                  T.C. Summary Opinion 2008-143



                     UNITED STATES TAX COURT




          SHERMAN L. AND DAISY SPIVEY, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent




     Docket No. 12198-06S.             Filed November 13, 2008.



     Sherman L. and Daisy Spivey, pro sese.

     Bradley Plovan, for respondent.



     GOLDBERG, Special Trial Judge:    This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code

(Code) in effect at the time 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,
                               - 2 -

subsequent section references are to the Internal Revenue Code in

effect for the years in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.

     On March 24, 2006, respondent mailed petitioners a notice of

deficiency with respect to their taxable years 2002, 2003, and

2004.   In that notice, respondent determined the following

deficiencies, additions to tax for late filing, and accuracy-

related penalties:

                                   Addition to Tax        Penalty
     Year         Deficiency       Sec. 6651(a)(1)      Sec. 6662(a)

     2002            $11,470          $2,460.00          $2,294.00

     2003             10,142           2,248.25           2,028.40

     2004              7,627             289.90           1,525.40

     These deficiencies resulted from respondent’s disallowance

of the following expenses:

                                                  Taxable Years
        Disallowed Expense               2002         2003      2004

     Schedule E--Supplemental
       Income and Loss--Rental
       Real Estate                     $19,641      $21,894   $24,013
     Schedule C--Profit or Loss
        From Business                   18,074       17,075    10,276
     Schedule A--Itemized
       Deductions--Job Expenses
         and Other Miscellaneous
           Deductions                   11,856       11,096    10,775

     The Schedule A job expenses and other miscellaneous

deductions shown above comprised two categories of expenses, as

follows:
                                - 3 -

                                                  Taxable Years
         Expense Category                 2002        2003      2004

     Unreimbursed employee
       business expenses                $11,856    $10,996   $10,745
     Tax preparation fees                    35        100        30
     Total before 2-percent
       reduction1                       11,891      11,096    10,775
            1
           Sec. 67(a) reduces miscellaneous itemized expenses by
     2 percent of adjusted gross income.

     Petitioners attached Forms 2106-EZ, Unreimbursed Employee

Business Expenses, to their income tax returns for the years in

issue.    The Forms 2106-EZ summarized the unreimbursed employee

business expenses that petitioners deducted on their Schedules A,

Itemized Deductions, as shown below:

                                                  Taxable Years
           Business Expenses               2002       2003      2004

     Parking fees                         $480       $480      $480
     Other business expenses             4,663      4,102     4,036
     Meals and entertainment
       expenses1                        10,328      9,868     8,898
     Multiplied by deduction rate2        x 65%      x 65%     x 70%
     Deduction for meals                 6,713      6,414     6,229
        Total expenses                  11,856     10,996    10,745
           1
           Petitioners included cellular phone expenses in the
     meals and entertainment category.
           2
           Sec. 274(n) allows a deduction for meal and
     entertainment expenses at a 50-percent rate. However, sec.
     274(n)(3) increases that rate gradually to 80 percent during
     1998 to 2008 for employees who are subject to Department of
     Transportation (DOT) limitations on hours of service.
     Petitioners claimed the higher DOT rate.

     At trial, the Court received into evidence petitioners’

exhibit entitled “Miscellaneous Statements” that purportedly

detailed their unreimbursed employee business expenses for each
                               - 4 -

year.   Petitioners offered no other documentation or records to

substantiate the amounts on the miscellaneous statements.       As the

figures below show, petitioners’ calculations for meals and

cellular phone expenses in 2003 and 2004, and their calculation

of other expenses in 2003, do not agree with the amounts that

petitioners claimed on the Forms 2106-EZ attached to their tax

returns.   Petitioners did not explain the differences.

                                                Taxable Years
     Expenses per “Miscellaneous         2002        2003         2004
       Statements”

     Parking Fees
       ($40 x 12 months)                 $480        $480        $480

     Meals and Cellular Phone
       Expenses
         Meals
         (2002: $35 x 268 trips)
         2003: $25 x 268 trips
         2004: $25 x 268 trips)        $9,380      $6,700       $6,700
        Cellular Phone
          ($79 x 12 months)               948         948         948
         Total meals and cellular
           phone expenses              10,328       7,648       7,648

     Other Expenses
       Union dues                      $1,004      $1,004       $1,014
       New uniforms (jackets,
         shirts, pants, ties, hats,
           and sweaters)                  525         527         530
       Uniform maintenance
       ($24 x 38 weeks)                   912         912         912
       Safety shoes
       ($109 x 3 pairs)                   327         327         330
       Safety glasses
       (2 pairs per year)                 325         325         327
       Grooming
       (2002: $15 x 37 weeks)
       (2003: $20 x 37 weeks)
       (2004: $25 x 37 weeks)             555         740         925
                              - 5 -

       Supplies (briefcase,
         security locks, laptop,
           calculators, pens)            1,000        -0-       -0-
             Total other expenses        4,663      3,835     4,036

     Petitioners brought to trial receipts and records that

supported some of the disallowed deductions.     Respondent stated

that if given time to review the records and discuss the

adjustments with petitioners, the parties might reach a

settlement on many of the items.    The Court agreed, the parties

met, and afterwards, the parties filed a supplemental

stipulation.

