United States Tax Court

T.C. Summary Opinion 2022-9

RAUL ROMANA AND MARIA CORAZON ROMANA,

Petitioners

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

—————

Docket No. 1156-21S. Filed June 16, 2022.

—————

Steven S. Chung, for petitioners.

Chae M. Kim and Michael E. Washburn, for respondent.

SUMMARY OPINION

CARLUZZO, Chief 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 other court, and this 

opinion shall not be treated as precedent for any other case.

In a notice of deficiency dated December 11, 2020 (notice), 

respondent determined deficiencies in petitioners’ federal income tax

and section 6662(a) accuracy-related penalties for 2016, 2017, and 2018.

After concessions, the issues for decision are whether petitioners 

(1) are entitled to a miscellaneous itemized deduction for unreimbursed 

1 Unless otherwise indicated, statutory references are to the Internal Revenue 

Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the 

Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and

Rule references are to the Tax Court Rules of Practice and Procedure.

Served 06/16/22
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employee business expenses for 20172 in excess of the amount already 

allowed by respondent and (2) are liable for a section 6662(a) accuracyrelated penalty for any year in issue.

Background

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

Petitioners lived in California when the Petition was filed.

During each year in issue Mr. Romana was employed as a 

stationary engineer; Mrs. Romana was employed as a nurse in a plastic 

surgery clinic operated by Kaiser Permanente (Kaiser). Both petitioners 

received most of their formal education in the Philippines although both 

received additional professional and/or vocational training in the United 

States after moving to the United States from the Philippines. Neither 

petitioner had any formal training in accounting or federal income 

taxation.

Kaiser’s dress code in effect at the location where she worked 

required that Mrs. Romana be dressed in “comfortable” clothes and in a 

manner that reflected her profession as a nurse. Neither Kaiser nor the 

collective bargaining agreement for her nursing union had a policy that 

allowed reimbursement for the expenses she incurred to purchase 

clothing that satisfied her employer’s dress code. While at work, Mrs. 

Romana wore clothing that resembled scrubs that she purchased at her 

own expense from local department stores. In the operating room she 

was required to wear scrubs provided by Kaiser. Routinely, depending 

upon the operation schedule for any given day, she changed back and 

forth between her scrublike clothing and the operating room scrubs her 

employer provided.

During 2017 Mrs. Romana also purchased, at her own expense, a 

white “lab” coat with “Kaiser Permanente” and her name embroidered 

on it. The purchase was made as part of a bulk purchase along with 

similar items purchased by fellow employees. The lab coat cost 

approximately $45, and it was dry cleaned multiple times during the 

year. Otherwise, the costs that petitioners paid for Mrs. Romana’s work 

clothing cannot be precisely determined.

2 The Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97, § 11045, 131 Stat.

2054, 2088, amended section 67 by suspending miscellaneous itemized deductions for 

any taxable year beginning after December 31, 2017, and before January 1, 2026.
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Petitioners’ federal income tax return for each year in issue was 

prepared by a paid income tax return preparer. Petitioners’ return 

preparer, who began preparing federal income tax returns for 

petitioners around 2003, was hired on the recommendation of 

petitioners’ family and friends. The return preparer assisted petitioners 

with other financial matters as well. For example, the return preparer

advised petitioners to set up an S corporation to manage their rental

properties and helped them set up living trusts and living wills.

The Schedule A, Itemized Deductions, included with petitioners’

2017 return shows various deductions, including, as relevant here, 

unreimbursed employee business expenses relating to Mrs. Romana’s 

employment with Kaiser and Mr. Romana’s employment as a stationary 

engineer. Attached to the Schedule A is a “TY 2017 Unreimbursed 

Expense Statement” reflecting the detail of the unreimbursed employee 

business expenses as follows:

Unreimbursed Expense Amount

Union and professional dues $3,616

Uniforms and protective clothing 1,915

Dry cleaning/laundry 399

Seminars 601

Tools 250

Telephone 263

Internet 1,134

Total $8,178

In the notice and as relevant, respondent allowed the 

miscellaneous itemized deduction for unreimbursed employee business 

expenses claimed on petitioners’ 2017 Schedule A for union and 

professional dues and for seminars. Otherwise, respondent disallowed

the miscellaneous itemized deduction for unreimbursed employee 

business expenses claimed for uniforms and protective clothing, dry 

cleaning and laundry, tools, telephone, and internet. As noted, 
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respondent also imposed a section 6662(a) accuracy-related penalty for 

each year in issue.

