TAX COURT OPINION

Case: Jose A. & Sylvia M. Garcia
Docket Number: 26361-06S
Judge: Vasquez
Opinion Type: summary
Filed: 10/28/2008
Pages: 9

4 JOSE A . AND SYLVIA M . GARCIA, Petitioners v . COMMISSIONS OF INTERNAL REVENUE, Responden t VASQUEZ, Judge: his case was heard'pursuant,to th e provisions of section 463 of the Internal Revenue Code in effec t when the petition was fled .' Pursuant' to section 7463(b), th e decision to be entered is°not reviewable by any other court, an d 1 Unless otherwis indicated, all'subsequent sectio n references are to the Internal Revenue Code in effect for th e year in issue, and all Rule references are to the'Tax Court Rule s of Practice and Proced re . this opinion shall not be treated as precedent for any othe r case . Respondent determined a deficiency of $2,815 in petitioners ' 2003 .Federal income tax . The issue for decision is whethe r petitioners' unreimbursed employee business expenses claimed o n Schedule A, Itemized Deductions, of their 2003 return are deductible pursuant to section 162 . 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 . At the time they filed the petition, petitioners resided in New Mexico . During 2003 Jose A . Garcia (petitioner) worked for two different employers in the construction industry . Petitioner worked for Wolf Corp . (Wolf) from January 1 through May 5, 2003 . Wolf had a reimbursement policy in effect for employee business expenses and miles driven in the course of employment . Wolf would have reimbursed petitioner for the mileage incurred in the course of his employment during 2003 if he had-submitted a request for reimbursement ; petitioner did not submit a request . From June 26 through December 29, 2003, petitioner worked for'Lockwood Construction Co . (Lockwood) . Lockwood did not hav e { an employee expense reimbursement policy in effect during th e time of petitioner's employment . V - 3 Petitioner owned a 1988 Ford Ranger-truck and drove it fo r business purposes i n 003 . Petitioners fil e a joint return in 2003, claimin g deductions'of $24,986 . 32 for unreimburs'ed employee expenses=o f vehicle expenses, par ing, .and overnight travel . Petitione r claimed to have drive 65,212 miles for work' during. 2003 . applying the standard mileage rate of $0 .'36 t o this figure , petitioner calculated vehicle expense deduction of'$23,476 .32 . Petitioner also claim e Id $160 in parking fees and $1,'350 i n overnight travel expe n es . during 2003 . Petitioner submit ed copies of the first and last pages .of mileage log to documen the'miles driven . Petitioner had los t the actual mileage log and did not attempt to, reconstruct the .b.k mileage log . Petition r made entries in the mileage log at th e end of every day ., The first page logged trips from January 6 to February 6 and listed starting odometer reading . of 230,156 . The last page logged t ips from the last 3 weeks in Novembe r through the end of the year and listed an ending odometer readin g of 295,368 . The first page of .the mileage log .reports 4,63 5 mi les-driven and_the .1 st page of the mileage log reports 6,553 miles driven . The log provides the ; day of the 'week,, the date, the destination(s), th mileage driven during the day,_ and the starting and ending mi eage for 2003 . } IC 4 - Petitioner was not able to produce any oil change receipts or similar receipts which would have listed the mileage . Discussio n Petitioners have neither claimed nor shown that they : satisfied the requirements of section 7491(a) to shift the burde n of proof to respondent with regard .to any factual issue . Accordingly, petitioners bear the burden of proof . See Rule 142(a) . Deductions are a matter of legislative grace, and the taxpayer .has the burden of showing that he is entitled to any deduction claimed . Rule 142(a) ; New Colonial Ice Co .~ v . Helverina , 292 U .S . 435, 440 (1934) . Section 162(a) allows a taxpayer to deduct all ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business, including a trade or business a s an employee . Lucas v . Commissioner , 79 T .C . 1, 6 (1982) . An employee cannot deduct trade or business expenses to, the extent that the employee is entitled to reimbursement from his or her employer for expenditures related to his or her status as an employee . Id . at 7 ; Kennelly v . . Commissioner , 56 T .C . 936, 943 (1971), affd . without published opinion 456 F .2d 1335 (2d Cir . 1972) ; Stolk v . Commissioner , 40 . T .C . 345, 356 (1963), affd . 326 F . 2d 760 (2d Cir . 1964 .) Daily mileage automobile expenses otherwise deductible as a business expense under section 162(a) will be disallowed in full unless the taxpayer s4tisfies,the strict substantiatio n requirements of section 274(d) as automobiles are "liste d property" . ' Secs . 274 d) (' 4), 280F (d) (4) (A) (i) . If-an expense i s subject to section 274-(d), no deduction is allowable on the basi n of any approximation, r'the taxpayer's unsupported testimony . Sanford v . Commissioner, 50 T .C . 823, 826-827 (1968), affd . pe r curiam 412 F .2d 201 (2nd Cir .-1969) ; Sec . 1 .274-5T(a), Temporar y Income Tax Regs ., 50 Fed . Reg . 46014'(Nov . 6, 1985) . The taxpayer must substantiate each element of use with "adequat e records" or present'"sufficient-evidence" corroborating his'o r her statement . Sec . 