     According to the supplemental stipulation, the parties

resolved all issues related to the Schedule E rental property.

They also resolved all issues regarding the Schedule C business

expenses except one: whether petitioners are entitled to deduct

depreciation on two computers they had purchased in prior years.

Petitioners had not claimed a deduction in the years at issue;

however, at trial they asserted they were entitled to

depreciation.

     Related to Schedule A job expenses, respondent allowed union

dues of $992.92, $1,019.19, and $1,399.00 for 2002, 2003, and

2004, respectively, but continues to disallow deductions for the

remainder of petitioners’ unreimbursed employee business expenses

for the 3 years in issue, and tax return preparation fees for

2003 and 2004.
                               - 6 -

     Thus, in summary, after concessions, the issues for decision

are whether petitioners are:   (1) Entitled to deduct depreciation

expenses for 2002, 2003, and 2004 for two computers they

purchased in prior years for use in their Schedule C business;

(2) entitled to deduct unreimbursed employee business expenses

for the years in issue in addition to union dues that respondent

has already conceded; and (3) entitled to deduct tax return

preparation fees for 2003 and 2004.

                            Background

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

The stipulations of facts and the attached exhibits are

incorporated herein by this reference.    At the time they filed

their petition, petitioners resided in Maryland.

     In 1988 petitioner wife (Ms. Spivey) started a computer

education and training business called Small Bytes.    She operated

Small Bytes out of their home and provided computer instruction

to children enrolled at daycare centers and afterschool programs

near petitioners’ home.

     In 1999 Ms. Spivey bought a laptop computer for $1,500 from

CompUSA, Inc., for use in her business.    Ms. Spivey promptly

began using the computer for Small Bytes and continued to use the

laptop for Small Bytes during the taxable years in issue.    In

2000 Ms. Spivey purchased another laptop computer for use in her

business.   This one was from Best Buy, where she paid
                               - 7 -

approximately $1,900.   Again she promptly began using the

computer and continued to use it during the years in issue.     Ms.

Spivey did not claim a depreciation expense on Schedule C with

respect to her business for 2002, 2003, or 2004.

     During the years at issue petitioner husband (Mr. Spivey)

served as a railroad passenger conductor1 for Amtrak and Maryland

Area Regional Commuter service (MARC) on the Penn line.2     At the

time of the trial he had worked as a conductor for 35 years.     He

started with Penn Central in 1972, and later that year, when

Amtrak took over Penn Central’s passenger service, Mr. Spivey

became an Amtrak employee.

     In 2002 Mr. Spivey worked mainly on Amtrak’s Washington,

D.C.--New York, New York route.   He also worked on the entire

length of the MARC Penn line route that runs, with intermediate

stops, from Washington Union Station to Baltimore Penn Station

and on to Perryville Station (Maryland).   During 2003 and 2004



     1
       The primary responsibility of a railroad conductor is to
make sure passengers have paid for their travel. A conductor may
sell, punch, or collect tickets. The number of conductors on
Amtrak and MARC trains varies depending on the number of cars
that make up the train. A supervising or senior conductor may
also be on board.
     2
       Under an operating agreement between MARC and Amtrak,
Amtrak provides engineers, conductors, and repair and maintenance
personnel to MARC for the Penn Line commuter trains between
Perryville, Baltimore Penn Station, Union Station, and
intermediate stations. When working on Amtrak trains personnel
wear Amtrak insignia on their uniforms, and while on MARC trains
they wear MARC insignia.
                                - 8 -

Mr. Spivey increased the number of his work trips on the MARC

line while decreasing his trips on Amtrak.

     When Mr. Spivey was working his Amtrak schedule, his workday

would last 8 to 12 hours.3    He would begin the day by driving his

car from his residence in Maryland and parking at the Baltimore

Washington International Airport (BWI) Station.     He paid $40 per

month for a parking pass.    He would then take a train from the

BWI Station to Union Station in Washington, D.C., which was his

duty station and where his workday would begin.     He worked a

daily (not overnight) round trip route between Union Station and

New York Penn Station.   For example, he might depart on an 8 a.m.

train from Union Station and arrive into Penn Station in New York

at approximately 11:30 a.m.    After turning in the money and

tickets he had collected to the Amtrak Penn Station office, Mr.

