1 Unless otherwise indicated, all subsequent section

references are to the Internal Revenue Code in effect for 2006,

the taxable year in issue, and all Rule references are to the Tax

Court Rules of Practice and Procedure.

T.C. Summary Opinion 2010-132

UNITED STATES TAX COURT

DAVID R. HOLLAND, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 7951-09S. Filed September 8, 2010.

David R. Holland, pro se.

Nicholas Doukas, for respondent.

ARMEN, Special Trial 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 
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2 Without regard to the 2-percent floor on miscellaneous

itemized deductions, see sec. 67(a), respondent concedes that

petitioner is entitled to a deduction for union dues of $368 as

claimed by petitioner on his return.

other court, and this opinion shall not be treated as precedent

for any other case.

Respondent determined a deficiency of $2,121 in petitioner’s

2006 Federal income tax.

After a concession by respondent,2 the only issue for

decision is whether petitioner is entitled to the deduction for

employee business expenses that respondent disallowed for lack of

substantiation. We hold that petitioner is but only to the

extent decided herein.

Background

Some of the facts have been stipulated, and they are so

found. We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

Petitioner resided in the State of California when the

petition was filed.

Throughout 2006, the taxable year in issue, petitioner lived

in Coalinga, California. He did not subscribe to landline

telephone service at his home but rather relied exclusively on a

cellular telephone, which he used for both personal and business

purposes.
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3 Operating Engineers Local Union No. 3 has over 40,000

members, most of whom work as heavy equipment operators and

construction workers. See http://www.oe3.org. Local Union No. 3

portrays itself as the largest construction trades local in the

United States. Id. It is an affiliated local of the

International Union of Operating Engineers. See

http://www.iuoe.org.

By profession, petitioner is (and has been for some years)

an operator of heavy equipment, such as bulldozers, excavators,

and similar types of machinery used in the building of highways

and other construction projects. As such, petitioner is a member

of Operating Engineers Local Union No. 3.3

During 2006, petitioner obtained most of his work

assignments through signing the “out-of-work” book at the union

hall in Fresno and waiting for his name to come to the top of the

list. He did, however, manage to find some assignments on his

own.

All of petitioner’s assignments throughout 2006 were short

term, lasting as little as a few days or a week to no more than a

couple of months.

For the first 10 months of 2006, petitioner worked at

various jobsites in California, many of which were located in the

Central Valley. If the job was within 100 miles or so of his

home in Coalinga, petitioner would drive back and forth on a

daily basis. If the job were further afield, petitioner would

stay at a motel during the workweek and return to his home in

Coalinga for the weekend.
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4 The record does not disclose the name(s) of the company

or companies for whom petitioner worked nor exactly where in

Arizona he worked.

5 Presumably, “they” were the employers.

For much of the last 2 months of 2006, petitioner “went into

Arizona and was working for a company in Arizona.”4

None of the expenses incurred by petitioner for

transportation or for meals was reimbursed by any employer or by

his union. However, “they usually paid for the lodging”.5

On August 3 and 4, 2006, petitioner worked for Shasta

Constructors, Inc. (Shasta), at a project in Merced, California. 

Petitioner also worked for Shasta at the same project from August

7 through 11, 2006. On each of those 7 days, petitioner drove

from his home in Coalinga to the jobsite and back, a total of 224

miles per day. Thus, over the course of those 7 days, petitioner

drove some 1,568 work-related miles.

On October 10 through 13, 2006, petitioner worked for

American Paving Co. (American Paving) at a project in Clovis,

California. Petitioner also worked for American Paving at the

same project from October 16 through 19, 2006, and from October

23 through 27, 2006. On each of those 13 days, petitioner drove

from his home in Coalinga to the jobsite and back, a total of 157

miles per day. Thus, over the course of those 13 days,

petitioner drove some 2,041 work-related miles.
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Petitioner filed a Federal income tax return for 2006. 

Petitioner did not prepare the return himself; rather, it was

prepared for him by a small bookkeeping and return preparation

business.

