Court Opinion

ID: 4592298
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:07:38.663785+00
Date Added: 2024-06-11T07:50:50.571494
License: Public Domain

M. LUCAS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Lucas v. CommissionerDocket No. 12068.United States Board of Tax Appeals13 B.T.A. 642; 1928 BTA LEXIS 3209; September 28, 1928, Promulgated *3209  Items of expense established by evidence, allowed; those claimed, but not established by evidence disallowed.  Arthur Heeman, Esq., for the petitioner.  P. M. Clark, Esq., for the respondent.  LOVE *642  This proceeding is for a redetermination of a deficiency in income tax for the year 1924 in the amount of $377.50.  The deficiency arises by reason of the disallowance of $700 of the $1,750 claimed by the petitioner as a deduction for depreciation on a building; and of several items claimed as being deductible as ordinary and necessary expenses.  At the hearing petitioner abandoned his assignment of error in regard to the item of depreciation, but still insists on the right to deduct the expense items.  *643  FINDINGS OF FACT.  The petitioner resides in Fort Worth, Tex., and his occupation is traveling salesman for a manufacturer of hosiery.  He was employed on a commission basis and paid his own expenses.  The items of expense claimed as deductions by petitioner and disallowed by the Commissioner are as follows: Traveling expenses$3,000Salary of demonstrator, that is the difference between amount claimed and the amount allowed by the Commissioner15Expenses of trip to Chicago250Samples given away600Salary of salesman2,2686,133*3210  During the taxable year, in addition to the trip to Chicago, petitioner was on the road about 40 weeks, making the various towns in his territory.  He traveled by railroad, bus lines, and lived in hotels.  He also had to spend money in transporting and transferring baggage.  He kept no itemized account (at least offered none in evidence) of his traveling expenses.  His trip to Chicago was made to confer with his employers in regard to his business.  He employed a demonstrator in a department store in Dallas at a salary of $90 per month, one-half of which was paid by himself and the other half by his employer.  The petitioner deducted in his return, as expense, $2,868 as commissions paid to a nephew as assistant salesman.  The Commissioner allowed $600 of that amount.  Petitioner also claimed a deduction in the amount of $600 as cost of merchandise given to customers.  The Commissioner disallowed the whole of that amount.  The petitioner was not reimbursed for any of his expenses except as to the salary of the demonstrator as stated herein.  OPINION.  LOVE: The evidence in this case is very unsatisfactory.  The petitioner testified at the hearing that he did keep an account*3211  of his traveling expenses, from which he made his return.  He also testified that when the deputy collector, W. A. Brent, called to see him in 1925, he showed Brent his books.  Brent testified that he was shown no books by the petitioner, and that petitioner then stated that he had kept no record of expenses, but had estimated them at $75 per week.  There was also an affidavit, signed and sworn to by the petitioner on May 20, 1925, stating that the affiant had no itemized expense *644  account, and that he had estimated his expenses at $75 per week for 40 weeks and that he carried 250 pounds of excess baggage.  There were no records offered in evidence.  With reference to the $3,000 traveling expenses, while no itemized account of such expenses was presented, petitioner testified positively that he was on the road about 40 weeks; that he spent at least $3,000 in railroad fares, bus fares, baggage transfers and hotel bills, all of which are deductible expense items.  In view of such evidence, we believe and so hold that petitioner is entitled to that deduction.  With reference to the $15 representing the difference between the amount claimed and the amount allowed on salary*3212  paid the demonstrator, petitioner testified that the salary paid was $90 per month and that he paid half and the employer paid half.  One-half the annual salary is $540.  The Commissioner allowed $585 - that is, $45 more than half the salary.  The reason for allowing that excess was not explained.  We find no reason for disturbing the Commissioner's action in this respect, and the same is approved.  With reference to the $2,686 deducted in the return as commissions paid Bryan Lucas, and of which the Commissioner allowed $600, we find nothing in the record to justify us in disturbing the action of the Commissioner in this matter, and hence such action is approved.  There is no evidence in the record to sustain petitioner's claim for a deduction of $600 representing cost of merchandise given to customers; hence, the Commissioner's action in disallowing that item is approved.  We believe, and so hold, that petitioner is entitled to a deduction of $250 representing expenses of business trip to Chicago.  Judgment will be entered under Rule 50.