Spivey was released from his work duties.     Since he usually

arrived near lunchtime, Mr. Spivey would often join other

conductors for lunch in one of the nearby restaurants.     He did

not bring meals from home.    Mr. Spivey would also spend a good

part of his time in the Amtrak employee lounge.     Employees called

the lounge the “Quiet Room”, though it did not have a suitable

place where employees could sleep.      Mr. Spivey typically did not

engage in substantial sleep or rest during his layover in New


     3
       To determine the total hours of “work” per day, we
excluded the number of hours for Mr. Spivey’s personal commuting
time between his residence and his duty station.
                                 - 9 -

York.    After the layover, which lasted for sometimes 1 but

usually around 3 to 4 hours, Mr. Spivey would work on a return

train from New York to Union Station.    He would then return home

by reversing his morning commute; i.e., he would take a train

from Union Station to BWI Station and then drive his car to

Catonsville.

       When Mr. Spivey was working his MARC schedule, his workday

might last from 11 to 13 hours.    He would drive from his home in

Catonsville to Baltimore Penn Station, which was his duty

station.    Parking for MARC employees was free at Baltimore Penn

Station.    Mr. Spivey would typically work two round trip routes

each day (no overnight trips).    He began with a round trip

between Baltimore Penn Station and Union Station in Washington,

D.C.    After a short layover in Washington Union Station, he would

return to Baltimore, where he could have around a 2-hour layover.

At the conclusion of each leg of the trip, Mr. Spivey would turn

in the money and tickets he had collected to the local Amtrak

office, which under an agreement served as an agent for MARC.

Both Baltimore’s Penn Station and Washington’s Union Station had

quiet rooms for employees.    Mr. Spivey did not normally sleep

during his layovers in Baltimore or Washington.    In the

afternoons Mr. Spivey would work the round trip route from

Baltimore Penn Station to Washington Union Station.    On occasion

he might work on a train that was going from Union Station to the
                               - 10 -

Perryville Station, which was approximately 40 miles northeast of

Baltimore.    He would then return to Baltimore Penn Station on a

MARC train.   Once back in Baltimore Penn Station, he would end

his workday and commute by car to his residence in Catonsville.

     To compute his meals deduction for the years at issue, Mr.

Spivey used a per diem rate of $35 for meals when working on the

Amtrak trains and a per diem of $25 when working on MARC trains.

The $35 figure represented Mr. Spivey’s understanding of the

Federal per diem allowance for meals for transportation workers.

The $25 was apparently Mr. Spivey’s attempt to reduce the per

diem for the shorter time of his MARC layovers.    Neither Amtrak

nor MARC reimbursed Mr. Spivey for his meals.

     Amtrak and MARC each required Mr. Spivey to wear their

uniform, insignia, and emblems when working on their trains.     To

accomplish this, Mr. Spivey would merely remove his Amtrak

insignia and emblems and replace them with MARC insignia and

emblems.   Amtrak’s uniform requirement, which also applied to

MARC employees, included a provision that employees maintain

their uniforms through professional laundering and pressing.

While Amtrak provided an allowance for uniforms, Amtrak deducted

from Mr. Spivey’s pay an amount for uniform items that Mr. Spivey

decided to purchase in excess of the allowance, or any items that

he had to purchase because of loss or excessive wear.
                              - 11 -

     In addition to his uniform, Amtrak required Mr. Spivey to

wear safety glasses.   Amtrak contracted with a specialty vendor

who sold the glasses to rail workers at Union Station.   The

glasses had safety lenses with protective shields which, when

worn, protected the entire upper half of the wearer’s face.    Mr.

Spivey paid $325 per year to purchase two pairs of glasses during

each year at issue.

     Although neither Amtrak nor MARC required Mr. Spivey to

purchase any other supplies for his work, and they did not

require him to carry a cellular phone for business, on occasion

Mr. Spivey would purchase various items such as pens and

calculators to use in his job as a conductor.   Additionally, Mr.

Spivey belonged to a union, and Amtrak deducted union dues from

his paycheck.

     In the taxable years at issue, petitioners completed most of

the work involved in filling out their tax returns, however, they

hired a tax preparer to complete the returns.   They paid $35,

$100, and $30 in tax preparation fees for 2002, 2003, and 2004,

respectively.

