TAX COURT OPINION

Case: Robert F. Madden
Docket Number: 4176-12S
Judge: Guy
Opinion Type: bench
Filed: 07/02/2013
Pages: 9

RMM UNITED STATES TAX COURT WASHINGTON, DC 20217 ROBERT F. MADDEN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 4176-12S. ) ) ) ) OR D E R 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 abovecaptioned case before Special Trial Judge Daniel A. Guy, Jr., at Tampa, Florida, on June 13, 2013, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Daniel A. Guy, Jr. Special Trial Judge Dated: Washington, D.C. July 2, 2013 SERVED Jul 02 2013 Capital Reporting Company 3 1 2 Bench Opinion by Special Trial Judge Daniel Guy, Jr. June 13, 2013 3 Robert F. Madden v. Commissioner 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Docket No. 4176-12S THE COURT: The Court has decided tò render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion. ' The oral findings of fact and. opinion shall not be relied upon as precedent in any other case. This proceeding for the redetermination of a deficiency is a small tax case conducted pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 174 of the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. 21 Hereinafter in this bench opinion, section references 22 23 24 25 are to the Internal Revenue Code of 1986, as amended, in effect for 2009, and Rule references are to the Tax Court Rules of Practice and Procedure. Petitioner resided in Florida at the time 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 the petition- was filed and appeared at trial pro se. Jeremy D. Cam'eron appeared on behalf of respondent. The issue remaining in dispute is whether petitioner is entitled to a deduction for unreimbursed employee expenses reported on Schedule A, Itemized Deductions, forA taxable year 2009. To the extent not discussed herein, other issues are computational and flow from our decision in this. case . The parties filed with the Court a stipulation of facts and a supplemental stipulation of facts, with accompanying exhibits, that are incorporated herein by this reference. Petitioner worked for a company that provided pool repair services during the first half of 2009. Petitioner began to work for Alarm Team, Inc., during the latter half of.2009, installing and 19 maintaining alarm systems in private residences. 20 Petitioner was required to travel to the location of 21 22 23 24 25 Alarm Team, Inc.'s clients. to perform the services. Petitioner timely filed his tax return for 2009, and attached a Schedule A on which he reported a deduction for unreimbursed employee business expenses consisting of $1, 012 for cellular phone 866.488.DEPO www.CapitalReportingCompany.com ( Capital Reporting Company 5 1 2 3 expenses, $300 for supplies, $1,000 for parking and t-otd-, and $20,625 for vehicle expenses. Respondent issued a notice of deficiency to 4. petitioner.and disallowed the deduction for 5 6 7 unreimbursed employee business expenses listed above for lack of substantiation. Petitioner filed a timely petition for redetermination with the 8 Court. 9 10 11 12 13 14 , Alarm Team, Inc.'s reimbursement policy provided that employees would be reimbursed for services and installation calls performed in excess of 50 miles from the employee's residence. Alarm Team, Inc.'s records indicated that petitioner did not receive any mileage reimbursement during 2009. 15 Petitioner believed that if he received any 16 17 18 19 20 21 22 23 24 25 reimbursement it would have been reported in the wages that Alarm Team, Inc. reported on his Form W-2 for 2009. Petitioner maintained a vehicle mileage log for 2009 which listed the number of miles that he drove on a given date. He did not list the business purpose of the trips, the names or addresses of the clients visited, or·the odometer readings for each trip. Petitioner reported that he drove 37, 500 miles during 2009 in the course of his employment with 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company . 6 1 2 3 4 5 6 7 8 9 10 11 12 13 Alarm Team, Inc. Applying the standard mileage rate of 55 centers per mile, petitioner reported total vehicle expenses.of $20,625. See Rev. Proc. 2008-72, sec. 2.01,.2008-50 I.R.B. 1286. Petitioner did not provide any documentation, such as bills, invoices, or bank records to substantiate the cellular phone and supply expenses. Petitioner presented bank records - indicating that Florida Sunpass, the State of Florida's toll authority, routinely charged his account $35 to replenish his Sunpass account. Florida Sunpass charges for the year totaled approximately $730.0'Ó He did not provide the Court 14 with any receipts for parking expenses. 