                            T.C. Summary Opinion 2012-123



                            UNITED STATES TAX COURT



      JAMES MICHAEL BURKE AND ELIZABETH ANN BURKE, a.k.a.
              ELIZABETH ANN JACOBSON, Petitioners v.
         COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 17217-11S.                                Filed December 26, 2012.



      James Michael Burke and Elizabeth Ann Burke, a.k.a. Elizabeth Ann

Jacobson, pro sese.

      Christina L. Cook, for respondent.



                                 SUMMARY OPINION


      SWIFT, Judge: This case was heard pursuant to the provisions of section

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


      1
          Unless otherwise indicated, all section references are to the Internal Revenue
                                                                            (continued...)
                                         -2-

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 $4,658 deficiency in petitioners’ 2008 Federal income

tax.

       After settlement by the parties of many disputed claimed expense

deductions, the issues remaining for decision are the allowability of claimed away-

from-home employee meal and vehicle mileage expense deductions and gambling

losses.

                                     Background

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

       During 2008 petitioners lived in Minnesota but James Michael Burke

(petitioner) worked as a union electrician at temporary jobsites in Missouri,

Pennsylvania, Washington, and Minnesota. Petitioner’s records and

documentation relating to much of his work-related travel are not complete.

       In 2008 petitioner also gambled at casinos in Wisconsin and Washington, and

he purchased lottery tickets in Washington, Texas, and Minnesota.

Petitioner’s records relating to his gambling activity are not complete. A number

       1
       (...continued)
Code applicable for 2008, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                                        -3-

of casinos gave to petitioner and submitted to respondent yearend statements

reflecting some of petitioner’s gambling activity. These statements reflect only

the gambling activity for which petitioner used his casino-issued player cards, and

do not include gambling activity for which he did not use his player cards.

      On their 2008 joint Federal income tax return petitioners reported that

petitioner had total gambling winnings for 2008 of $3,750. This $3,750 in

gambling winnings was reflected on a Form W-2G, Certain Gambling Winnings,

issued by North Quest Casino and represented one slot machine jackpot petitioner

won on August 12, 2008. Petitioner’s 2008 gambling winnings at other casinos

and at North Quest other than the August 12 slot machine jackpot were not

reported on petitioners’ 2008 Federal income tax return.

      On a Schedule A, Itemized Deductions, attached to their 2008 tax return,

petitioners reported $24,998 in unreimbursed employee expenses and $3,750 in

gambling losses.

      On a Form 2106, Employee Business Expenses, attached to their 2008

return, petitioners reported $7,956 for petitioner’s meal expenses incurred while

working away from home at his various jobsites. Under section 274(n) this

amount was reduced on Form 2106 by 50% to $3,978. In computing his claimed

meal expense deduction petitioner used the rates set forth in the Federal guidelines
                                        -4-

for meal and incidental expenses (M&IE), Rev. Proc. 2008-59, sec. 4.03, 2008-2

C.B. 857, 860.

      Also on the Form 2106, petitioners claimed a deduction for $13,612 in

unreimbursed business vehicle mileage expenses (using petitioner’s estimate of

24,308 business miles driven for his work).

      On audit respondent disallowed all $24,998 claimed on petitioners’

Schedule A as unreimbursed employee expenses and the $3,750 petitioners

claimed as gambling losses. In light of these adjustments, if sustained, it would be

more advantageous for petitioners to use the standard deduction; therefore

respondent on audit allowed petitioners a $10,900 standard deduction in lieu of the

other itemized deductions reflected on petitioners’ Schedule A that respondent

allowed.

      After settlement, there are left for our resolution only disputed expenses

claimed by petitioners for away-from-home meal expenses of $4,065, vehicle

mileage expenses of $8,692, and gambling losses of $3,589.

                                     Discussion

      Section 162(a) generally allows deductions for ordinary and necessary trade

or business expenses. Taxpayers, however, have a responsibility to maintain
                                        -5-

adequate records to substantiate the amounts and purpose of claimed deductions.

Sec. 6001; sec. 1.6001-1(a), Income Tax Regs.

      Under section 274(d) and the regulations thereunder heightened taxpayer

substantiation and documentation requirements apply to expenses for business

travel away from home, including meal and vehicle mileage expenses. Sec. 1.274-

5T(a)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).

      Taxpayers are to maintain records and documentation which are sufficient

to establish each element of a claimed away-from-home business travel expense--

amount, time, place, and business purpose. Sec. 1.274-5T(b)(2), Temporary

Income Tax Regs., supra. Taxpayers are to maintain account books, diaries,

statements of expenses, and other documentation to establish each required

element.

      On account of petitioner’s poor records and documentation relating to the

remaining claimed expense deductions at issue, no shift in the burden of proof under

section 7491 applies, and petitioners bear the burden of substantiating the disputed

meal and vehicle mileage expenses and gambling losses. See Rule 142(a).
                                        -6-

Meal Expenses

      In lieu of substantiating the cost of every meal, taxpayers may use the

Government-provided M&IE rates to estimate unreimbursed meal and incidental

expenses for days working away from home on business. Rev. Proc. 2008-59, sec.

4.03. Taxpayers, however, are still required to substantiate the time, place, and

business purpose of the away-from-home travel to qualify for the M&IE daily

meal expense deduction.

