1Respondent concedes that petitioners are not liable for the

self-employment tax. Accordingly, petitioners are not entitled

to the corresponding deduction for one-half of the self-

(continued...)

T.C. Memo. 2010-60

UNITED STATES TAX COURT

ENA M. AND BRIAN R. FLEMING, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 28973-07. Filed March 30, 2010.

Ena M. and Brian R. Fleming, pro sese.

Christine K. Lane, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

WELLS, Judge: Respondent determined a deficiency of $3,246

in petitioners’ Federal income tax for tax year 2004. After

concessions by respondent,1 we must decide whether petitioners
- 2 -

1(...continued)

employment tax for their 2004 tax year. Respondent also concedes

that petitioners are entitled to a deduction for franchise fees

of $765 and advertising expenses of $231 for their 2004 tax year. 

However, respondent disputes any deduction for advertising and

franchise fees above this amount.

are entitled to deduct expenses they claimed on Schedule C,

Profit and Loss from Business, attached to their 2004 tax return

for mileage driven, automobile repairs and maintenance, meals and

entertainment, cellular telephone service, advertising and

franchise fees, professional dues, office supplies and expenses,

and legal and professional fees. 

FINDINGS OF FACT

Some of the facts and certain exhibits have been stipulated.

The stipulations of fact are incorporated in this opinion by

reference and are so found.

At the time they filed the petition, petitioners resided in

Florida. 

Petitioners are husband and wife. Petitioners filed a joint

Federal income tax return for their 2004 tax year. 

Petitioner Ena M. Fleming (Ms. Fleming) is employed as a

school teacher. Petitioner Brian R. Fleming (Mr. Fleming) is a

real estate agent for the Keyes Co. 

For their 2004 tax year petitioners reported no gross income

on Schedule C of their Federal income tax return. However,

petitioners claimed as deductible expenses on that Schedule C:
- 3 -

2Unless otherwise indicated, all Rule references are to the

Tax Court Rules of Practice and Procedure, and all section

references are to the Internal Revenue Code, as amended. 

3Petitioners do not contend that sec. 7491(a) should apply

to shift the burden of proof to respondent, nor did they

establish that it should apply. 

Mileage driven of $5,258, automobile repairs and maintenance of

$580, meals and entertainment (after reduction by the 50-percent

limitation of section 274(n)2) of $45, legal and professional

fees of $1,397, and cellular telephone service, advertising,

franchise fees, office expenses and supplies, and professional

dues in the total amount of $4,306. 

On September 17, 2007, respondent sent petitioners a notice

of deficiency. Petitioners timely filed a petition in this Court

for redetermination of the deficiency. 

OPINION

Generally, the Commissioner’s determination of a deficiency

is presumed correct, and the taxpayer has the burden of proving

it incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115

(1933).3

Deductions are a matter of legislative grace, and taxpayers

bear the burden of proving their entitlement to the deductions

claimed. Sec. 6001; INDOPCO, Inc. v. Commissioner, 503 U.S. 79,

84 (1992). Section 162(a) allows a deduction from income for all

ordinary and necessary expenses for carrying on a trade or

business during the taxable year. However, a taxpayer generally
- 4 -

must keep records sufficient to establish the amounts of the

items reported on his Federal income tax return. Sec. 6001; sec.

1.6001-1(a), (e), Income Tax Regs. In the event that a taxpayer

establishes that a deductible expense has been paid but is unable

to substantiate the precise amount, we generally may estimate the

amount of the deductible expense bearing heavily against the

taxpayer whose inexactitude in substantiating the amount of the

expense is of his own making. Cohan v. Commissioner, 39 F.2d

540, 543-544 (2d Cir. 1930). We cannot estimate a deductible

expense, however, unless the taxpayer presents evidence

sufficient to provide some basis upon which an estimate may be

made. Vanicek v. Commissioner, 85 T.C. 731, 743 (1985).

Section 274(d) supersedes the Cohan doctrine for certain

categories of expenses. Sanford v. Commissioner, 50 T.C. 823,

827-828 (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969). A

deduction is disallowed with regard to traveling expenses, meals

and entertainment, or listed property unless the taxpayer

properly substantiates: (1) The amount of such expense, (2) the

time and place of the expense, (3) the business purpose, and (4)

in the case of meals and entertainment, the business relationship

between the taxpayer and the persons being entertained. Sec.