                            Discussion

     In general, the Commissioner’s determination set forth in a

notice of deficiency is presumed correct, and the taxpayer bears

the burden of showing that the determination is in error.    Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).    Deductions
                               - 12 -

are a matter of legislative grace, and the taxpayer bears the

burden of proving entitlement to any deduction claimed on a

return.    See INDOPCO, Inc. v. Commissioner, 503 U.S. 79 (1992);

Wilson v. Commissioner, T.C. Memo. 2001-139.

     Pursuant to section 7491(a), the burden of proof as to

factual matters shifts to the Commissioner under certain

circumstances.    Petitioners have neither alleged that section

7491(a) applies nor established their compliance with the

requirements of section 7491(a)(2)(A) and (B) to substantiate

items, maintain records, and cooperate fully with respondent’s

reasonable requests.    Petitioners therefore bear the burden of

proof.    With respect to penalties and additions to tax, section

7491(c) places the burden of production on the Commissioner.

     Section 162(a) allows a deduction for all ordinary and

necessary expenses incurred during the taxable year in carrying

on a trade or business.    Generally, the performance of services

as an employee constitutes a trade or business.     Primuth v.

Commissioner, 54 T.C. 374, 377 (1970).    A taxpayer must maintain

records sufficient to substantiate the amounts of the deductions

claimed.    Sec. 1.6001-1(a), Income Tax Regs.   For such expenses

to be deductible, the taxpayer must not have the right to obtain

reimbursement from his employer.    See Orvis v. Commissioner, 788

F.2d 1406, 1408 (9th Cir. 1986), affg. T.C. Memo. 1984-533.
                                - 13 -

     If a taxpayer establishes that an expense is deductible but

is unable to substantiate the precise amount, we may estimate the

amount, bearing heavily against the taxpayer whose inexactitude

is of his own making.     Cohan v. Commissioner, 39 F.2d 540, 543-

544 (2d Cir. 1930).     The taxpayer must present sufficient

evidence for the Court to form an estimate because without such a

basis, any allowance would amount to unguided largesse.        Williams

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

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

     Section 274 overrides the Cohan rule with regard to certain

expenses.    Sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed.

Reg. 46014 (Nov. 6, 1985).     Section 274 requires stricter

substantiation for travel, meals, and listed property such as

computers.   Section 274(d) requires taxpayers to provide adequate

records or sufficient other evidence establishing the amount,

time, place, and business purpose of the expense to corroborate

the taxpayer’s statements.     Even if such an expense would

otherwise be deductible, section 274 may still prohibit a

deduction if the taxpayer does not have sufficient

substantiation.   Sec. 1.274-5T(a), Temporary Income Tax Regs.,

supra.
                               - 14 -

     For employees in the transportation industry,4 the Internal

Revenue Service (Service) publishes an annual revenue procedure

that offers a per diem exception to the above substantiation

rules for meals and incidental expenses (M&IE).   See Rev. Proc.

2002-63, sec. 4.04, 2002-2 C.B. 691, 694.    Under the exception,

transportation industry employees may deduct their meals using

the published M&IE rate, in lieu of claiming actual expenses and

maintaining records.   Id.   For context, the rate for meal and

incidental expenses was $40 per day for the first part of 2003.

Id. sec. 4.04(2).

      Keeping in mind these well-established principles, we now

turn to decide whether the Spiveys may deduct the disputed

business expenses.

I.   Schedule C Depreciation Expense for Computers

     Following concessions reflected in the supplemental

stipulation of facts, Ms. Spivey maintains that she is entitled

to a depreciation deduction for two laptop computers she

purchased for use in her business, Small Bytes.   Ms. Spivey’s

laptop computers are an ordinary and necessary expense under

section 162 for her computer training business that entails

visiting clients at offsite locations.



     4
       The definition of transportation industries employees
relevant here includes workers who (a) directly move people by
train, and (b) who regularly travel away from home. Rev. Proc.
2002-63, sec. 4.04(4), 2002-2 C.B. 691, 694.
                              - 15 -

     Section 167(a) allows as a depreciation deduction a

reasonable allowance for the exhaustion, wear, and tear of

property used in a trade or business.   The purpose of the

deduction for depreciation is to allow the taxpayer to recover

over the useful life of the property its cost or other basis.

Unites States v. Ludey, 274 U.S. 295, 300-301 (1927).

     Pursuant to section 168(a), taxpayers determine the

depreciation deduction by using the applicable depreciation

method, applicable convention, and the applicable recovery

period.   The period for depreciation of an asset begins when the

taxpayer first places the asset into service.   Sec. 1.167(a)-

10(b), Income Tax Regs.   Deductions for depreciation must be

taken in the year in which depreciation occurs and cannot be

recouped in subsequent years by reason of a taxpayer’s failure to

deduct the depreciation allowance in prior years.   Sec. 1.167(a)-

10(a), Income Tax Regs.   Generally, depreciation is computed by

using the cost of the property as its basis.    Secs. 167(c), 1011,

1012; sec. 1.167(g)-1, Income Tax Regs.