15 16 17 18 19 20 21 22 23 24 We begin with the fundamental principle o· S 7G Federal tax litigation that the Commissioner' s determinations normally are presumed correct. See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering, 290 U.S. 111, 115 (1933). In conjunction with this principle, tax deductions are a matter of legislative grace, and the taxpayer bears the burden of proving that he or she is entitled to any deduction claimed. Rule 142(a); Deputy v. duPont, 308 U.S. 488, 493 (1940); New 25 Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company (1934). A taxpayer must substantiate deductions claimed by keeping and provitl+rrg adequate records prod ut in3 . 7 that enable the Commissioner to determine the taxpayer's correct tax liability. Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975), 1 2 3 4 5 6 aff'd per curiam, 540 F.2d 821 (5th Cir. 1976) ; 541 3.{, 7 Meneguzzo v. Commissioner, 43 T.C. 824, 831-832 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1965) . Section 162(a) provides that a deduction is allowed for ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. The determination of whether an expenditure satisfies the requirements for deductibility under section 162 is a question of fact. See Commissioner v. Heininger, 320 U.S. 467, 475 (1943). A deduction normally is not available, however, for personal, living; or family expenses . f,. Sec.. 262 (a) . The term "trade or business" includes performing services as an employee. Primuth v. Commissioner, 54 T.C. 374, 377-378 (1970). However, expenses for which an employee could claim reimbursement from his or her employer, but does not, are not ordinary and necessary expenses. See Podems v. Commissioner, 24 T.C. 21, 22-23 (1955). Petitioner did not offer any documentation 866.488.DEPO www.CapitalReportingCompany.com ( Capital Reporting Company 8 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 to substantiate the deduction he claimed for supplies. Accordingly, respondent's determination disallowing a deduction for supply expenses is sustained. Petitioner offered bank records showing that he paid a total of $730 to Florida Sunpass during 2009. He did not offer any documentation to substantiate parking expenses. Although petitioner has shown that he paid approximately $730 for tolls during 2009, he failed to show that those tolls related to his work for Alarm Team, Inc. On the recordÉ presented, respondent's determination disallowing a deduction for parking and toll expenses is sustained. Section 274 (d) prescribes more stringent substantiation requirements before a taxpayer may deduct certain categories of expenses, including expenses related to the use of listed property as defined in section 280F(d) (4). See Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd, 412 F.2d 201 (2d Cir. 1969). As relevant here, for the taxable year 2009 the term "listed property" included, inter alia, passenger automobiles and cellular phones. &ee. 280F(d) (4) (A) (i), (v). To satisfy the requirements of section 274 (d), a 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 taxpayer generally must maintain records and documentary evidence which, in combination, are sufficient to establish the amount, date and business purpose for an expenditure or business ·use of listed property. Sec. 1.274-ST(b) (6), Temporary Income Tax Regs., 50 Fed. Reg. 46016-46017 (Nov. 6, 1985). The deductions petitioner claims for cellular phone and vehicle expenses are subject to the strict substantiation requirements of section 274 (d). As previously mentioned, petitioner did not present any records to substantiate his expenses for cellular phone service. In addition, the mileage log that petitioner maintained did not include the name of the client or a specific address that would lend. itself to establishing the business purpose of individual trips. On the record presented, we conclude that petitioner's mileage log does not meet the strict substantiation requirements of section 274 (d). Consequently, respondent's determination disallowing the deductions petitioner claimed for cellular. phone service and vehicle expenses is sustained. Consistent with the preceding discussion, a decision will be entered for respondent. This concludes the Court's oral findings of fact and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1.7 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com ( 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 . 17 18 19 20 21 22 23 24 25 Capital Reporting Company 10 opinion in this case. (Whereupon, at 11:28 a.m., the above- entitled matter was concluded.) (cid:16)042 866.488.DEPO www.CapitalReportingCompany.com