274(d). Section 280F(d)(4) includes as listed property any

passenger automobile or cellular telephone. Generally, expenses

subject to the strict substantiation requirements of section
- 5 -

274(d) must be disallowed in full unless the taxpayer satisfies

every element of those requirements. Sanford v. Commissioner,

supra; Larson v. Commissioner, T.C. Memo. 2008-187; sec. 1.274-

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

1985). In the case of listed property that is used both

personally and professionally, expenses are disallowed unless a

taxpayer establishes the amount of business use of the property

in question. Kinney v. Commissioner, T.C. Memo. 2008-287; Olsen

v. Commissioner, T.C. Memo. 2002-42, affd. 54 Fed. Appx. 479 (9th

Cir. 2003); sec. 1.274-5T(b)(6)(i)(B), Temporary Income Tax

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

Taxpayers may substantiate their deductions by either

adequate records or sufficient evidence that corroborates the

taxpayer’s own statement. Sec. 274(d). To satisfy the adequate

records requirement, a taxpayer must maintain records and

documentary evidence that in combination are sufficient to

establish each element of an expenditure or use. Larson v.

Commissioner, supra; sec. 1.274-5T(c)(2)(i), Temporary Income Tax

Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). A contemporaneous log

is not required, but corroborative evidence used 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. Larson v. Commissioner, supra; sec.
- 6 -

1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46016

(Nov. 6, 1985). 

In the absence of adequate records, a taxpayer may

alternatively establish an element by “his own statement, whether

written or oral, containing specific information in detail as to

such element” and by “other corroborative evidence sufficient to

establish such element.” Larson v. Commissioner, supra; sec.

1.274-5T(c)(3), Temporary Income Tax Regs., 50 Fed. Reg. 46020

(Nov. 6, 1985). However, we may not use the Cohan doctrine to

estimate expenses covered by section 274(d). Sanford v.

Commissioner, supra at 827; Larson v. Commissioner, supra. 

Petitioners’ expenses can be divided into two categories: 

(1) Those that must meet the strict substantiation requirements

of section 274(d) in addition to otherwise qualifying as

deductible under section 162 and (2) those that must meet only

the general substantiation requirements of section 162. The

expenses that must meet the section 274(d) requirements include

car and truck expenses for mileage driven, automobile repairs and

maintenance, meals and entertainment, and expenses for cellular

telephone services. Secs. 274(d), 280F(d)(4). Expenses that are

not required to meet the strict substantiation requirements of

section 274(d) but must meet the general substantiation

requirements include advertising and franchise fees, professional
- 7 -

4Mr. Fleming testified that “local” means that he was

looking at buildings and surveying neighborhoods, making separate

stops along the way. However, Mr. Fleming failed to provide more

specificity.

5Petitioners’ log for Nov. 2004, indicates a beginning

mileage of 33,200, while an invoice petitioners offered from BJ’s

Tire Service Center, dated Dec. 23, 2004, indicates a mileage of

32,433.

dues, office supplies and expenses, and fees for legal and

professional services. 

We first address those expenses that must meet the strict

substantiation requirements of section 274(d). For their 2004

tax year petitioners claimed car and truck expenses for mileage

driven of $5,258. Petitioners submitted a mileage log to

substantiate those expenses. The mileage log lists total miles

driven for the day. The log does not contain any entries

regarding the business purpose of the trips, and in many

instances it lists the destination as “local”.4 Moreover,

petitioners’ log is incompatible with receipts they provided.5

Accordingly, we conclude that petitioners’ mileage logs are not

adequate records of their mileage expense. Similarly, we

conclude that petitioners have failed to provide other

corroborative evidence sufficient to establish that they have met

the requirements of section 274(d). Consequently, we sustain

respondent’s determination disallowing a deduction for car and

truck expenses for mileage driven claimed on petitioners’ 2004

tax return. 
- 8 -

We next turn to petitioners’ expenses for repairs and

maintenance on their automobiles. Mr. Fleming testified that

petitioners had two automobiles and that both were used in his

real estate business. Petitioners claimed $580 for repairs and

maintenance of their automobiles. In support of their claim

petitioners provided an invoice for $113 for the installation of

a tire on one of their automobiles. However, petitioners failed

to allocate between the business and personal use of their

personal automobiles as required under section 274(d). See Olsen

v. Commissioner, supra; sec. 1.274-5T(b)(6)(i)(B), Temporary

Income Tax Regs., supra. Accordingly, we sustain respondent’s

determination disallowing a deduction for automobile repairs and

maintenance claimed on petitioners’ 2004 tax return. 

We next consider petitioners’ meals and entertainment

expenses. Petitioners failed to present, and we do not find, any

evidence of the business relationship of the persons entertained

or of the business purpose of the expenses. See sec. 274(d). 