On his return, petitioner itemized his deductions. Among

those claimed was one for employee business expenses of $15,897,

which consisted of the following:

Item Amount

Form 2106 $13,809

Union dues 368

Work gloves 550

 Boots 150

 Cellular phone 1,020

 $15,897

On the Form 2106, Employee Business Expenses, petitioner

claimed vehicle expenses of $10,444, travel expenses while away

from home overnight (other than meals) of $525, and meals of

$6,930. Next, petitioner reduced the amount for meals by $1,250

for reimbursements received; he then reduced the difference

(i.e., $6,930-$1,250, or $5,680) by 50 percent. See sec. 274(n). 

Finally, petitioner added the balance, or $2,840, to the amounts

for vehicle expenses ($10,444) and travel expenses ($525) to

arrive at the total deduction of $13,809.

In part II of Form 2106, petitioner computed vehicle

expenses based on the standard mileage rate of $0.45/per mile

times 23,470 business miles.
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In the notice of deficiency, respondent disallowed, for lack

of substantiation, the entire deduction claimed by petitioner on

his Schedule A, Itemized Deductions, for employee business

expenses. However, at trial respondent conceded that petitioner

was entitled to deduct union dues of $368 as claimed by

petitioner on his return.

Discussion

Burden of Proof

Generally, the Commissioner’s determinations are presumed

correct, and the taxpayer bears the burden of proving that those

determinations are erroneous. Rule 142(a); INDOPCO, Inc. v.

Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering, 290

U.S. 111, 115 (1933). Specifically, deductions are a matter of

legislative grace, and the taxpayer bears the burden of proving

entitlement to any deduction claimed. Rule 142(a); Deputy v. du

Pont, 308 U.S. 488, 493 (1940); New Colonial Ice Co. v.

Helvering, 292 U.S. 435, 440 (1934). Although section 7491(a)

may serve to shift the burden of proof to the Commissioner under

certain circumstances, it does not do so here for at least three

independent reasons: Petitioner failed to raise the matter;

petitioner failed to comply with recordkeeping and substantiation

requirements, see sec. 7491(a)(2)(A) and (B); and petitioner

failed to introduce the requisite quality of evidence, see sec.

7491(a)(1). Accordingly, petitioner bears the burden of proof.
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6 Sec. 6001 provides that “Every person liable for any tax

imposed by this title, or for the collection thereof, shall keep

such records * * * and comply with such rules and regulations as

the Secretary may from time to time prescribe.”

Sec. 1.6001-1(a), Income Tax Regs., provides that “Any

person subject to tax * * * shall keep such permanent books of

account or records * * * as are sufficient to establish the

(continued...)

Petitioner’s Position and Admissions

At trial, petitioner succinctly set forth his position as

well as his understanding of what this case is all about:

* * * I did run construction. I did have expenses. I

don’t have records of them expenses, but I did work

this construction all year long, and I had the

expenses. I don’t know of any job that you have no

expenses for. Just because I don’t have the records of

it is what this is all about. 

Petitioner candidly admitted at trial that “I’m not a

recordkeeper” and that “I didn’t save my receipts or nothing.” 

Indeed, in response to respondent’s counsel’s comment on crossexamination that “We’re just trying to get the facts out”, 

petitioner replied: “Well, the only facts here is I have no

receipts for this stuff.”

General Principles Governing Substantiation

Like petitioner, we are not aware of “any job that you have

no expenses for.” But that truism does not abide, because a

taxpayer is required to maintain records sufficient to

substantiate deductions claimed by the taxpayer on his or her

return. See generally sec. 6001; sec. 1.6001-1(a), (e), Income

Tax Regs.6 This is because a tax return is merely a statement of
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6(...continued)

amount of * * * deductions”.

Sec. 1.6001-1(e), Income Tax Regs., provides that “The books

or records required by this section shall be kept at all times

available for inspection by authorized internal revenue officers

or employees, and shall be retained so long as the contents

thereof may become material in the administration of any internal

revenue law.” 

the taxpayer’s claim, and the return is not presumed to be

correct. Wilkinson v. Commissioner, 71 T.C. 633, 639 (1979);

Roberts v. Commissioner, 62 T.C. 834, 837 (1974). In short, the

fact that a taxpayer claims a deduction on the taxpayer’s income

tax return is not sufficient to substantiate the deduction

claimed on the return. Wilkinson v. Commissioner, supra at 639;

Roberts v. Commissioner, supra at 837; Seaboard Commercial Corp.

v. Commissioner, 28 T.C. 1034, 1051 (1957); Halle v.