     Computers used exclusively in a trade or business are

depreciable using the Modified Accelerated Cost Recovery System

(MACRS) over a 5-year life.   For such 5-year property, MACRS uses

an accelerated depreciation schedule for the first 3 years,

converting to straight-line for the last 3 years.   MACRS also
                               - 16 -

uses a half-year convention, computing depreciation for a half

year in year 1 and a half year in year 6.

      Section 280F (d)(4)(A) subjects computers to special

substantiation requirements of section 274 as “listed property”.

However, section 280F(d)(4)(B) provides an exception, subject to

certain requirements, for computers that taxpayers use

exclusively in their business.    Whalley v. Commissioner, T.C.

Memo. 1996-533.   On the basis of Ms. Spivey’s uncontroverted

testimony, and the nature of her business, a computer training

service, we believe that Ms. Spivey used the computers

exclusively in her business.   Further, Ms. Spivey presented

credible evidence through the receipts from CompUSA, Inc., and

Best Buy to adequately substantiate her bases.    See sec. 6001.

Thus, to the extent section 168 allows depreciation expense

deductions for the laptop computers in the years at issue, we

hold that petitioners are entitled to deduct the allowable

depreciation expenses for 2002, 2003, and 2004.

II.   Schedule A--Unreimbursed Employee Business Expenses

      For unreimbursed employee business expenses, the initial bar

is whether the taxpayer received reimbursement or had the right

to receive reimbursement from his employer.    Orvis v.

Commissioner, 788 F.2d at 1408.   In other words, a taxpayer may

not deduct unreimbursed expenses if the employer maintains a

reimbursement plan and the employee fails to seek reimbursement
                               - 17 -

for work-related expenses.    Leamy v. Commissioner, 85 T.C. 798,

810 (1985).    Mr. Spivey did not receive reimbursement and was not

eligible to receive reimbursement.      We now discuss the specific

categories of Mr. Spivey’s unreimbursed expenses.

     A.    Parking Fees

     Mr. Spivey deducted $480 per year during 2002-04 to park in

a garage at the BWI Station on the days he worked for Amtrak.       He

would drive from his residence, park at BWI, and then continue

his commute to Washington, D.C. Union Station where he reported

to work.    He would reverse the commute on his way home.   Mr.

Spivey claimed that he paid the parking fees by check but did not

produce any receipts or canceled checks.     Thus, Mr. Spivey did

not satisfy the substantiation requirements of section 274.

Moreover, parking fees, similar to the cost of driving to and

from work, are personal expenses and therefore are not

deductible.    Sec. 262(a); Commissioner v. Flowers, 326 U.S. 465,

473-474 (1946); sec. 1.162-2(e), Income Tax Regs.

     B.    Meals Purchased While Away From Home

     As noted above, Mr. Spivey was correct in that the Service

permits employees in the transportation industries to use a per

diem rate.    See Rev. Proc. 2002-63, sec. 4.04.    However, before

we discuss the amount, we must first decide the threshold issue

of whether Mr. Spivey’s meals qualify for a deduction.
                                - 18 -

     Section 162(a)(2) allows taxpayers to deduct traveling

expenses, including meals, if the taxpayer is “away from home”

while traveling for a trade or business.    The reason for Mr.

Spivey’s travel was his job, which required him to work on

railroad passenger cars traveling between cities.    As a result,

the sole issue is whether Mr. Spivey was “away from home” when he

purchased his meals.     Overnight nonlocal business travel normally

fits easily into the definition of “away from home”.    See

Williams v. Patterson, 286 F.2d 333, 335 (5th Cir. 1961).

However, Mr. Spivey’s travel was not overnight.    He worked long

days compounded by a long commute, but he completed his trips

within 1 day.   Section 262 prohibits deductions for personal

expenses, which include meals workers buy during a workday.      Sec.

262(a); Commissioner v. Flowers, supra at 473-474; sec. 1.162-

2(e), Income Tax Regs.    Therefore, the key is determining under

what circumstances taxpayers who travel away from home on

business for shorter than overnight may nonetheless deduct their

meals.

     On this point, the Commissioner’s position is found in Rev.

