                   T.C. Summary Opinion 2010-74



                      UNITED STATES TAX COURT



               ZDZISLAW F. BEDNARSKI, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 25853-08S.            Filed June 16, 2010.



     Zdzislaw F. Bednarski, pro se.

     Melanie E. Senick, for respondent.



     DEAN, 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.   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 the years at
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issue, and Rule references are to the Tax Court Rules of Practice

and Procedure.

     Respondent determined for 2005 a deficiency in petitioner’s

Federal income tax of $1,778 and an accuracy-related penalty of

$355.60 and for 2006 a deficiency of $5,361 and an accuracy-

related penalty of $1,072.20.

     Petitioner concedes that he is not entitled to a dependency

exemption for Z.R.B. for 2006.    The issues remaining for

decision1 are whether for 2005 and 2006 petitioner is entitled to

deductions on Schedule C, Profit or Loss From Business, in excess

of those respondent allowed and whether petitioner is liable for

accuracy-related penalties under section 6662(a).

                            Background

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

The stipulation of facts and the exhibits received in evidence

are incorporated herein by reference.    Petitioner resided in the

State of Washington when the petition was filed.

     Petitioner was a real estate agent during the years at

issue.   Petitioner deducted on his Schedules C for both years car

and truck expenses, advertising expenses, and other expenses.

After examining petitioner’s Federal income tax returns,

respondent disallowed a portion of his advertising and other


     1
      Adjustments to petitioner’s self-employment tax deductions
and self-employment taxes are computational and will be resolved
consistent with the Court’s decision.
                                - 3 -

expenses for both years.   Respondent disallowed almost all of

petitioner’s deductions for car and truck expenses for 2005 and

2006.

                            Discussion

     Generally, the Commissioner’s determinations in a notice of

deficiency are presumed correct, and the taxpayer has the burden

of proving that those determinations are erroneous.    See Rule

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

cases the burden of proof with respect to relevant factual issues

may shift to the Commissioner under section 7491(a).    Petitioner

did not argue or present evidence that he satisfied the

requirements of section 7491(a).   Therefore, the burden of proof

does not shift to respondent.

Business Expenses

     Section 162 generally allows a deduction for ordinary and

necessary expenses paid or incurred during the taxable year in

carrying on a trade or business.   Generally, no deduction is

allowed for personal, living, or family expenses.   See sec. 262.

     Where a taxpayer has established that he has incurred a

trade or business expense, failure to prove the exact amount of

the otherwise deductible item may not always be fatal.

Generally, unless precluded by section 274, the Court may

estimate the amount of such an expense and allow the deduction to

that extent.   See Finley v. Commissioner, 255 F.2d 128, 133 (10th
                                - 4 -

Cir. 1958), affg. 27 T.C. 413 (1956); Cohan v. Commissioner, 39

F.2d 540, 543-544 (2d Cir. 1930).   In order for the Court to

estimate the amount of an expense, however, there must be some

basis upon which an estimate may be made.    Vanicek v.

Commissioner, 85 T.C. 731, 742-743 (1985).   Without such a basis,

an allowance would amount to unguided largesse.     Williams v.

United States, 245 F.2d 559, 560 (5th Cir. 1957).

      Petitioner offered no evidence with respect to respondent’s

adjustments to his deductions for advertising and other expenses.

The Court sustains respondent’s determination as to those two

items for both years.

      Certain business deductions described in section 274 are

subject to rules of substantiation that supersede the doctrine in

Cohan v. Commissioner, supra.    See sec. 1.274-5T(c), Temporary

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

274(d) provides that no deduction shall be allowed with respect

to:   (a) Any traveling expense, including meals and lodging away

from home; (b) any item related to an activity of a type

considered to be entertainment, amusement, or recreation; or (c)

the use of any “listed property”, as defined in section

280F(d)(4),2 unless the taxpayer substantiates certain elements.




      2
      “Listed property” includes any passenger automobile.     Sec.
280F(d)(4)(A)(i).
                               - 5 -

     For an expense described in one of the above categories, the

taxpayer must substantiate by adequate records or sufficient

evidence to corroborate the taxpayer’s own testimony:     (1) The

amount of the expenditure or use applying the appropriate measure

(mileage may be used in the case of automobiles); (2) the time

and place of the expenditure or use; (3) the business purpose of

the expenditure or use; and (4) in the case of entertainment, the

business relationship to the taxpayer of each expenditure or use.

See sec. 274(d).

     To meet the adequate records requirements of section 274, a

taxpayer must maintain some form of records and documentary

evidence that in combination are sufficient to establish each

element of an expenditure or use.   See sec. 1.274-5T(c)(2),

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

contemporaneous log is not required, but corroborative evidence

to support a taxpayer’s reconstruction of the elements of

expenditure or use must have “a high degree of probative value to

elevate such statement” to the level of credibility of a

contemporaneous record.   Sec. 1.274-5T(c)(1), Temporary Income

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

     In May 2008 petitioner reported to police that his

automobile had been broken into.    Petitioner advised the police

that a jacket and a “briefcase full of documents” were stolen

from the car.   Petitioner testified that his briefcase contained
                                 - 6 -

his mileage log, which he had not yet submitted to the examiner.