Discussion

As a general rule, the Commissioner’s determination of a 

taxpayer’s federal income tax liability in a notice of deficiency is 

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

determination is erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 

111, 115 (1933).3

I. Unreimbursed Employee Business Expenses

As we have observed in countless opinions, deductions are a 

matter of legislative grace, and the taxpayer bears the burden of proving 

entitlement to any claimed deduction. Rule 142(a); INDOPCO, Inc. v. 

Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 

292 U.S. 435, 440 (1934). This burden requires the taxpayer to 

substantiate expenses underlying deductions claimed by keeping and 

producing adequate records that enable the Commissioner to determine 

the taxpayer’s correct tax liability. § 6001; Hradesky v. Commissioner, 

65 T.C. 87, 89–90 (1975), aff’d per curiam, 540 F.2d 821 (5th Cir. 1976); 

Meneguzzo v. Commissioner, 43 T.C. 824, 831–32 (1965). A taxpayer 

claiming a deduction on a federal income tax return must demonstrate 

that the deduction is allowable pursuant to some statutory provision and 

must further substantiate that the expense to which the deduction 

relates has been paid or incurred. See § 6001; Hradesky, 65 T.C. 

at 89–90; Treas. Reg. § 1.6001-1(a).

Taxpayers may deduct ordinary and necessary expenses paid in 

connection with operating a trade or business. § 162(a); Boyd v. 

Commissioner, 122 T.C. 305, 313 (2004). Generally, the performance of 

services as an employee constitutes a trade or business. Primuth v. 

Commissioner, 54 T.C. 374, 377 (1970). If, as a condition of employment, 

an employee is required to incur certain expenses, then the employee is 

entitled to a deduction for those expenses unless entitled to 

reimbursement from his or her employer. See Fountain v. 

Commissioner, 59 T.C. 696, 708 (1973); Spielbauer v. Commissioner, 

T.C. Memo. 1998-80.

3 Petitioners do not claim and the record does not otherwise demonstrate that 

the provisions of section 7491(a) need be applied here, and we proceed as though they 

do not.
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The deduction for unreimbursed employee business expenses is a 

miscellaneous itemized deduction. §§ 67(b), 63(d)(1), 62. During the 

relevant period miscellaneous itemized deductions were allowable only 

to the extent that the total of such deductions exceeded 2% of adjusted 

gross income (AGI). § 67(a) and (b). Petitioners’ total miscellaneous 

itemized deductions for 2017, as allowed by respondent in the notice, 

exceed 2% of their AGI.

As a general rule, if a taxpayer provides sufficient evidence that 

the taxpayer has incurred a trade or business expense contemplated by 

section 162(a) but is unable to adequately substantiate the amount, the 

Court may estimate the amount and allow a deduction to that extent.

Cohan v. Commissioner, 39 F.2d 540, 543–44 (2d Cir. 1930). However, 

in order for the Court to estimate the amount of an expense, there must 

be some basis upon which an estimate may be made. Vanicek v. 

Commissioner, 85 T.C. 731, 742–43 (1985).

All of the disputed deductions relate to Mrs. Romana’s 

employment with Kaiser or Mr. Romana’s employment as a stationary 

engineer. According to petitioners, they are entitled to unreimbursed 

employee business expense deductions of $1,526 for clothing, $250 for 

tools, $263 for telephone, and $1,134 for internet. According to 

petitioners, each expense qualifies as an ordinary and necessary 

business expense paid by petitioners but not reimbursable by their 

employers. See § 162(a). According to respondent, petitioners have 

failed to establish that (1) the expenses were paid or, if paid, (2) the 

expenses were ordinary and necessary business expenses, and if 

business related, (3) they were not reimbursable by petitioners’ 

employers.

A. Clothing

On their 2017 return petitioners claimed $1,915 in expenses for 

“Uniforms and protective clothing” and $399 for “dry cleaning/laundry.” 

Petitioners now assert that they are entitled to deduct $1,526 for those 

items.

Generally, the cost of a business wardrobe, even if required as a 

condition of employment, is considered a nondeductible personal 

expense within the meaning of section 262. See, e.g., Hynes v. 