Rul. 75-170, 1975-1 C.B. 60.5    The Service allows railroad


     5
       Rev. Rul. 75-170, 1975-1 C.B. 60, updates and restates
Rev. Rul. 61-221, 1961-2 C.B. 34, which the Commissioner based on
the division in Williams v. Patterson, 286 F.2d 333, 340 (5th
Cir. 1961), where the Court of Appeals for the Fifth Circuit
concluded that the sleep or rest rule was the “correct rule”.
See Williams also for excellent histories of the development of
                                                   (continued...)
                                - 19 -

employees to deduct the cost of their meals when a layover

requires substantial sleep or rest because although the absence

is less than 24 hours, the employees have in effect met the “away

from home” requirement for deducting traveling expenses under

section 162(a)(2).    Rev. Rul. 75-170, supra.   Conversely, the

Service will disallow a deduction when a layover is of sufficient

time to eat but too brief to require substantial sleep or rest

because such intervals are not the equivalent of traveling away

from home.    Id.   These principles are known as the “sleep or rest

rule”.

     In United States v. Correll, 389 U.S. 299, 302-303 (1967),

the Supreme Court determined that the Commissioner’s sleep or

rest rule detailed in Rev. Rul. 61-221, 1961-2 C.B. 34, provided

substantial fairness and objectivity and avoided wasteful

litigation, in part by placing 1-day travelers on a footing

similar to that of intracity travelers and commuters who do not

have the advantage of a business expense deduction to help pay

for their meals.    The Court noted that when Treasury regulations

and interpretations continue substantially unchanged for a long

time, such as this one, the rules take on the imprimatur of

congressional approval and therefore have the effect of law.       Id.

at 305-306.   The Court concluded that while one could imagine


     5
      (...continued)
the statutory “away from home” requirement and the Commissioner’s
“sleep or rest rule”.
                                 - 20 -

improvements to the rule, the courts are not responsible for

perfecting tax administration.      Id. at 306-307.    Rather, Congress

delegated that authority to the Commissioner.         Id. at 307.   The

proper role of the judiciary is to determine whether a regulation

falls within the congressional mandate, which the Court found

this rule did.     Id.

     In the 40 years since that opinion, the judiciary has not

changed its approval of the Commissioner’s rule, Congress has not

amended the statute, and the Commissioner has not altered his

stance.   Accordingly, we find that the Commissioner’s “sleep or

rest rule” is a legitimate promulgation that governs Mr. Spivey’s

situation.

     This Court has held that a railroad employee who claimed

meal deductions on facts similar to Mr. Spivey’s circumstances

was not entitled to the deductions.       Stevens v. Commissioner,

T.C. Memo. 1985-16.      In Stevens, the taxpayer worked as a

railroad engineer on two separate round trip schedules.        On the

first schedule, Mr. Stevens worked one round trip that required a

13.5-hour workday including an 8-hour layover.        His second

schedule necessitated two round trips between the same two cities

as his one round trip.     The two round trips aggregated to an

11.3-hour workday, which included various layovers, the longest

being 2.3 hours.    Regarding the first schedule, we found that the

8-hour layover was due to the combination of the railroad’s
                              - 21 -

business schedule and Federal regulations and not due to any need

for substantial sleep or rest.   Regarding the more arduous two-a-

day round trips, we likewise found that the schedule did not

require substantial sleep or rest and that in actuality Mr.

Stevens did not engage in substantial sleep or rest.   We

concluded that both of Mr. Stevens’s work schedules were in

effect no different than those of many other workers whose jobs

require long hours but whose meals remain personal expenses.

     Addressing Mr. Spivey’s facts, we find that Mr. Spivey also

worked two separate schedules:   One with Amtrak that required one

round trip for the day and the other with MARC that usually

required two round trips.   The Amtrak route encompassed a 3-1/2-

to 4-hour run from Washington, D.C., to New York Penn Station, a

sometimes 1-hour but more typically a 3- to 4-hour layover,

followed by a 3-1/2- to 4-hour return run to Washington, D.C.

Mr. Spivey did not claim that he rested, and we find that his

workday did not require substantial sleep or rest.

     Even though Mr. Stevens worked a longer day than Mr. Spivey,

and as a railroad engineer Mr. Stevens had greater public safety

responsibilities, we still found that Mr. Stevens’s long day was

a result of the railroad company’s scheduling convenience and not

of Mr. Stevens’s need for substantial sleep or rest.   Likewise,

or even more so, we find that Mr. Spivey’s workday was not so

long or arduous and did not involve public safety to an extent
                              - 22 -

that required substantial sleep or rest.   Additionally, the fact

that Mr. Spivey did not engage in substantial sleep or rest is

significant, as is the fact that on some days, he was able to

complete the return trip with only a 1-hour layover in New York.