Commissioner, 7 T.C. 245 (1946), affd. 175 F.2d 500 (2d Cir.

1949).

The Cohan Rule and Its Limitations

As a general rule, if, in the absence of required records, a

taxpayer provides sufficient evidence that the taxpayer has

incurred a deductible expense, but the taxpayer is unable to

adequately substantiate the amount of the deduction to which he

or she is otherwise entitled, the Court may estimate the amount

of such expense and allow the deduction to that extent. Cohan v.

Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930). However, the 
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7 Sec. 274(d) provides in pertinent part as follows:

SEC. 274. Disallowance of Certain Entertainment, Etc., Expenses.

(d) Substantiation Required.--No deduction or credit shall

be allowed--

(1) * * * for any traveling expense (including meals

and lodging while away from home),

(2) for any item with respect to an activity which is

(continued...)

Court may bear heavily against the taxpayer, whose inexactitude

is of his or her own making. Id.

Further, in order for the Court to estimate the amount of an

expense, we must have some basis upon which an estimate may be

made. Vanicek v. Commissioner, 85 T.C. 731, 743 (1985). Without

such a basis, any allowance would amount to unguided largesse. 

Williams v. United States, 245 F.2d 559, 560 (5th Cir. 1957).

Strict Substantiation for Certain Expenses

In the case of certain expenses, section 274(d) expressly

overrides the so-called Cohan doctrine. Sanford v. Commissioner,

50 T.C. 823, 827 (1968), affd. per curiam 412 F.2d 201 (2d Cir.

1969); sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg.

46014 (Nov. 6, 1985). Specifically, and as pertinent herein,

section 274(d) provides that no deduction is allowable for

traveling expenses (including meals and lodging while away from

home) or with respect to listed property as defined in section

280F(d)(4), unless the deduction is substantiated in accordance

with the strict substantiation requirements of section 274(d) and

the regulations promulgated thereunder.7 Included within the
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7(...continued)

of a type generally considered to constitute entertainment,

amusement, or recreation, * * *

(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. * * *

definition of listed property in section 280F(d)(4) is any

passenger automobile or other property used as a means of

transportation and any cellular telephone. Sec.

280F(d)(4)(A)(i), (ii), (v), (5); sec. 1.280F-6(b) and (c),

Income Tax Regs.

Thus, under section 274(d), no deduction is allowable for

expenses incurred for traveling expenses or in respect of listed

property on the basis of any approximation or the unsupported

testimony of the taxpayer. See, e.g., Murata v. Commissioner,

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

In other words, in the absence of adequate records or sufficient

evidence corroborating the taxpayer’s own statement, any

deduction that is subject to the stringent substantiation

requirements of section 274(d) is proscribed.
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8 The stipulation of facts includes an exhibit, to which

respondent reserved an objection, of a copy of a “2006 calendar

purportedly showing recorded mileage traveled by petitioner

during 2006.” At trial, petitioner candidly admitted that the

calendar was not kept contemporaneously but rather was prepared

from memory “three years back” in an effort to reconstruct his

travel; he also frankly admitted that “there’s a couple mistakes

on it” and that “we do have a couple of questionables.” 

Petitioner did not identify the “questionables”, but we note that

the calendar is not consistent with certain other evidence in the

record. Under the circumstances, we conclude that the exhibit

does not constitute the type of documentation mandated by sec.

274(d), and we therefore sustain respondent’s objection to its

admissibility.

9 At trial, petitioner seemed surprised by this third-party

documentation, even though it was included in the stipulation of

facts that he had executed. Contrary to petitioner’s complaint

that Shasta and American Paving had been willing to provide this

documentation to respondent but not to him, the cover sheets

accompanying the documentation clearly demonstrate that it had

been faxed to petitioner’s bookkeeper and return preparer, Tony

Gomez, and not to any of respondent’s agents.

Analysis

Expenses Subject to the Section 274(d) Standard

The bulk of the expenses subsumed in the deduction for

employee business expenses is subject to the strict

substantiation standard of section 274(d) because those expenses

relate either to traveling expenses or to listed property (i.e.,

petitioner’s vehicle and cell phone).

