respondent allowed.

     B. Meals and Entertainment Expenses

     For 2002 petitioners’ unreimbursed business expenses

deduction includes amounts Mr. Jennings claims to have

contributed to the common meal fund, as well as for the cost of

all other meals Mr. Jennings consumed while on duty as a

firefighter.   Ms. Hartman’s claimed meals expense deductions in

2002 and 2004 include the costs of meals consumed while traveling

on business as well as the costs of meals for “entertaining”

Design clients.

          1. Mr. Jennings’ Meals Expenses

     According to petitioners, because Mr. Jennings was required

as a condition of his employment to eat his meals at the fire

station, the costs of the meals as well as his contributions to

the meal fund are deductible as employee business expenses.     In

support of their position, petitioners rely upon a letter from

the association stating that “every member of the Franklin



     4
      Respondent concedes the vehicle expense deduction
attributable to Ms. Hartman for 2003.
                               - 13 -

Firefighters Association is required to pay into a meal fund

while they are on duty for the city of Franklin.”

     Generally, the costs of a taxpayer’s meals are nondeductible

personal expenses, unless the expense of a meal is incurred while

the taxpayer is traveling away from home for business purposes.

See secs. 162(a)(2), 262(a).   If, however, a fire department

requires its firefighter-employees as a condition of employment

to make contributions into a common meal fund so as to ensure

their presence at all times at the fire station, then those

contributions qualify as deductible ordinary and necessary

business expenses.   See, e.g., Sibla v. Commissioner, 68 T.C.

422, 432 (1977), affd. 611 F.2d 1260 (9th Cir. 1980); Belt v.

Commissioner, T.C. Memo. 1984-167.      On the other hand, if a

firefighter’s contributions into a common meal fund are not

required as a condition of employment but are made voluntarily,

then such contributions are considered a personal expense that is

not deductible.   See, e.g., Duggan v. Commissioner, 77 T.C. 911,

914-915 (1981).

     The meal expenses attributable to Mr. Jennings and deducted

by petitioners were not incurred while he was traveling away from

home on business, and the expenses cannot be deducted on that

ground.   Furthermore, the deduction is not supported by the

letter from the association because Mr. Jennings was not an

employee of the association.   There is insufficient evidence in
                              - 14 -

the record to establish that Mr. Jennings, while on duty and as a

condition of employment with the City of Franklin Fire

Department, was required to purchase his meals through

contributions made to a common meal fund.   Petitioners are not

entitled to a deduction for amounts attributable to Mr. Jennings’

meal expenses included in the unreimbursed employee business

expense deduction claimed for 2002.5

          2. Ms. Hartman’s Meals Expenses

     Ms. Hartman contends that because she incurred costs for

meals while traveling on business and/or while entertaining

Design clients, the costs of the meals are deductible as

unreimbursed employee business expenses.

     As stated above, in general, the costs of a taxpayer’s meals

are nondeductible personal expenses, unless the expense of a meal

is incurred while the taxpayer is traveling away from home for

business purposes.   See secs. 162(a)(2), 262(a).   The

deductibility of meals and entertainment expenses is also

conditioned on their being substantiated by adequate records or

by other sufficient evidence corroborating the claimed expenses

pursuant to section 274(d).   Sec. 1.274-5T(a), Temporary Income

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




     5
      Even if the expenses were otherwise allowable, we note that
petitioners failed to meet the strict substantiation requirements
of sec. 274(d).
                               - 15 -

     Ms. Hartman failed to provide any substantiating

documentation with respect to her claimed meals expenses.    See

sec. 274(d).    Respondent’s disallowance of Ms. Hartman’s claimed

meals expenses is sustained.

     C. Expenses for “Uniforms” and “Uniform” Maintenance

     In 2002 petitioners claimed a deduction for the purchase

and dry cleaning of the clothing each wore while at work.    In

2004 Ms. Hartman claimed a deduction for the dry cleaning of her

work uniform.

     Expenses for work clothing are deductible if the clothing or

uniform is of a type specifically required as a condition of

employment, the uniform is not adaptable to general use as

ordinary clothing, and the uniforms are not worn as ordinary

clothing.   Yeomans v. Commissioner, 30 T.C. 757, 767-769 (1958);

Wasik v. Commissioner, T.C. Memo. 2007-148; Beckey v.

Commissioner, T.C. Memo. 1994-514.

     The business casual attire and business suits Mr. Jennings

purchased, including any related dry cleaning or other

maintenance costs of that clothing, are not deductible because

the clothing is adaptable for nonbusiness wear.   See, e.g.,

Hawbaker v. Commissioner, T.C. Memo. 1983-665.    With respect to

expenses incurred for specialized clothing and steel-toe footwear

Mr. Jennings wore while investigating a fire scene, we
                               - 16 -

find that petitioners are entitled to a deduction of $1,000 for

the purchase of Mr. Jennings’ fire-resistant clothing and

maintenance thereof in 2002.   See Cohan v. Commissioner, 39 F.2d

at 543-544; Vanicek v. Commissioner, 85 T.C. 731, 743 (1985).

     Ms. Hartman failed to provide the Court with any explanation

as to her claimed dry cleaning expenses.   Furthermore, she did

not offer any evidence to substantiate the deductions claimed.

Accordingly, respondent’s disallowance of Ms. Hartman’s claimed

uniforms expenses is sustained.

     D. Deduction for Unidentified “Business Expenses”

     Petitioners claimed business expense deductions of $6,425

and $6,264 on their 2002 and 2003 joint returns, respectively.

