1 In the notice of deficiency, respondent determined that

petitioners had underreported their income by $17,753. After

respondent conceded $3,198, petitioners stipulated that they had

received but failed to report $14,555 of operating income from

(continued...)

T.C. Memo. 2000-268

UNITED STATES TAX COURT

BARRY AND PENNY KNELMAN, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8397-99. Filed August 24, 2000.

Barry and Penny Knelman, pro sese.

Erica Y. Wu, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

VASQUEZ, Judge: Respondent determined a deficiency of

$11,790 and an accuracy-related penalty of $2,358 on petitioners’

1994 Federal income tax. After concessions,1 the issues for
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(...continued)

their landscaping business. They dispute, however, that this

income is subject to tax. 

Respondent also determined that petitioners had overstated

their Schedule C, Profit or Loss From Business, deductions

relating to their landscaping business by $18,456. Respondent,

however, conceded $2,235 of these deductions, reducing the

overstated amount to $16,221. Petitioners then conceded $12,856

of that amount, leaving $3,365 in dispute.

Before the parties’ concessions, respondent determined that

petitioners were subject to additional self-employment income

taxes of $6,908 and entitled to an additional self-employment tax

deduction of $2,558. Petitioners presented no evidence at trial

regarding this issue and failed to address it on brief. 

Petitioners are therefore liable for any self-employment income

taxes due on the additional self-employment income found by the

Court. See Petzoldt v. Commissioner, 92 T.C. 661, 698 (1989).

2 All section references are to the Internal Revenue Code

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

the Tax Court Rules of Practice and Procedure.

decision are: 

(1) Whether petitioners failed to report $14,555 of Schedule

C, Profit or Loss From Business, income for the 1994 tax year;

(2) whether petitioners are entitled to deduct $2,035 for

travel expenses and $1,330 for meals under section 162 as

Schedule C business expenses; and

(3) whether petitioners are liable for the accuracy-related

penalty under section 6662(a).2

FINDINGS OF FACT

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

The stipulated facts and the related exhibits are incorporated

herein by this reference. At the time of filing the petition in

this case, petitioners resided in Irvine, California. 
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During the mid-1980's, Barry Knelman began operating a

landscaping business in southern California named “Barry Knelman

Plant Company”. Mr. Knelman operated the landscaping business as

a sole proprietorship, selling and maintaining indoor plants for

business offices in the Los Angeles County area. In 1991,

petitioners decided to move to Ohio so that their children could

be closer to the rest of their family. Instead of selling,

relocating, or closing the landscaping business, Mr. Knelman

decided to continue operating the business in California. 

Throughout 1994, petitioners maintained their residence in

Ohio. During this period, the only business petitioners owned or

operated was the landscaping business in southern California. 

Because Mr. Knelman could not afford to hire a full-time employee

to manage the landscaping business, he traveled to California

every month. During 1994, Mr. Knelman spent more than 6 months

in California, with each stay lasting approximately 14 days. 

Petitioners filed a joint Federal income tax return for the

taxable year ending December 31, 1994. On their return,

petitioners failed to report $14,555 from the landscaping

business. Petitioners also claimed $3,365 in Schedule C

deductions for the costs Mr. Knelman incurred traveling between

his residence in Ohio and his landscaping business in southern

California. The disputed deductions involve $2,035 for travel

expenses and $1,330 for meals and entertainment expenses.
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OPINION

Gross Income

Under section 61, Congress defined gross income as all

income from whatever source derived. See Commissioner v.

Glenshaw Glass Co., 348 U.S. 426, 430 (1955); Abrams v.

Commissioner, 82 T.C. 403, 407 (1984). This includes income from

a business. See sec. 61(a)(2). Petitioners do not challenge

respondent’s calculation of petitioners’ income. Petitioners, in

fact, stipulate that during 1994, Mr. Knelman received, but

failed to report, $14,555 of income from the landscaping

business.

Notwithstanding the express language of section 61,

petitioners contend that they are not required to pay any Federal

income tax on this income. Petitioners advance shopworn

arguments characteristic of tax-protester rhetoric that has been

universally rejected by the courts. See Williams v.

Commissioner, 114 T.C. 136, 138-139 (2000); Boyce v.

Commissioner, T.C. Memo. 1996-439, affd. without published

opinion 122 F.3d 1069 (9th Cir. 1997); Fair v. Commissioner, T.C.

Memo. 1994-276, affd. without published opinion 60 F.3d 833 (9th

Cir. 1995). Petitioners allege: (1) There are no provisions in

the Internal Revenue Code requiring U.S. citizens to pay Federal

income tax on income earned in the United States; (2) the income

which the landscaping business earned was not gross income and
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3 Their claim to the meals and entertainment deduction

equals $1,330 after the 50-percent reduction pursuant to sec.

