TAX COURT OPINION

Case: Viliadert Joissaint
Docket Number: 3697-18
Judge: Goeke
Opinion Type: bench
Filed: 10/11/2019
Pages: 6

CT UNITED STATES TAX COURT WASHINGTON, DC 20217 VILIADERT JOISSAINT, Petitioner(s), v. ) ) ) ) ) Docket No. 3697-18. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke at Hartford, Connecticut containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. October 11, 2019 SERVED Oct 15 2019 1 2 Bench Opinion by Judge Joseph Robert Goeke October 3, 2019 3 Viliadert Joissaint v. Commissioner of Internal Revenue 3 4 5 6 7 8 9 Docket No. 3697-18 THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and op1nlon. The oral findings of fact and opinion shall not 10 be relied upon as precedent in any other case. This 11 opinion is rendered pursuant to section 7459(b) of the 12 Internal Revenue Code, and Rule 152 of the Tax Court Rules 13 of Practice and Procedure. Section references in the 14 15 remainder of this opinion are to the Internal Revenue Code in effect for the year in issue in this case, which is 16 2015. Our jurisdiction over this case is pursuant to 17 18 19 section 6213(a). The issue in the case relates to expenses claimed on Schedule C of petitioner's timely filed 2015 20 Federal Income Tax Return for his activities as an Uber 21 Driver. Respondent has allowed certain of these expenses 22 and disallowed others. The record in the case consists of 23 a stipulation of facts and attached exhibits, and the 24 petitioner's testimony. Respondent's notice of deficiency 25 was issued for 2015 on December 12, 2017 and asserted a cr ne s deficiency in the amount of $3,668. 4 The deficiency notice disallowed $10,614 of expense reflected on the Schedule C, but allowed an additional amount of $51.75 for car and truck expenses. The explanation in the notice of deficiency indicates that car and truck expenses, based upon mileage, were allowed in the amount of $8,906.75. And that other expenses for E-ZPass in the amount of $550, Uber fees in the amount of $4,993, and cell phone expenses in the amount of $1,308 were also allowed. All the other expenses associated with the Schedule C were apparently 1 2 3 4 5 6 7 8 9 10 11 12 disallowed by respondent. 13 Petitioner testified that he believed he drove 14 more than the expenses allowed for mileage. However, the 15 mileage expenses which were allowed were based upon the 16 log, which he submitted, which was allowed in full. And 17 he did not provide any records or information which would 18 19 support additional mileage. Therefore, we sustain respondent's determination in the notice of deficiency 20 based upon the allowable mileage. We note that the 21 automobile related mileage expenses are subject to the 22 strict substantiation rules of section 274(d)(3), and 23 section 274(d)(1). 24 The two remaining categories of expense in issue 25 relate to petitioner's claimed expense for clothing, which 5 he wore as an Uber driver, and his claimed expense for business related insurance on the Schedule C. We note that the cost of clothing is only deductible if the clothing is specifically required as a condition of employment and not adaptable to ordinary use. Hynes v. Commissioner, 74 T.C. 1266 (1980). In the present case, petition was not able to establish that any of the clothing in question was actually specialized clothing related to his activities as an Uber driver. In addition, he did not provide adequate substantiation of the expense related to the clothing in any event. Therefore, we sustain respondent's disallowing of clothing related expenses. The remaining item of expense is reflected on 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 the Schedule C filed by petitioner as an auto loan, for 16 which he claimed $2,400 in expense. Respondent has 17 conceded that interest with respect to the auto loan would 18 not be included in the automatic allowable mileage expense 19 contained in the notice of deficiency. So petitioner 20 would be entitled to interest expense on the auto loan as 21 a business interest expense to the extent he can 22 23 24 substantiate this expense. We believe this interest expense would not be subject to section 274(d)(1) and (3), because it is a 25 business loan expense, and not necessarily directly tied 6 to any of the items which would be subject to section 274. Nevertheless, petitioner has not substantiated such an expense in the amount of $2,400. The stipulated record does include evidence that the petitioner paid interest expense of roughly $506 associated with his vehicle which was the key piece of equipment in his business activities for Uber. However, it is not clear what portion of the vehicle used was not related to the Uber activities. We believe that, given the petitioner's other employment, and other activities he did use the vehicle for some personal expense trips, which would not be part 1 2 3 4 5 6 7 8 9 10 11 12 of his Uber related business activities. Given his 13 14 testimony and his business log of mileage, we believe that it is reasonable in this instance to apply Cohen v. 15 Commissioner, 39 F.2d 554, 553-544 (2nd Circuit 1930) to 16 allow a portion of the interest expense which is 17 substantiated. Accordingly we will allow petitioner $300 18 of business-related interest expense. This is the only 19 item we are allowing which has not previously been allowed 20 21 to the petitioner in the notice of deficiency. Our determination that he is entitled to this 22 additional expense will require that a Rule 155 23 computation be entered in this case. 24 This concludes the Court's oral findings of fact 25 and opinion in this case. (Whereupon, at 10:00 a.m., the above-entitled 7 matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25