For both years in issue the entire amount of the business expense

deductions relates to Ms. Hartman, but it is unclear what

specific costs are included in the deduction.

     At trial petitioners failed to present any evidence to

explain, much less substantiate, the amounts so deducted.

Petitioners are not entitled to deductions identified simply as

“business expenses” on either their 2002 or 2003 joint return.

     E. Home Office Expenses

     Petitioners claimed a $1,375 home office deduction on their

2002 return.   According to petitioners, the home office was used
                              - 17 -

(1) in connection with their rental properties,6 and (2) by Ms.

Hartman to prepare for meetings and/or sales calls with Design

clients.

     In general, a taxpayer is not entitled to deduct any

expenses related to the use of a dwelling unit used by the

taxpayer as a residence during the taxable year.   See sec. 280A.

Expenses attributable to a home office are excepted from this

general rule, however, if the expenses are allocable to a portion

of the dwelling unit which is exclusively used on a regular basis

as the principal place of business for the taxpayer’s trade or

business.   See sec. 280A(c)(1); Lofstrom v. Commissioner, 125

T.C. 271, 278 (2005).   If the taxpayer is an employee, the

exception under section 280A(c)(1) will apply only if the home

office is maintained for the convenience of the employer.     See

Hamacher v. Commissioner, 94 T.C. 348, 353-354 (1990).

     Petitioners do not claim and they have not established that

during 2002 the den was used exclusively on a regular basis as

the principal place of business for either petitioner or that the

den/home office was maintained for the convenience of either of

their employers.   The fact that petitioners used the den/home

office for business purposes as they claim is insufficient to



     6
      Petitioners’ 2002 joint return includes a Schedule E,
Supplemental Income and Loss, showing rental income and expenses
attributable to certain real estate. None of the items reported
on the Schedule E are in dispute.
                                - 18 -

allow any deduction attributable to that use.     See Lofstrom v.

Commissioner, supra at 278.     Petitioners are not entitled to a

home office deduction for 2002, and respondent’s determination in

this regard is sustained.

     F. Parking Fees and Tolls

     Ms. Hartman claimed a deduction for parking fees and tolls

on her 2004 return.   According to Ms. Hartman, she incurred the

parking fees while traveling on business in Knoxville, Tennessee,

where she met with her Design clients.     She testified that Design

reimbursed her for parking fees, and she has not established that

she is entitled to a deduction in excess of the amount

reimbursed.   Ms. Hartman is not entitled to a deduction for

expenses shown as parking fees and tolls on her 2004 return.

     G. Internet Expenses

     Ms. Hartman claimed a deduction for Internet expenses on her

2004 return; but she did not address the Internet expense

deduction at trial, and no receipts or other documentation to

substantiate her Internet expenses were provided.     Therefore, Ms.

Hartman is not entitled to a deduction for Internet expenses.

     H. Cell Phone Expenses

     Ms. Hartman claimed a $1,158 deduction for cell phone

use on her 2004 return.     Expenses for cell phone use must be

substantiated in accordance with section 274(d) and the

regulations thereunder.     She has provided no evidence that
                               - 19 -

substantiates her cell phone expense in accordance with section

274(d) and therefore is not entitled to the cell phone expense

deduction.

II. The Accuracy-Related Penalties

     Lastly, we consider whether petitioners are liable for

section 6662(a) accuracy-related penalties for 2002 and/or 2003,

and whether Ms. Hartman is liable for that penalty for 2004.

Although various grounds for the imposition of the penalty for

each year are stated in the appropriate notice of deficiency,

under the circumstances for each year, only negligence or

disregard of rules or regulations is applicable.    See sec.

6662(a), (b)(1), (c).    The burden of production with respect to

the imposition of the penalty rests with respondent.    Sec.

7491(c).

     In support of this burden, respondent points out that for

each year in issue petitioners and/or Ms. Hartman, as applicable,

failed to maintain adequate substantiating records supporting the

various deductions here in dispute.     According to respondent, a

taxpayer’s failure to maintain adequate records is a ground

for the imposition of a section 6662(a) penalty for negligence.

Sanderlin v. Commissioner, T.C. Memo. 2008-209; Corrigan v.

Commissioner, T.C. Memo. 2005-119; sec. 1.6662-3(b)(1), Income

Tax Regs.    In principle, we agree with respondent but are not
                              - 20 -

willing to impose the penalty on that basis in these cases for

any of the years in issue.

     According to petitioners and their return preparer,

petitioners maintained and presented to respondent’s examining

agent sufficient documentation to support each of the deductions

claimed on the returns for the years in issue.   It has not been

made clear why, if once available to the examining agent, the

records were not available at trial.   In any event, petitioners

assumed that the examining agent would be called as a witness at

trial because that individual was listed as a witness on

respondent’s pretrial memorandum.   Respondent, however, did not

call the examining agent, who was not otherwise present during

the trial and not available to be called as a witness on

petitioners’ behalf.

     What documents the examining agent reviewed remains a

mystery, but it stands that the only evidence on the point in the

record consists of petitioners’ claim that substantiating

documents, at least as of the time each return was filed, were

not only maintained, but also available to respondent for

examination.   In the absence of any contrary evidence as to what

documents were reviewed by the examining agent, we are reluctant

to impose a section 6662(a) accuracy-related penalty for any of

the years in issue.
                        - 21 -

To reflect the foregoing,


                                 An appropriate order will

                            be issued denying petitioners’

                            motion to shift the burden of

                            proof, and decisions will be

                            entered under Rule 155.