274(n).

thus not taxable; (3) the deficiency was not a legally

enforceable deficiency; and (4) petitioners were denied their

Sixth Amendment right to confront and cross-examine respondent’s

employees who audited their return. We shall not painstakingly

address petitioners’ assertions “with somber reasoning and

copious citation of precedent; to do so might suggest that these

arguments have some colorable merit.” Crain v. Commissioner, 737

F.2d 1417, 1417 (5th Cir. 1984); Williams v. Commissioner, supra

at 139. Accordingly, we sustain respondent’s position that

petitioners underreported their income by $14,555 with regard to

the landscaping business.

Travel and Meals and Entertainment Expenses

Petitioners claim that they paid $2,035 for travel expenses

and $2,660 for meals and entertainment expenses.3 The travel

expenses represent the airfare costs Mr. Knelman incurred flying

between his residence in Ohio and his place of business in

California, whereas the meals and entertainment expenses

represent the cost of meals Mr. Knelman incurred during his trips

to California. Respondent disallowed the deductions relating to

both expenditures, contending that the travel and the meals and

entertainment expenses were nondeductible personal expenses and 
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not ordinary and necessary expenses incurred in the pursuit of a

business.

Deductions are strictly a matter of legislative grace, and

taxpayers bear the burden of proving that they are entitled to

any deductions claimed on their return. See Rule 142(a);

INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Section

162 permits deductions for ordinary and necessary expenses

incurred in carrying on a trade or business, such as travel

expenses and meals and entertainment expenses. See sec. 162(a). 

Section 262, however, precludes deductions for personal,

living, or family expenses not otherwise expressly allowed. For

example, commuting expenses between a taxpayer’s home and place

of business are personal expenses and thus not deductible. See

Commissioner v. Flowers, 326 U.S. 465, 469-470 (1946); Sanders v.

Commissioner, 439 F.2d 296, 297 (9th Cir. 1971), affg. 52 T.C.

964 (1969); Roy v. Commissioner, T.C. Memo. 1997-562, affd.

without published opinion 182 F.3d 927 (9th Cir. 1999); secs.

1.162-2(e), 1.262-1(b)(5), Income Tax Regs. The fact that a

taxpayer chooses to live a substantial distance from his place of

business provides no exception to this general rule. See

Commissioner v. Flowers, supra at 470, 473; Sisson v.

Commissioner, T.C. Memo. 1994-545, affd. without published

opinion 108 F.3d 339 (9th Cir. 1996). In addition, the living

expenses incurred as a result of this decision are also
- 7 -

nondeductible personal expenses. See Commissioner v. Flowers,

supra at 472-474; Tucker v. Commissioner, 55 T.C. 783, 786

(1971).

The rationale behind this rule is that a taxpayer is free to

choose the location of his personal residence. See Anderson v.

Commissioner, 60 T.C. 834, 835 (1973). If we allowed the

taxpayer to deduct the commuting expenses, we would be permitting

the taxpayer to take a deduction for what is an inherently

personal expense. See id.; Alexander v. Commissioner, T.C. Memo.

1979-436.

In the instant case, we find that Mr. Knelman’s primary

motivation in traveling between Ohio and California was to

commute between the locations of his chosen residence and

business. Had petitioners remained in southern California, their

traveling expenses between work and home would also have been

nondeductible commuting expenses. The distance traveled, no

matter how far, does not change the character of the commuting

expense. See Commissioner v. Flowers, supra at 473. 

Furthermore, petitioners have not presented any evidence

refuting respondent’s determination that the meals petitioners

deducted were nondeductible living expenses incurred as a result

of their decision to live outside the State where their

landscaping business is located. In the instant case, the

taxpayers, for personal reasons, wanted to reside in Ohio and
- 8 -

maintain their landscaping business in California. We hold that

the costs of the airfare and meals cannot be deducted as ordinary

and necessary business expenses under section 162. Therefore, we

sustain respondent’s determination on this issue.

Accuracy-Related Penalty

Pursuant to section 6662(a), respondent determined that

petitioners are liable for an accuracy-related penalty due to an

underpayment of tax attributable to negligence or disregard of

rules or regulations. Because respondent determined that

petitioners had failed to report income, failed to maintain

proper records to substantiate the Schedule C deductions, and

deducted personal expenses, respondent computed the accuracyrelated penalty based upon the entire underpayment.

Petitioners bear the burden of proving that section 6662

does not apply. See Rule 142(a); Tweeddale v. Commissioner, 92

T.C. 501, 506 (1989). Petitioners have neither offered any

evidence regarding this issue nor provided a reasonable

explanation why we should not hold them liable for the accuracyrelated penalty. Accordingly, we sustain respondent’s

determination of the accuracy-related penalty with regard to the

underpayment associated with petitioners' concessions and this

Court's redeterminations.

In reaching our holdings herein, we have considered all of

petitioners’ arguments, and, to the extent not mentioned above,
- 9 -

we find them to be irrelevant or without merit.

To reflect the foregoing,

Decision will be entered

under Rule 155.