The record includes no documentation by petitioner

substantiating such expenses.8 However, the record does include

documentation obtained from two of petitioner’s employers, Shasta

and American Paving.9 That documentation, which was

contemporaneously maintained by those employers, painstakingly
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10 The cited cases hold that a taxpayer may deduct daily

transportation expenses incurred in going between the taxpayer’s

residence and a temporary work location outside the metropolitan

area where he or she lives and normally works. In this regard,

petitioner’s employment with Shasta and American Paving was

clearly temporary, and respondent did not even suggest that

locations such as Clovis and Merced, 78.5 miles and 112 miles

distant, respectively, from petitioner’s home in Coalinga, were

not outside petitioner’s “metropolitan area” or that he did not

normally work in such area. 

But to the extent that petitioner (or his return preparer)

may be under the impression that daily transportation expenses

may be augmented by a flat $40 daily allowance for meals, such is

not the case. Rather, the law provides that a taxpayer’s daily

meals are generally nondeductible under sec. 262 as personal,

living, or family expenses, see United States v. Correll, 389

U.S. 299 (1967); Barry v. Commissioner, 54 T.C. 1210, 1212

(1970), affd. per curiam 435 F.2d 1290 (1st Cir. 1970), because

expenses for meals would have been incurred regardless of whether

the taxpayer had engaged in any business activity, Christey v.

United States, 841 F.2d 809, 814 (8th Cir. 1988); Moss v.

Commissioner, 80 T.C. 1073, 1077-1078 (1983), affd. 758 F.2d 211

(7th Cir. 1985), and even though meals eaten “on the road” may

cost more than those prepared at home, Barry v. Commissioner, 435

F.2d at 1291. Expenses for meals may be deducted under sec.

162(a)(2), but only if consumed while traveling on business away

(continued...)

details petitioner’s employment by date, hour, location, and

project. That documentation, in combination with petitioner’s

testimony, satisfies the strict substantiation requirements of

section 274(d). Thus, without regard to the 2-percent floor on

miscellaneous itemized deductions, see sec. 67(a), petitioner is

entitled to a deduction for mileage expenses of $918.45 based on

the standard mileage rate of $0.45/per mile times 2,041 miles.

See supra p. 4; see also Brockman v. Commissioner, T.C. Memo.

2003-3; Aldea v. Commissioner, T.C. Memo. 2000-136; Rev. Rul. 99-

7, 1999-1 C.B. 361.10
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10(...continued)

from home “overnight”, i.e., on a trip requiring that the

taxpayer stop for sleep or a substantial period of rest, United

States v. Correll, supra; Strohmaier v. Commissioner, 113 T.C.

106, 115 (1999), and then only if the substantiation requirements

of sec. 274(d) are satisfied.

However, apart from the documentation obtained from Shasta

and American Paving, there is nothing in the record that suffices

to satisfy the strict substantiation requirements mandated by

section 274(d). Although we found petitioner to be a credible

individual, his testimony, standing alone, is no substitute for

what section 274(d) demands. Thus, except for the allowance

described in the immediately preceding paragraph, we are obliged

to sustain respondent’s determination disallowing the deduction

claimed by petitioner for “Form 2106” and cellular phone

expenses.

Expenses Subject to the Cohan Standard

Finally, the deduction in issue includes expenses for work

gloves ($550) and safety boots ($150). Neither of these items is

subject to strict substantiation; rather, both are subject to the

more liberal Cohan standard.

Given petitioner’s profession, we can well appreciate that

safety boots are a necessity, as are work gloves. But while we

understand that work gloves wear out or are misplaced and need to

be replaced, $550 strikes us as a bit much, at least in the

absence of any documentary evidence. Accordingly, without regard
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to the 2-percent floor on miscellaneous itemized deductions, see

sec. 67(a), we allow $150 for safety boots and $300 for work

gloves. See Cohan v. Commissioner, 39 F.2d at 543-544. 

Respondent’s determination to the contrary is not sustained.

Conclusion

We have considered all of the arguments advanced by

petitioner, and, to the extent that we have not expressly

addressed any, we conclude that none supports an outcome contrary

to that reached herein.

To reflect our disposition of the disputed issue, as well as

respondent’s concession, see supra note 2,

Decision will be entered

under Rule 155.