T.C. Memo. 1999-338

UNITED STATES TAX COURT

MARY K. MOYLAN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 12613-97. Filed October 8, 1999.

Mary K. Moylan, pro se.

Robin W. Denick, for respondent.

MEMORANDUM OPINION

POWELL, Special Trial Judge: Respondent determined a

deficiency in petitioner's 1994 Federal income tax in the amount

of $8,984. Unless otherwise indicated, section references are to

the Internal Revenue Code in effect for the year in issue, and

Rule references are to the Tax Court Rules of Practice and

Procedure.
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1 Respondent concedes that petitioner is entitled to the

following deductions: $1,600 in depreciation, an insurance

expense of $394, and $1,035 in toll charges. Respondent also

concedes that if petitioner's income falls below the threshold

amount, petitioner is entitled to an earned income credit. 

Petitioner concedes that she is subject to self-employment taxes;

she is therefore entitled to a deduction for self-employment

taxes.

After concessions,1 the issue is whether petitioner is

entitled to deduct certain Schedule C expenses. 

The facts may be summarized as follows. Petitioner resided

in Baltimore, Maryland, at the time the petition was filed. In

1994, petitioner was employed by the Board of Education for

Prince Georges County, Maryland, as an interpreter for the deaf. 

Petitioner also engaged in work as an interpreter for the deaf as

an independent contractor in 1994.

During 1994, petitioner was also engaged in the trucking

business. Petitioner purchased a truck tractor in 1993. During

1994, petitioner hired an independent contractor to drive the

tractor. Petitioner would enter into contracts with shippers to

have the tractor used to haul their freight. Petitioner sold the

tractor in 1995.

On Schedule C for 1994 petitioner reported income and

claimed deductions for both the interpreting work and the

trucking business. Respondent disallowed certain expenses, and

the following items remain in dispute.
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Claimed Allowed Disallowed

Auto/truck expenses $20,546 $13,560 $6,986

Insurance expenses 3,244 394 2,850

Legal expenses 2,250 -0- 2,250

Office expenses 840 -0- 840

Repair expenses 6,400 -0- 6,400

Taxes/licenses 1,767 -0- 1,767

Utilities 1,020 -0- 1,020

Tolls 1,526 1,035 491

Miscellaneous 902 -0- 902

Test expense 150 -0- 150

Except as discussed infra, petitioner presented no

documentary evidence to support the deductions that were

disallowed. Petitioner's testimony concerning these items was

sparse. Petitioner testified that the truck expenses ($20,546)

were for diesel fuel, but she had receipts for only $10,435.65. 

With respect to the legal expenses, petitioner testified that

they were incurred in connection with selling the tractor, the

sale of which was completed in 1995. Petitioner could not state

what the deduction for taxes was, although from her testimony it

appears that at least some part was paid to the Internal Revenue

Service. The office expenses and utilities were for an alleged

home office; she did not know, however, how the expenses had been

allocated between the personal and business use of the residence. 

Petitioner did not know what the miscellaneous expenses were for. 

With respect to the repair expenses, petitioner agreed that some

of the claimed expenses were for her personal automobile. With

regard to the "test" expense, this apparently was an expense for
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a drug test for the driver who operated as an independent

contractor.

Discussion

Section 162(a) allows deductions for "ordinary and

necessary" expenses paid or incurred during the taxable year in

carrying on any trade or business. Deductions are a matter of

legislative grace, and taxpayers must prove that they are

entitled to the claimed deductions. See Rule 142(a); INDOPCO,

Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Sufficient records

to establish deduction amounts must be maintained. See sec.

6001; Willits v. Commissioner, T.C. Memo. 1999-230. A taxpayer's

inability to produce records does not relieve the taxpayer of the

burden of proof. See Estate of Mason v. Commissioner, 64 T.C.

651, 657-658 (1975), affd. 566 F.2d 2 (6th Cir. 1977).

In the present case, petitioner has failed to produce

sufficient documentation to support the claimed deductions. 

Petitioner introduced into evidence a number of so-called

Settlement Sheets (sheets). These sheets were produced by the

various companies for which petitioner's driver hauled freight. 

The sheets contain various information on the trucking runs,

e.g., the location of the containers, the distances, pick-up

dates, etc. The sheets also note the costs of each run and in

some cases the amounts paid out by the company contracting for

the runs. 
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There is, however, no means by which to ascertain from the

sheets what expenses claimed by petitioner as deductions were

incurred. The sheets do not specify amounts paid by petitioner,

and the information is simply too general. Petitioner did not

provide any receipts, canceled checks, or any type of

documentation that would connect the information provided on the

sheets with the claimed deductions. Petitioner provided nothing

more than her own curiously vague testimony in an effort to prove

the expenses were actually incurred. This Court is not bound to

accept the self-serving, unverified testimony of a taxpayer. See

Niedringhaus v. Commissioner, 99 T.C. 202, 212 (1992).

With respect to the attorney's fees incurred in the sale of

the tractor in 1995, even if they were substantiated, they would

not be deductible as an ordinary and necessary business expense

in 1994. See Of Course, Inc. v. Commissioner, 499 F.2d 754, 756

(4th Cir. 1974), revg. en banc 59 T.C. 146 (1972). Furthermore,

with regard to the "test" expense, this was an expense of the

driver, who was an independent contractor, and was not

petitioner's expense. With respect to other items such as

insurance and taxes, clearly petitioner could have obtained some

documentation. Rather than obtain evidence to support her

claims, petitioner's litigation tactic seems to have been to

attempt to blame respondent for her lack of records. But, as far

as we can determine, respondent allowed deductions for all

expenses that were substantiated. 
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In sum, petitioner must establish that the deductions

claimed are ordinary and necessary expenses and further must

substantiate the deductions claimed. See also Hradesky v.

Commissioner, 65 T.C. 87, 89-90 (1975), affd. per curiam 540 F.2d

821 (5th Cir. 1976). Petitioner has failed to do so. Except for

respondent's concessions, respondent's determinations are

sustained. 

 Decision will be entered

under Rule 155.