TAX COURT OPINION

Case: Macceau Medozile
Docket Number: 13276-06
Judge: Colvin
Opinion Type: bench
Filed: 05/16/2008
Pages: 10

I UNITED STATES TAX COURT WASHINGTON , D .C . 202 1 7 MACCEAU MEDOZILE , Petitioner , V . Docket No . 13276-06 COMMISSIONER OF INTERNAL REVENUE, ) Respondent . RECORDE D SERVICE S . T . JUDGE -1 FILES O R D E R Pursuant to Rule 152(b), Tax Cour Rules of Practice an d Procedure, it i s ORDERED that the Clerk of the Cou to petitioner and to respondent a copy transcript of the trial of the above c Kroupa at New York, New York on April oral findings of fact and opinion rend trial . t shall transmit herewith of the pages of th e se before Judge Diane L . 0, 2008, containing her red at the conclusion o f ra E In accordance with the oral findi decision will be entered under Rule 1 5 gs of fact and opinion, a (Signed ) Diane L. Kroupa Judge Dated : Washington, D .C . May 16, 2008 SERVED MAY 16 2008 3 1 Bench Opinion by Judge Diane . Kroupa April 30, 2008 2 Macceau Medozile v . Commissio er Docket No . 13276-0 6 3 4 THE COURT : The Cou t has decided to render 5 Oral Findings of Fact and Opi ion in this case, an d 6 the following represents the ourt's oral Findings of 7 Fact and Opinion . These oral findings of fact an d 8 opinion shall not be relied u on as precedent in any 9 other case . 10 This bench opinion i made pursuant to the 11 authority granted by Section 7 59(b) of the Internal 12 Revenue Code, and Rule 152 of he Tax Court Rules of 13 Practice and Procedure . All s ction references are t o 14 the Internal Revenue Code for 1 he year 2004 , and al l 15 Rule references are to the Tax Court's Rules of 16 Practice and Procedure . 17 Macceau Medozile app( ared on his own behalf , 18 and Michelle Maniscalco appearo d on behalf of th e 19 Respondent . 20 FINDINGS OF FACT 21 Certain facts have been stipulated . Th e 22 stipulation of facts filed by the parties, with 23 accompanying exhibits , is incorporated by this 24 reference . The facts are so found . 25 The Petitioner resided in New York at the Heritage Reporting Corporatio n (202) 628-4888 4 1 time she filed the petition in this case . Petitioner 2 was an employee of the New Yor City Department o f 3 Parks during 2004 as a general field service 4 representative . Petitioner eazned $36,835 in thi s 5 position and claimed almost al~ of it (or $27,643) fo r 6 miscellaneous itemized deductions on the return fo r 7 2004, including unreimbursed e ployee busines s 8 expenses . 9 Respondent examined etitioner's return and 10 disallowed most of the claimed business expenses for 11 various reasons . For example,, the Responden t 12 disallowed expenses Petitioners claimed for vehicl e 13 expenses, boots, shoes, suits, and the upkeep thereof , 14 a briefcase, seminars , journa]s, magazines like Mother 15 Earth, scarves, coats, leather gloves, and physica l 16 exercise either because they were not reimbursable b y 17 Petitioner's employer, they were personal in nature, 18 or Petitioner lacked substant}ation for such expenses, 19 as well as other certain itemized deductions . 20 Petitioner maintained that the expenses were 21 necessary to his employment as a general field service 22 representative to maintain the parks . Respondent als o 23 disallowed the entire charit le contributio n 24 Petitioner claimed of $3,135,1of which $2,64 0 25 consisted of cash, and $495 consisted of property . Heritage Reporting Corporation (202) 628-4888 5 1 Respondent made then e determinations in a 2 statutory notice of deficiency dated July 19, 2006, 3 and determined a $3,811 deficiency in income ta x 4 against Petitioner for 2004 . This is primarily a 5 substantiation case involving whether Petitioner i s 6 entitled to deduct certain mis cellaneous itemize d 7 deductions . 8 OPINIO: 9 We begin with certai pn fundamental principle s 10 of tax litigation . First, the Commissioner' s 11 determinations are presumed co~rect, and the taxpayer 12 bears the burden of proving that those determination s 13 are erroneous . Rule 142(a) . 