1 .274-5T(c)(1 .), .Temporary Income Tax-Regs ., 50 Fed . Reg . 46016, 46017 (Nov . 6, 1985) . The elements of use required to be substan iated are asfollows : (1) The amount of each use (i .e ., mileage) and the total use'of the listed property : for'the taxable period,-(2) the date of each use, and, (3) th e business or investmen t purpose of each use ., Sec .- 1.274-5T (b) (6) (i) through (i Temporary Income Tax Regs ., 50 Fed . Reg . ''46016 ' (Nov . 6,- 19 5) . Adequate records equire the-taxpayer to"maintain a log or similar record . and doc mentary evidence, which when the two ar e combined are sufficien to'establish each element of use . Sec . . 1 .274-5T (c) (2) (i) , -Tem orary Income Tax Regs .', 50 Fed . Reg . 46017 (Nov . 6, 1985) The 1 g or similar record is to be prepared or maintained'in such man er that each recording of use is made near 6 - the time of use . Sec . .1 .274-5T(c)(2)(ii), Temporary Income Tax Regs . ., 50 Fed . Reg . 46017 (Nov . 6, 1985) .. The level of detail in such log or similar record is permitted to vary depending upon the facts and circumstances .w.hen a taxpayer is attempting to establish adequate records for business use of an automobile . Sec .i1 .274-5T(c)(2)(ii)(C)(1), Temporary Income Tax Regs ., 50 Fed .,Reg . 46018 (Nov . 6, 1985) . Specifically, the regulations listthe example of a mixed business and personal use vehicle . driven on an established route and permit the taxpayer to list the beginning and ending mileage and subtract the trips taken t o establish the total number .of miles driven during the taxabl e year, . Documentary evidence that substantiates such expens e includes items,such as receipts, paid bills, or similar evidenc e that establishes the amount, date, place, and essential characte r of the expenditure . Sec . .1 .274-5(c)(2)(iii), Temporary Income TaxRegs ., 50 Fed . Reg . 46019 (Nov . 6, 1985) . Sufficient evidence to corroborate a taxpayer's,idetailed statement of business use must be sufficient to establish eac h element of use before the taxpayer will be permitted to deduct such claimed business use .-Sec 1 .274-5T(c)(3)(i), Temporary Income Tax Regs ., 50 Fed . Reg . 46020 (Nov . 6, 1985) . Only direct evidence will be sufficient evidence to establish the elements o f amount, time, place, or date of use . Id . Direct evidence is a statement in writing, oral testimony of other. witnesses setting forth detailed inform tion about such element, or an accoun t book, diary, log, etc Id . Miles Driven From'Jan ar ;1 to May 5,2003 ' During(cid:127)th-is time petitioner was employed by'Wolf and 'was entitled'-to seek reimbursement for his-claimed unreimbursed employee expenses pur uant to'Wolf's policy . Accordingly, petitioner is;'not entitled to deduct any expenses incurred :whil e an employee of Wolf- . See Lucas v . Commissioner , supra ; Kennell y v . Commissioner , su r ; Stolk v-Commissioner , supra . Petitioner may not deduct any-ini eage he drove for work on or befor e May 5, 2003 . Miles Driven From Jui 26 to December 31, 200 3 During this time petitioner was employed by Lockwood .and was not entitled to reimbursement for his claimed unreimbursed employee expenses . Ac ordingly, if'petitioner,has satisfied .the substantiation require eats of section 274(d) then petitioner-is entitled to deduct-mileage incurred during his employment with Lockwood . The last page of he mileage log submitted by petitioner logs the last 3 weeks 'n November and December . It lists the date, the places drive to and from, the miles driven, and the -day of the week .- It'd es not list the purpose of the trip, but petitioner testified c edibly as to the general purpose of th e logged trips . 8 - The last page of the log submitted by petitioner substantiates the mileage listed as driven during the last 3 weeks in November through December . This page is sufficient evidence to corroborate petitioner's credible testimony that he drove these miles for business . It contains the mileage driven , the total use for the year , and the date of each use, an d petitioner credibly testified as to the general purpose of each trip. Accordingly, petitioner is entitled to deduct unreimburse d mileage expenses incurred as an employee in the amount of $2,359 .08 for the 6,553 miles driven' for business in,2003 . Overnight Travel, Parking, and Toll Expense s Petitioner has failed to provide any documentary evidence of the claimed overnight travel, parking, and toll expenses . The $1,350 in overnight expenses and $160 in parking and, tolls hav e I not been substantiated . Additionally, petitioner has no t provided any dates on which the claimed overnight travel , parking, and toll expenses were incurred . To the extent the y were incurred during petitioner's employment with Wolf, he would not be entitled to deduct such expenses incurred because he was entitled to-reimbursement . See Lucas v . Commissioner , 79 T .C . 1 (1982) ; Kennelly v . Commissioner , 56 T .C . 936 (1971) . ; Stolk v . Commissioner , 40 T .C . 345 (1963) . Accordingly, petitioner may not deduct these amounts . In reaching all of our holdings herein, we have considere d all arguments made by the parties, and to the extent no t mentioned above,-we c nclude they are irrelevant or withou t merit . To reflect the fIregoing, Decision will be entere d under Rule 155 .