Commissioner, 74 T.C. 1266, 1290 (1980). Those costs are not deductible 

even when it has been shown that the particular clothes would not have 

been purchased but for the employment. Id. Clothing costs are 
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deductible as ordinary and necessary business expenses under section 

162 only if (1) the clothing is of a type specifically required as a condition 

of employment, (2) it is not adaptable to general use as ordinary 

clothing, and (3) it is not so worn. See Yeomans v. Commissioner, 30 

T.C. 757, 767 (1958); see also Deihl v. Commissioner, T.C. Memo. 2005-

287.

Mrs. Romana was required to dress professionally and 

comfortably for her job as a nurse. To do so, she purchased shirts and 

pants at department stores. Because the clothing resembled scrubs, we 

find that the clothing was not adaptable to general use as ordinary 

clothing outside of her employment. Consequently, the cost of the 

clothing and the cost to dry clean the clothing are deductible. Mrs. 

Romana also purchased a white lab coat with “Kaiser Permanente” and 

her name embroidered on it. This lab coat was not appropriate for 

general use. 

According to Mrs. Romana, the lab coat cost around $45. 

Petitioners provided only generalized estimates for the costs of the 

scrublike clothing that Mrs. Romana wore at work and the dry cleaning 

costs paid to dry clean those items. After a careful review of the 

evidence, and as best we can estimate from what has been submitted, 

we find that petitioners are entitled to a $500 deduction for the 

purchases of the clothing that Mrs. Romana was required to wear as a 

condition of her employment and the related dry cleaning costs paid with 

respect to those items. See Cohan v. Commissioner, 39 F.2d at 543–44. 

B. Tools 

Petitioners claimed a deduction of $250 for tools for 2017. They 

did not offer any evidence that identifies the type of tools, the cost of the 

tools, or the business use of the tools. Furthermore, there is insufficient 

evidence that would allow for a deduction based on an estimate. See

Vanicek, 85 T.C. at 742–43. Accordingly, petitioners are not entitled to 

a deduction for unreimbursed employee business expenses for tools for 

2017.

C. Phone and Internet

Petitioners claimed deductions of $264 for phone expenses and 

$1,134 for internet expenses. Petitioners did not offer documentary 

evidence or testimony regarding their business use of the phone and 

internet, nor did they explain how they arrived at their estimate of 

business versus personal use. Without such evidence the Court does not 
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have a reasonable basis to estimate the amounts of the expenses related 

to business use. See id. Accordingly, petitioners are not entitled to a 

deduction for unreimbursed employee business expenses for phone and 

internet for 2017. 

II. Accuracy-Related Penalties

Lastly, we consider whether petitioners are liable for a section 

6662(a) accuracy-related penalty for any year in issue. Relying upon 

various grounds, respondent argues that petitioners are liable for the 

penalty for each year. See § 6662(a)-(d).

Petitioners’ paid income tax return preparer prepared petitioners’ 

2016, 2017, and 2018 returns. Petitioners had retained the same return 

preparer since approximately 2003 to prepare their returns. Routinely, 

petitioners met with the return preparer two or three times each year. 

As was petitioners’ practice with respect to their joint federal income tax 

returns filed for other years, Mrs. Romana assembled petitioners’ 

personal and employment information, tax documents, and source 

documents underlying the deductions shown on their returns and 

provided them to the return preparer. Mrs. Romana also provided the 

return preparer with various financial statements related to their rental 

properties.

 Petitioners’ presentation at trial satisfies us that petitioners 

reasonably relied upon their return preparer to do what they paid their 

return preparer to do. Neither petitioner had any formal training in 

accounting or matters of federal income taxation. To the extent that 

petitioners claimed disallowed deductions that they now concede, we 

find that these deductions were claimed on the advice of their return 

preparer and further find that it was not unreasonable for petitioners 

not to have questioned that advice.

Under the circumstances, we find that petitioners had reasonable 

cause for the underpayment of tax required to be shown on their return 

for each year in issue and that they acted in good faith with respect to 

those underpayments. See § 6664(c); Higbee v. Commissioner, 116 T.C. 

438, 446–47 (2001). Petitioners are not liable for the section 6662(a) 

accuracy-related penalty for any year in issue. 

To reflect the foregoing,

Decision will be entered under Rule 155.