Thus, we find Mr. Spivey’s layover was for his employer’s

scheduling convenience and not for Mr. Spivey’s needs.   His meals

are clearly personal expenses and not deductible meals purchased

when traveling away from home on business.   Further, Mr. Spivey’s

facts closely match the hypothetical in United States v. Correll,

supra at 304-305, where the Court noted the “obvious” inequity of

permitting a taxpayer to deduct the cost of his lunch simply by

making a quick trip from New York to Washington and returning in

time for dinner.   In summary, regarding Mr. Spivey’s employment

with Amtrak, we find that he did not satisfy the sleep or rest

rule, and therefore, we hold that he is not entitled to deduct

his meal expenses when he traveled for Amtrak because he does not

satisfy the away from home requirement of section 162(a)(2).

     Regarding Mr. Spivey’s meal expenses during his two-a-day

round trips for MARC, we also find that he did not satisfy the

sleep or rest rule.   For MARC, Mr. Spivey’s main layover was at

Baltimore Penn Station and the layover lasted for at most 2-1/2

hours.   In Stevens v. Commissioner, supra, Mr. Stevens, similar

to Mr. Spivey, also had a separate two-a-day round trip schedule.

Even though we found that the two-a-day schedule was more arduous
                                - 23 -

than a one-a-day schedule, we still found that Mr. Stevens’

layovers, the longest being 2.3 hours, were too brief to allow

substantial sleep or rest.     Ultimately, we concluded that the

breaks were not more than a “mere pause” in the engineer’s daily

work routine.     Likewise for Mr. Spivey; his MARC trip layovers

were too brief and did not require substantial sleep or rest and

he did not engage in substantial sleep or rest.    Thus, we

conclude for MARC, similar to Amtrak, that Mr. Spivey’s travel

did not satisfy the sleep or rest rule.    Consequently, he was not

away from home for purposes of section 162(a)(2) and therefore

may not deduct his meal expenses.

       C.   Cellular Phone Expenses

       In certain circumstances, the taxpayer must meet specific

substantiation requirements in addition to section 162.       See sec.

274.    Section 274(d) applies to the use of “listed property” as

defined in section 280F(d), which includes cellular phones.      To

deduct these types of expenses, the taxpayer must provide

evidence that, through adequate records, corroborates the

taxpayer’s testimony as to:     (1) The amount of the expenditure or

use; and (2) the business relationship of the taxpayer to each

expenditure or use.     Sec. 274(d).

       To satisfy the adequate records requirement of section 274,

a taxpayer must maintain records and documentary evidence that in

combination are sufficient to establish each element of an
                               - 24 -

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

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

contemporaneous log is not required, corroborative evidence to

support a taxpayer’s reconstruction “of the elements * * * of the

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).

     Mr. Spivey testified that he deducted his entire cell phone

bill, $79 per month, as a business expense.6    He provided no

records or receipts showing actual expenses to support these

cellular phone expenses.    Since Mr. Spivey failed to meet the

strict substantiation requirements of section 274(d) with respect

to his cellular phone, we sustain respondent’s disallowance in

full regarding the cellular phone expenses for the years in

issue.

     D.   Other Business Expenses

     With respect to the remaining unreimbursed employee business

expenses at issue, we discuss their deductibility below.

          (1) New Uniforms - Taxpayers may deduct expenses for

articles of clothing under section 162(a) only if the clothing is

required in the taxpayer’s employment, is not suitable for



     6
       Petitioners included Mr. Spivey’s cellular phone expenses
for all years as “other unreimbursed employee business expenses”.
                                - 25 -

general or personal wear, and is not worn for general or personal

purposes.    Yeomans v. Commissioner, 30 T.C. 757, 767-768 (1958).

On his tax returns, Mr. Spivey claimed deductions of $525, $527,

and $530 for new uniforms that he purchased in 2002, 2003, and

2004, respectively.    However, Mr. Spivey did not provide support

for those amounts, and at trial he testified that he actually

spent $93, $139, and $369.99 on purchasing new uniforms in 2002,

2003, and 2004, respectively.    We find that the uniforms (Amtrak

shirts, jackets, and pants) were not suitable for general wear,

and were “directly connected with or pertaining to the taxpayer’s

trade or business”.    Sec. 1.162-1(a), Income Tax Regs.

Accordingly, we hold that petitioners are entitled to business

expense deductions for Mr. Spivey’s new uniforms of $93, $139,

and $369.99 for 2002, 2003, and 2004, respectively.