14 This principle is not affected by Section 15 7491(a) because Petitioner failed to comply wit h 16 statutory substantiation requirements or maintain all 17 required records . See Sectionl,7491(a)(2)(A) and (B) ; 18 see also Higbee v . Commissioner , 116 T .C . 438 (2001) . 19 Second, deductions are a matter o f 20 legislative grace,aO q_the tax ayer must show that h e 21 or she is entitled to each deduction claimed . Rul e 22 142 (a) ; Deputy v . dePont , 308 S . 488, 493 ( 1940) ; 23 New Colonial Inc . Co v . Helveriing , 292 U .S . 435, 440 24 (1934 ) . This includes the burden of substantiation . 25 Hradesky v . Commissioner , 65 T .'IC . 87, 90 (1975), affd . Heritage Reporting Corporation (202) 628-4888 6 per curiam 540 F .2d 821 (5th C ir . 1976) . Substantiation means that a taxpayer shall keep such permanent records or books of account as are sufficient to establish the am unt of deduction s claimed on the return . Sec . 6 001 ; Sec . 1 .6001-1(a), (e), Income Tax Regs . The Cou t need not accept a taxpayer's self-serving testim ony when the taxpayer fails to present other probati ve evidence . Beam v . Commissioner , T .C . Memo . 1990- 304 (citing Tokarski v . Commissioner , 87 T .C . 74, 7 7 1986) . Services performed y an employee constitut e a trade or business . O'Malle" v . Commissioner , 9 1 T .C . 352, 363-364 (1988) ; Sec . 1-162-17 (a), Income Tax Regs . The taxpayer must, how ver, prove that the expenses are legitimate busin ss expenses , and such expenses are ordinary and ne c ssary, to the employer's business . Sec . 1 .211-1, Inco e Tax Regs . We first consider P titioner's charitable contributions . Petitioner cl imed he contribute d 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 5 1 6 1 7 1 8 19 20 $2,640 of cash and $495 of property to charities i n 21 2004, yet failed to document these contributions . 22 Charitable contributions a taxpayer make s 23 are generally deductible under Section 170(a) . No 24 deduction is allowed , however for any contribution of 25 $250 or more unless the taxpayer substantiates th e Heritage Reporting Corporation (202) 628-4888 7 1 contribution by a contemporaneous writte n 2 acknowledgement of the contribution by a qualifie d 3 donee organization . Sec . 170 f)(8)(A) . We note there 4 are now more stringent requir ments for contributions 5 of money . Sec . 170 (f) (17) . 6 After August 17, 2006, no deduction for a 7 contribution of money in any mount is allowed unless 8 the donor maintains a bank record or writte n 9 communication from the donee showing the name of the 10 donee organization, the date of the contribution, an d 11 the amount of the contributio . Pension Protectio n 12 Act of 2006, Pub . L . 109-280, Sec . 1217, 120 Stat . 13 1080 . 14 The deduction for a contribution of property 15 equals the fair market value f the property on the 16 date contributed . Sec . 1 .174-1( c)(1), Income Tax 17 Regs . 18 A taxpayer claiming a charitabl e 19 contribution is generally req ired to maintain for 20 each contribution a canceled heck, a receipt from the 21 donee charitable organization showing the name o f 22 their organization, and the date and amount of the 23 contribution, or other reliable written record s 24 showing the name of the donee and the date and amoun t 25 of the contribution . Sec . 1 .$L70A-13(a)(1), Income Ta x Heritage Reporting Corporation (202) 628+4888 8 1 Regs . 2 Here, Petitioner fai led to provide any 3 admissible evidence regarding ny charitabl e 4 contribution for 2004 . Thus, Petitioner is not 5 entitled to deduct any charita ble contributions i n 6 2004 . 7 We now address the o ther amounts Petitioner 8 claimed as miscellaneous item' zed deductions . These 9 include $11,608 of vehicle e x enses, $639 union dues, 10 $410 job search expenses, $3, 99 .04 for busines s boots p, 11 suits, shoes , [s±aes], and thei upkeep, $1,579 .02 for 12 seminars, journals , magazines, and technical support, 13 $300 for a briefcase , $ 225 fo tax preparation 14 software , $ 1,240 .50 for scary s, coats, leather 15 gloves , and physical exercise $825 .80 for civil 16 books, drawing and study guid s, and $2,046 fo r 17 continuing education expensed all of which are stil l 18 in dispute . 