Accordingly, we sustain respondent’s determination disallowing a

deduction for meals and entertainment claimed on petitioners’

2004 tax return. 

As to petitioners’ cellular telephone expenses, each

petitioner owned a cellular telephone and petitioners provided

records for both. Petitioners testified that Mr. Fleming used

his cellular telephone to call Ms. Fleming and one friend, but
- 9 -

6Expenses for cellular telephone service are also included

within the $4,306 of other expenses. However, cellular

telephones are listed property that must meet the strict

substantiation requirements of sec. 274(d). 

that all other calls were for business purposes. However,

petitioners failed to allocate between the personal and business

use of Mr. Fleming’s cellular telephone or Ms. Fleming’s cellular

telephone as required under section 274(d). See Kinney v.

Commissioner, T.C. Memo. 2008-287. Accordingly, we sustain

respondent’s determination disallowing a deduction for

petitioners’ cellular telephone expenses claimed on their 2004

tax return. 

As to petitioners’ expenses that are not required to meet

the strict substantiation requirements of section 274(d) in

addition to the requirements of sections 162 and 6001,

petitioners claimed other expenses of $4,306 and legal and

professional fees of $1,397 on their 2004 tax return. Included

within the $4,306 are expenses for advertising and franchise

fees, professional dues, office expenses, and office supplies.6

For the advertising and franchise fees, petitioners have

submitted monthly invoices from the Keyes Co., Mr. Fleming’s real

estate company, for petitioners’ 2004 tax year. The monthly

statements list franchise fees totaling $1,020 and advertising

fees totaling $231. Respondent has conceded that petitioners are

entitled to franchise fees of $765 and advertising fees of $231. 
- 10 -

Petitioners argue, but have failed to prove, that all amounts

billed were deductible from their 2004 income. Petitioners

testified that amounts billed, once paid, were removed from later

invoices. However, several of the Keyes Co. invoices from

petitioners’ 2005 tax year show amounts carried over from

petitioners’ 2004 tax year. In addition to the Keyes Co.

invoices, petitioners provided bank records that purportedly show

business expenses. Mr. Fleming testified that he placed a

checkmark next to each purported business expense. One entry

shows an expense of $51 for advertising in the local paper. 

Accordingly, we hold that petitioners are entitled to a deduction

for advertising expenses of $51 in excess of respondent’s

concession of $231 for their 2004 tax year. 

As to petitioners’ professional dues, petitioners provided

invoices for professional dues of $817. The invoices do not

indicate whether the $817 was paid, and petitioners failed to

provide any documentation, such as receipts, canceled checks, or

credit card statements, to show that the professional dues were

paid. Mr. Fleming testified that he paid the $817, but given

petitioners’ history of untimely payments and lack of

documentation, we find his testimony unpersuasive. Additionally,

we were unable to match payment of the professional dues to

petitioners’ 2004 bank statements. Accordingly, we conclude that

petitioners have failed to prove that they paid $817 for
- 11 -

professional dues. Consequently, we sustain respondent’s

determination denying a deduction for petitioners’ professional

dues claimed on their 2004 tax return. 

As to petitioners’ claimed deduction for office supplies and

expenses, in support of their claimed deduction petitioners

provided personal bank statements which they allege show business

expenses by notations of checkmarks, as stated above. Many of

the checked items were for purchases at Office Max and the U.S.

Postal Service. However, petitioners failed to provide any

additional testimony or evidence explaining the checked items. 

Accordingly, we conclude that, without more, petitioners’

evidence fails to provide a sufficient evidentiary basis to make

a Cohan estimate of costs. See Vanicek v. Commissioner, 85 T.C.

at 743. Consequently, we sustain respondent’s denial of

petitioners’ deduction for office supplies and expenses claimed

on their 2004 tax return. 

Finally, as to petitioners’ expenses for legal and

professional fees, petitioners failed to present any evidence or

argument on legal and professional fees. Therefore, petitioners

have failed to provide an evidentiary basis to make a Cohan

estimate of expenses for legal and professional fees. See

Vanicek v. Commissioner, supra. Accordingly, we sustain

respondent’s deficiency determinations regarding the legal and
- 12 -

professional fees claimed as a deduction on petitioners’ 2004 tax

return. 

The Court has considered all other arguments made by the

parties and, to the extent we have not addressed them herein, we

consider them moot, irrelevant, or without merit. 

To reflect the foregoing and respondent’s concessions,

Decision will be entered

under Rule 155.