Petitioner, however, attempted to recreate his mileage records.

      Petitioner prepared for 2005 a handwritten numbered list

(list) of 14 addresses and 13 names.     Most of the addresses have

beside them two factors that are multiplied to give a product

while all of the names have beside them but a single number.

Thirteen of the 14 addresses on the list are shown on a ledger

accompanying the list.    The ledger contains, among other items,

the income earned from each sale of property at the addresses on

the   list (the total sales comport with the amount reported as

gross receipts on Schedule C).    Petitioner, to complete his

reconstruction, attached copies of Web pages from Internet

mapping sites that show the mileage from his home to most of the

places on the list.   Similar documentation was provided for 2006.

      Comparing the mileage from the Internet maps with the

factors on the list reveals that one of the two factors is

mileage.   The other factor, where there is one, is apparently the

number of trips petitioner alleges that he made from his house to

each of the properties.   There is no explanation as to how

petitioner arrived at multipliers representing the number of

trips alleged.   There is no explanation of how he computed the

apparent mileage numbers for the items that lack a multiplier and

multiplicand.    These flaws (and his failure to give the time of

use) preclude petitioner’s documentation from reaching the “high
                                 - 7 -

degree of probative value to elevate” his statements to the level

of credibility of a contemporaneous record.      Sec. 1.274-5T(c)(1),

Temporary Income Tax Regs., supra.       But that is not the only

problem petitioner faces.

     Generally, expenses that a taxpayer incurs in commuting

between his home and place of business are personal and

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

474 (1946); Heuer v. Commissioner, 32 T.C. 947, 951 (1959), affd.

per curiam 283 F.2d 865 (5th Cir. 1960); secs. 1.162-2(e), 1.262-

1(b)(5), Income Tax Regs.   Expenses incurred, however, in going

between two or more places of business may be deductible as

ordinary and necessary business expenses under section 162 if

incurred for business reasons.    See Steinhort v. Commissioner,

335 F.2d 496, 503-504 (5th Cir. 1964), affg. T.C. Memo. 1962-233;

Heuer v. Commissioner, supra at 953.

     Where a taxpayer attempts to deduct the expenses of

traveling between two places of business, one of which is an

office in his home, such office must be the taxpayer’s principal

place of business for the trade or business conducted by the

taxpayer at those other work locations.      See Strohmaier v.

Commissioner, 113 T.C. 106 (1999); Curphey v. Commissioner, 73

T.C. 766, 777-778 (1980).   On his Schedules C for 2005 and 2006,

line 30, “Expenses for business use of your home”, petitioner

listed $0.   Even if the Court accepted petitioner’s
                                - 8 -

reconstruction of his mileage, he offered no evidence and made no

argument that his home was his “principal place of business”.

See Commissioner v. Soliman, 506 U.S. 168, 175-177 (1993).

       The Court concludes that petitioner is not entitled to

transportation expenses in excess of those respondent already

allowed.

Accuracy-Related Penalty

       Section 7491(c) imposes on the Commissioner the burden of

production in any court proceeding with respect to the liability

of any individual for penalties and additions to tax.       Higbee v.

Commissioner, 116 T.C. 438, 446 (2001); Trowbridge v.

Commissioner, T.C. Memo. 2003-164.      In order to meet the burden

of production under section 7491(c), the Commissioner need only

make a prima facie case that imposition of the penalty or

addition to tax is appropriate.    Higbee v. Commissioner, supra at

446.

       Respondent determined that for both 2005 and 2006,

petitioner underpaid a portion of his income taxes due to

negligence or intentional disregard of rules and regulations.

Section 6662(a) and (b)(1) imposes a penalty equal to 20 percent

of the portion of the underpayment attributable to negligence or

disregard of rules or regulations.

       Negligence is defined as any failure to make a reasonable

attempt to comply with the provisions of the Internal Revenue
                                 - 9 -

Code, and the term “disregard” includes any careless, reckless,

or intentional disregard.   See sec. 6662(c).   Negligence also

includes any failure by the taxpayer to keep adequate books and

records or to substantiate items properly.    Sec. 1.6662-3(b)(1),

Income Tax Regs.

     The accuracy-related penalties will apply unless petitioner

has demonstrated that there was reasonable cause for the

underpayment and that he acted in good faith with respect to the

underpayment.   See sec. 6664(c).   Section 1.6664-4(b)(1), Income

Tax Regs., specifically provides:    “Circumstances that may

indicate reasonable cause and good faith include an honest

misunderstanding of fact or law that is reasonable in light of

* * * the experience, knowledge, and education of the taxpayer.”

     Petitioner has not demonstrated that there was reasonable

cause for the underpayment and that he acted in good faith with

respect to the underpayment.   Respondent’s determinations of

accuracy-related penalties under section 6662(a) for 2005 and

2006 are sustained.

     To reflect the foregoing,


                                          Decision will be entered

                                     under Rule 155.