            (2) Uniform Maintenance - Petitioners multiplied $24

per week times 38 weeks to arrive at a deduction of $912 for

uniform maintenance for each year at issue.     However, petitioners

did not testify or provide receipts to substantiate the cost or

frequency of professional cleaning.      We find that Amtrak required

such maintenance, but the unsubstantiated amounts that

petitioners claimed seem overstated.     Since the record is silent

regarding the amounts of these expenses, we allow petitioners,

under Cohan v. Commissioner, 39 F.2d at 543-544, a deduction of

$10 per week multiplied by 38 weeks per year to arrive at a
                                 - 26 -

deduction for uniform maintenance of $380 for each year, 2002,

2003, and 2004.

            (3) Safety Shoes -   The record is devoid of evidence

that Mr. Spivey’s employment required safety shoes, that the

shoes were not suitable for general or personal wear, and that he

did not wear the shoes for general or personal purposes.

Although Mr. Spivey testified that his shoes permitted him to

“feel the ballast [the stones on train tracks between the ties]”

during a stop, Mr. Spivey provided no evidence that he was, in

fact, required to wear a specific type of shoe in his work.

Under cross-examination, Mr. Spivey stated that the shoes were

not steel toe and were not resistant to chemicals.     We conclude

that petitioners are not entitled to a deduction for Mr. Spivey’s

safety shoes for 2002, 2003, or 2004.

            (4) Safety Glasses - On the basis of Mr. Spivey’s

thorough description of the uniqueness of the glasses and the

fact that Amtrak-MARC required him to use them, we conclude that

these expenses were necessary, appropriate, and helpful to his

business.    Welch v. Helvering, 290 U.S. at 113.   Mr. Spivey’s

testimony as to the cost and quantity of glasses he purchased was

also credible.    Thus, under Cohan, we permit petitioners to

deduct the expense of purchasing two pairs per year, for a total

annual cost of $325 for years 2002, 2003, and 2004.
                               - 27 -

            (5) Grooming - The Court has long held that grooming

expenses are inherently personal and are nondeductible.      Drake v.

Commissioner, 52 T.C. 842, 844 (1969).    We are unconvinced that

Mr. Spivey’s particular grooming regime was “directly connected

with or pertaining to the taxpayer’s trade or business”.     Sec.

1.162-1(a), Income Tax Regs.    We acknowledge that his employment

required him to maintain a general level of proper grooming;

however, we do not find any element of this requirement to be so

extraordinary as to permit Mr. Spivey to deduct grooming as an

ordinary or necessary trade or business expense.    Accordingly, we

sustain respondent’s disallowance in full regarding Mr. Spivey’s

claimed grooming expenses.

            (6) Supplies - Petitioners claimed a $1,000 deduction

for supplies Mr. Spivey purchased in 2002.    Petitioners’

supporting schedule noted that Mr. Spivey’s 2002 supplies

purportedly included expenses for a laptop computer, which,

during testimony, Mr. Spivey acknowledged was a mistake.

Removing the computer, and relying on Cohan, we find $100 is a

reasonable estimate of the other supplies Mr. Spivey purchased

during 2002.

III.    Tax Return Preparation Fees

       Section 212(3) permits a deduction for expenses paid “in

connection with the determination, collection, or refund of any

tax.”    Thus, payments by taxpayers for preparation of their
                               - 28 -

returns are deductible.    Sec. 1.212-1(l), Income Tax Regs.

Petitioners claimed on their returns and testified

uncontrovertedly that they paid a preparer $35, $100, and $30 to

assist with their returns for 2002, 2003, and 2004.    A preparer’s

name was printed on the returns for those years, and we find it

unlikely that a preparer would list a deduction for tax

preparation fees that petitioners did not pay.    Moreover,

respondent allowed the deduction for 2002 and appears to have

disallowed it for 2003 and 2004 only by mistake.    We therefore

hold that petitioners may deduct the disputed tax return

preparation fees for 2003 and 2004.

IV.   Accuracy-Related Penalty and Addition to Tax for Late Filing

      As a final comment we note that respondent determined that

for each year at issue, 2002, 2003, and 2004, petitioners are

liable for an accuracy-related penalty under section 6662(a) and

an addition to tax under section 6651(a)(1) for late filing.

Although the Commissioner bears the burden of production with

respect to a penalty or an addition to tax, in this case

petitioners failed to raise the penalties or the additions as

issues in their petition, or at trial.    See sec. 7491(c); Higbee

v. Commissioner, 116 T.C. 438, 446-447 (2001).     These issues are

thereby deemed conceded.    See Rule 34(b)(4); Swain v.

Commissioner, 118 T.C. 358 (2002).
                        - 29 -

To reflect our disposition of the issues,


                                   Decision will be entered

                              under Rule 155.
