1Unless otherwise indicated, subsequent 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.

T.C. Summary Opinion 2010-7

UNITED STATES TAX COURT

RODDIE L. AND PATRICIA L. EVANS, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 25392-07S. Filed January 21, 2010.

Roddie L. and Patricia L. Evans, pro se.

Dessa J. Baker-Inman and William F. Castor, for respondent.

THORNTON, 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 Pursuant to section 7463(b), the

decision to be entered is not reviewable by any other court, and
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this opinion shall not be treated as precedent for any other

case. 

Respondent determined a $1,725 deficiency in petitioners’

2004 Federal income tax. After concessions, the issue for

decision is whether petitioners are entitled to deduct certain

business expenses for 2004.

Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference. When they petitioned this

Court, petitioners were married and resided in Louisiana.

During 2004 Mr. Evans was employed as a pipefitter by three

companies at three different jobsites. From February 17 to March

11, 2004, Mr. Evans was employed by Stone and Webster

Construction, Inc., at a jobsite in Vicksburg, Mississippi. From

March 19 to May 9, 2004, Mr. Evans was employed by Atlantic Union

Resources, Inc., at a jobsite in St. Louis, Missouri. From

August 19 to November 15, 2004, Mr. Evans was employed by Fru-Con

Construction Corp., at a jobsite in Alexandria, Louisiana. 

Petitioners owned a trailer, which they towed to the vicinity of

each jobsite and used for their living accommodations while

there. During 2004 none of Mr. Evans’ three employers reimbursed

any of his vehicle or travel expenses or had an expense

reimbursement policy.
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2Figures have been rounded to the nearest dollar.

Petitioners reported a total of $16,770 in vehicle, travel,

and meals and entertainment expenses on Form 2106, Employee

Business Expenses, attached to their 2004 Federal income tax

return.2 Respondent allowed or conceded all of petitioners’

meals and entertainment expenses and portions of petitioners’

vehicle and travel expenses. A total of $12,346 in vehicle and

travel expenses remains in dispute.

The records petitioners maintained with respect to the

claimed vehicle and travel expenses consisted only of certain

trailer park rental receipts. Petitioners did not maintain any

records or logs to account for the business mileage of vehicles.

Petitioners did not maintain adequate records with respect to the

disputed travel expenses because they believed that using the per

diem method to calculate such expenses was proper for tax

reporting purposes. Respondent conceded all of the amounts for

which petitioners provided adequate records, as well as a portion

of petitioners’ unsubstantiated vehicle expenses.

Discussion

A taxpayer may deduct ordinary and necessary expenses paid

or incurred during the taxable year in carrying on a trade or

business if the taxpayer maintains sufficient records to

substantiate the expenses. Secs. 162(a), 6001; sec. 1.6001-1(a),
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3Sec. 274(d) specifically provides:

SEC. 274(d). Substantiation Required.--No deduction or

credit shall be allowed--

(continued...)

Income Tax Regs. The taxpayer bears the burden of

substantiation. Hradesky v. Commissioner, 65 T.C. 87,

90 (1975), affd. 540 F.2d 821 (5th Cir. 1976). As a general

rule, no deductions are allowed for personal, living, or

family expenses. Sec. 262(a).

If a taxpayer establishes that deductible expenses were

incurred but fails to establish the amount, we generally may

estimate the amount allowable (the Cohan doctrine). Cohan v.

Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930). There must be

evidence in the record, however, that provides a rational basis

for our estimate. Vanicek v. Commissioner, 85 T.C. 731, 742-743

(1985).

In the case of travel expenses and expenses paid or

incurred with respect to listed property, e.g., passenger

automobiles or other property used as a means of transportation,

section 274 overrides the Cohan doctrine, and these expenses are

deductible only if the taxpayer meets stringent substantiation

requirements. Secs. 274(d), 280F(d)(4); Sanford v. Commissioner,

50 T.C. 823, 827 (1968), affd. 412 F.2d 201 (2d Cir. 1969); sec.

1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov.