19 We also observe tha Section 6001 and th e 20 regulations promulgated there nder require taxpayers 21 to maintain records sufficien to permit verification 22 of income and expenses . 23 As a general rule, f such records provid e 24 sufficient evidence that the taxpayer has incurred a 25 deductible expense, but the taxpayer is unable t o Heritage Reporting Corporation (202) 628}4888 9 1 adequately substantiate the amount of the deduction to 2 which he or she is otherwise entitled, the Court may 3 estimate the amount of such expense and allow the 4 deduction to that extent . Cohan v . Commissioner, 39 5 F .2d 540, 543 - 544 (2d Cir . 1930) . 6 For the Court to est mate the amount of a n 7 expense, however, we must have some basis upon whic h 8 an estimate may be made . Vani~ek v . Commissioner , 8 5 9 T .C . 731, 743 ( 1985 ) . Without such a basis, any 10 allowance would amount to ungu ded largesse . Williams 11 12 v . United States , 245 F .2d 55 9 560 (5th Cir . 1957) . Certain expenses, s u h as those for listed 13 expenses , which includes an au omobile, may not be 14 estimated because of the stric substantiatio n 15 requirements mandated by Secti n 274(d ) . See Sec . 16 280F ( d)(4)(A) ; Stanford V . Corn issioner , 50 T .C . 823, 17 827 ( 1968 ), affd . per curiam 4 2 F .2d 201 ( 2d Cir . 18 19691; Secs . 1 .274-5T ( a) and 1 .280F-6T(b)(2) , 19 Temporary Income Tax Regs . 20 For such expenses , only documentary 21 substantiation will suffice . For automobile expenses, 22 the taxpayer must provide the business purpose, the 23 amount, and the time and place, of expenditure . Sec . 24 1 .274 - 5T(b)(2), Temporary Income Tax Regs ., 50 Fed . 25 Reg . 46014 (Nov 6, 1985) . Heritage Reporting, Corporation (202) 628-4888 1 0 1 Third, personal living expenses are no t 2 deductible . Secs . 162 (a) and 62(a) . In fact, there 3 are many expenses that are helpful, even essential, to 4 one's business , but which are of deductible in ou r 5 tax system . See Carroll v . Commissioner, 51 T .C . 213 , 6 215 (1968), affd . 418 F .2d 9 1 7th Cir . 1969) . 7 Expenses of drivin g o and from work, for 8 example, are not deductible a s personal expenses . 9 Strohmaier v . Commissioner , 11 : T .C . 106, 113 (1999) ; 10 Sec . 1 .162( e), Income Tax Regs . By Petitioner's own 11 admission, he claims that he u $ ed his own vehicle to 12 work at the times he preferred , rather than the time s 13 his employer's vehicles were a ailable . Accordingly , 14 he cannot deduct any vehicle expenses for 2004 . 15 In addition, clothi n expenses are generally 16 not deductible as a business e pense even whe n 17 specific types of clothing are a necessary condition 18 of the business or employment . Hynes v . Commissioner , 19 74 T .C . 1266, 1290 (1980) . A ecognized exceptio n 20 exists for clothing that is no t suitable for general 21 or personal wear, and the clot .ing is not so worn . 22 Id . This test has been held t be an objectiv e 23 standard . Pevsner v . Commissioner , 628 F .2d 467, 470- 24 471 (5th Cir . 1980) . 25 Based on the record as a whole, Petitioner Heritage Reporting Corporation (202) 628-4888 1 1 1 has not substantiated that he eets any of the 2 requirements for his unreimbur ed employee business 3 and other miscellaneous expens s . The only evidence 4 Petitioner provided regarding hese expenses wa s 5 Exhibit 4-P that appears to be an Excel worksheet . 6 There is no separate documenta ion to substantiate 7 when the items were purchased r how the relate to 8 Petitioner's business of being a New York City Park 9 employee . 10 Further, many, if no all of the expenses 11 Petitioner claimed on the ret u n for 2004 appear to be 12 personal, nondeductible expens s . We therefore hol d 13 that Petitioner is not entitled to any of th e 14 miscellaneous itemized deducti ns still in disput e 15 after the parties' concession s 16 To give effect to t h foregoing and the 17 parties' concessions , decision wi]J be entered under I ak, 18 Rule 155 . 19 This concludes the Court's oral findings o f 20 fact and opinion in this case . 21 (Whereupon, at 9 :36 .m ., the bench opinio n 22 in the above-entitled matter w s concluded . ) 23 24 25 Heritage ReportinglCorporation (202) 628-4888