      As explained, on their 2008 tax return petitioners reported a total of $7,956

in business-related away-from-home meal expenses. No explanation has been

provided as to how that amount was calculated. At trial petitioner introduced into

evidence a “summary meal expense sheet” for 2008 which petitioners prepared for

trial and which reflects for petitioner a total of 207 days away from home and a

total of $8,130 for petitioner’s away-from-home meal expenses (using a daily $39

M&IE rate), which reduced by 50% would support an away-from-home meal

expense deduction for petitioners of approximately $4,065.

      On brief respondent acknowledges that petitioners have submitted sufficient

evidence to substantiate the time, place, and business purpose for 74 business-

related away-from-home workdays for petitioner in 2008 and total away-from-
                                           -7-

home meal expenses of $2,886 (using the daily $39 M&IE rate), or a deduction of

$1,443 (after the 50% limitation of section 274(n)).

       Petitioners have not submitted credible documentation to substantiate a

deduction for business-related away-from-home meal expenses for petitioner for

2008 in excess of the $2,886 which respondent would now allow (before the 50%

reduction required by section 274(n)). For example, petitioners’ summary meal

sheet submitted at trial lists a number of business trips for petitioner to cities a few

hours from petitioners’ Minnesota home which would not require an overnight

stay. Petitioners seek to corroborate the business nature of a winter trip to Texas

by providing lottery tickets purchased in Texas. The purchase in Texas in winter of

lottery tickets is just as suggestive of a vacation trip as of a business trip.

       We sustain respondent’s disallowance of claimed meal expenses relating to

petitioner’s away-from-home business travel in excess of the $1,443 to which

respondent now agrees.

Vehicle Mileage Expenses

       As stated, taxpayers may deduct as ordinary and necessary business

expenses vehicle mileage expenses if they satisfy the substantiation requirements

of section 274(d), and petitioners claim 24,308 business miles and a $13,612

deduction for 2008. The calendar petitioners submitted at trial reflected only
                                         -8-

sparse travel information and indicated a total of only 13,386 miles. A mileage

summary sheet petitioners introduced at trial reflects 15,318 miles.

       The brief notations in petitioner’s calendar are inadequate and do not

indicate a beginning point, location, destination, or business purpose for

petitioner’s trips. The notations indicate only a figure which petitioners claim is

the business miles driven each day and estimated odometer readings. For some of

the days on which petitioner claims to have made business trips in 2008,

petitioner’s calendar does not indicate any mileage. Some of the entries in the

calendar contradict entries on petitioners’ mileage summary sheet.

       Where a taxpayer lists mere mileage and does not have credible

contemporaneous records of people and places visited, trip purpose, and business

conducted, we may conclude that the substantiation requirements of section 274(d)

have not been satisfied, Lysford v. Commissioner, T.C. Memo. 2012-41, as we do

in this case.

       We sustain respondent’s disallowance of the additional $8,692 in vehicle

mileage expenses petitioners claimed.

Gambling Losses

       Gambling losses incurred by taxpayers engaged in the trade or business of

gambling are allowable in computing adjusted gross income under section
                                          -9-

62(a)(1). However, gambling losses incurred by a casual gambler such as

petitioner are allowable only as itemized deductions in calculating taxable income.

See sec. 63(a), (d); Johnston v. Commissioner, 25 T.C. 106, 108 (1955);

Shollenberger v. Commissioner, T.C. Memo. 2009-306. Casual gamblers are

allowed to deduct losses from gambling as itemized deductions but only to the

extent of their gross winnings from gambling. Sec. 165(d); McClanahan v. United

States, 292 F.2d 630, 631-632 (5th Cir. 1961).

      As we have explained: “To permit a casual gambler to net all wagering

gains or losses throughout the year would intrude upon, if not defeat or render

superfluous, the careful statutory arrangement that allows deduction of casual

gambling losses, if at all, only as itemized deductions, subject to the limitations of

section 165(d).” See Shollenberger v. Commissioner, T.C. Memo. 2009-306.

      We have held that a worksheet showing partial winnings, a letter from a

casino, and oral testimony are not necessarily sufficient to support claimed

gambling losses. LaPlante v. Commissioner, T.C. Memo. 2009-226.

      Before trial petitioners submitted to respondent additional documentation

relating to petitioner’s gambling activity. However, that documentation indicates

significantly greater gambling income for petitioner than the $3,750 reported on
                                       - 10 -

petitioners’ 2008 tax return. Respondent, however, does not seek to increase

petitioner’s income by the apparent additional unreported gross gambling income.2

      Without better records and documentation, we disallow the $3,589 in

gambling losses petitioners claim in excess of the $161 respondent allowed.

      To reflect the foregoing,


                                                      Decision will be entered under

                                                Rule 155.3




      2
        A statement from a Wisconsin casino indicates that in 2008 petitioner
realized in that casino gross gambling winnings of $38,322 on wagers of $40,457.
Neither the gross winnings nor the related wagering expenses were reported by
petitioners on their 2008 Federal income tax return.
      3
        In the light of the adjustments we sustain, it may be more advantageous for
petitioners to be allowed the $10,900 standard deduction, in lieu of Schedule A
itemized deductions.