6, 1985).3
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3(...continued)

(1) under section 162 or 212 for any

traveling expense (including meals and lodging

while away from home),

(2) for any item with respect to an activity

which is of a type generally considered to

constitute entertainment, amusement, or

recreation, or with respect to a facility used in

connection with such an activity,

(3) for any expense for gifts, or

(4) with respect to any listed property (as

defined in section 280F(d)(4)), 

unless the taxpayer substantiates by adequate records or by

sufficient evidence corroborating the taxpayer’s own

statement (A) the amount of such expense or other

item, (B) the time and place of the travel,

entertainment, amusement, recreation, or use of the

facility or property, or the date and description of

the gift, (C) the business purpose of the expense or

other item, and (D) the business relationship to the

taxpayer of persons entertained, using the facility or

property, or receiving the gift. * * *

To substantiate a deduction under section 274 a taxpayer

must generally maintain an account book, a diary, a log, a

statement of expenses, trip sheets, or a similar record and

documentary evidence which, in combination, are sufficient to

establish each element of each expense. Sec. 1.274-5T(c)(2)(i),

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

Thus, no deduction for expenses under section 274(d) may be

allowed on the basis of any approximation or the unsupported

testimony of the taxpayer. Sec. 1.274-5T(a), Temporary Income
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4The Commissioner issues an updated revenue procedure each

year enumerating the per diem rules. Rev. Proc. 2003-80, 2003-2

C.B. 1037, applies to Mr. Evans’ disputed expenses incurred

before Oct. 1, 2004.

5Rev. Proc. 2004-60, 2004-2 C.B. 682, applies to Mr. Evans’

disputed expenses incurred after Oct. 1, 2004.

Tax Regs., supra; see, e.g., Murata v. Commissioner, T.C. Memo.

1996-321; Golden v. Commissioner, T.C. Memo. 1993-602.

The Commissioner is authorized to prescribe rules under

which certain types of expense allowances, including per diem

allowances for ordinary and necessary expenses for traveling away

from home, will be regarded as satisfying the substantiation

requirements of section 274(d). Sec. 1.274-5(j), Income Tax

Regs. Under this authority, the Commissioner issued Rev. Proc.

2003-80, 2003-2 C.B. 1037,4 and Rev. Proc. 2004-60, 2004-2 C.B.

682,5 which provide rules for using a per diem method to

substantiate the amounts of lodging, meals, and incidental

expenses. 

The per diem method is available to employees only if their

employers pay a per diem allowance in lieu of reimbursing the

actual expenses an employee pays while traveling away from home. 

Rev. Proc. 2003-80, sec. 1, 2003-2 C.B. at 1037; Rev. Proc. 2004-

60, sec. 1, 2004-2 C.B. at 682. Employees who receive per diem

allowances from an employer and meet certain requirements of the

applicable revenue procedures are not required to include the

deemed substantiated amounts in their gross income or claim the
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expense deductions on their return. See Rev. Proc. 2003-80, sec.

7, 2003-2 C.B. at 1044; Rev. Proc. 2004-60, sec. 7, 2004-2 C.B.

at 691. Employees who are not reimbursed for travel expenses by

their employer cannot use the per diem method and must claim

their travel expense deductions by complying with all of the

substantiation requirements of section 274(d). See Rev. Proc.

2003-80, sec. 1; Rev. Proc. 2004-60, sec. 1.

 Petitioners’ use of the per diem method for substantiating

the amount of Mr. Evans’ travel expenses was in error. Mr. Evans

was not paid a per diem allowance by any of his three employers,

and thus petitioners were not eligible to use the per diem method

for calculating the amount of his travel expenses. 

Section 1.274-5(j)(2), Income Tax Regs., provides that the

Commissioner may prescribe a standard mileage rate that a

taxpayer may use to determine a deduction with respect to the

business use of a passenger automobile. Under this authority the

Commissioner issued Rev. Proc. 2003-76, 2003-2 C.B. 924, which

provides rules for using a standard mileage rate in lieu of

substantiating the actual amount of expenditures relating to the

business use of a passenger automobile. Petitioners are not

eligible to use the standard mileage rate provided in Rev. Proc.

2003-76, supra, because they did not maintain any records or logs

to account for the business mileage of vehicles. See sec. 1.274-

5(j)(2), Income Tax Regs.
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Petitioners have not maintained or provided any records

with respect to the expense amounts in dispute and thus have not

met the substantiation requirements of section 274(d).

Accordingly, petitioners are not entitled to deductions for the

$12,346 of disputed expenses.

To reflect the foregoing,

 Decision will be entered

under Rule 155.