Court Opinion

ID: 4622025
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:48:29.328667+00
Date Added: 2024-06-11T07:56:07.131691
License: Public Domain

Courtney F. Smith, Jr., and Imogene S. Smith, Petitioners v. Commissioner of Internal Revenue, RespondentSmith v. CommissionerDocket No. 14059-81United States Tax Court80 T.C. 1165; 1983 U.S. Tax Ct. LEXIS 67; 80 T.C. No. 64; June 28, 1983, Filed *67 Decision will be entered under Rule 155.  Petitioner-husband, who was self-employed, deducted certain business travel expenses on a per diem basis.  Held: Away-from-home travel expenses of a self-employed individual are subject to the substantiation requirements of sec. 274(d), I.R.C. 1954.  1 Petitioner-husband's claimed per diem expenses are not deductible because they have not been substantiated. Certain related business mileage is deductible because the requirements of sec. 274(d) have been met.Taylor W. O'Hearn, for the petitioners.H. Karl Zeswitz, Jr., for the respondent.  Goffe, Judge.  GOFFE*1166  The Commissioner determined deficiencies in petitioners' Federal income tax in the amount of $ 5,020.50 for the taxable year 1977 and $ 5,318.70 for the taxable year 1978.  After concessions, the issues for decision are whether petitioners may deduct (1) certain itemized deductions, (2) a per diem amount for away-from-home business travel, and (3) away-from-home business mileage.FINDINGS OF FACTSome of the facts in this case have been stipulated.  The stipulation of facts and attached exhibits are incorporated herein by this reference.The petitioners are husband and wife and filed joint Federal income tax returns for the taxable *69  years 1977 and 1978 with the Internal Revenue Service Center, Austin, Tex.  At the time they filed their petition in this case, they resided in Shreveport, La.  References to petitioner in the singular will refer to petitioner-husband, Courtney F. Smith, Jr.Petitioner Courtney Smith was self-employed as the community relations director (national field man) for the Liberty Lobby during the taxable years 1977 and 1978.  He traveled extensively in this capacity, principally to lecture throughout the country.  His business-related automobile travel for the taxable years 1977 and 1978 was as follows:SCHEDULE OF BUSINESS AUTOMOBILE TRAVEL -- 1977FromToDate of meetingShreveport, LAPasadena, CAJan. 28-30 Pasadena, CASan Diego, CAFeb. 5 San Diego, CAPhoenix, AZMar. 18-19 Phoenix, AZOklahoma City, OKApr. 1-2 Oklahoma City, OKEvansville, INApr. 27-30 Evansville, INDallas, TXMay 2  Dallas, TXSt. Louis, MOMay 13-14  St. Louis, MOShreveport, LAShreveport, LaCincinnati, OHMay 26  Cincinnati, OHMemphis, TNJune 2 Memphis, TNHouston, TXJune 7 Houston, TXNashville, TNJune 14 Nashville, TNBirmingham, ALJune 16 Birmingham, ALStockton, CAJune 28 Stockton, CALos Gatos, CAJune 30 Los Gatos, CASacramento, CAJuly 5 Sacramento, CAPortland, ORJuly 7 Portland, ORMeridian, IDJuly 12 Meridian, IDReno, NVJuly 14 Reno, NVAtlanta, GAJuly 28 Atlanta, GAMarietta, GAJuly 29 Marietta, GACharlotte, NCAug. 2 Charlotte, NCGreensboro, NCAug. 4 Greensboro, NCMemphis, TNAug. 5-6 Memphis, TNSan Antonio, TXAug. 16 San Antonio, TXAustin, TXAug. 18 Austin, TXEuless, TXAug. 19 Euless, TXTyler, TXAug. 23 Tyler, TXIndianapolis, INAug. 30 Indianapolis, INShreveport, LAShreveport, LAPhoenix, AZSept. 20-22Phoenix, AZSan Bernardino, CASept. 26San Bernardino, CABakersfield, CASept. 27Bakersfield, CAOakland, CASept. 29Oakland, CAShreveport, LAShreveport, LASt. Petersburg, FLOct. 11 St. Petersburg, FLTampa, FLOct. 13 Tampa, FLOrlando, FLOct. 17 Orlando, FLJacksonville, FLOct. 18 Jacksonville, FLShreveport, LAShreveport, LABaltimore, MDNov. 10 Baltimore, MDNew York, NYNov. 18-20 New York, NYBaton Rouge, LADec. 5 Baton Rouge, LANew Orleans, LADec. 6 New Orleans, LADenver, CODec. 9-10 Denver, CONorth Miami, FLDec. 12 North Miami, FLWest Palm Beach, FLDec. 13 West Palm Beach, FLMobile, ALDec. 15 Mobile, ALShreveport, LAShreveport, LALittle Rock, ARJan. 5 Little Rock, ARTulsa, OKJan. 9 Tulsa, OKOklahoma City, OKJan. 10 Oklahoma City, OKDallas, TXJan. 12 Dallas, TXShreveport, LAShreveport, LAPasadena, CAJan. 26-29, 31 Pasadena, CAGlendale, CAFeb. 2 Glendale, CASanta Barbara, CAFeb. 6 Santa Barbara, CAHollywood, CAFeb. 7 Hollywood, CACulver City, CAFeb. 9 Culver City, CATorrance, CAFeb. 13 Torrance, CaLong Beach, CAFeb. 14 Long Beach, CAWest Covina, CAFeb. 16 West Covina, CASanta Ana, CAFeb. 20 Santa Ana, CASan Diego, CAFeb. 21, 23 San Diego, CaShreveport, LAShreveport, LAJackson, MSMar. 3-4 Jackson, MSShreveport, LAShreveport, LAHouston, TXMar. 11-12 Houston, TXShreveport, LAShreveport, LALittle Rock, ARMar. 21 Little Rock, ARShreveport, LAShreveport, LANew Orleans, LAApr. 20 New Orleans, LABaton Rouge, LAApr. 21 Baton Rouge, LANew Orleans, LAApr. 22 New Orleans, LAShreveport, LAShreveport, LALouisville, KYMay 1  Louisville, KYDayton, OHMay 2  Dayton, OHKalamazoo, MIMay 4  Kalamazoo, MICleveland, OHMay 8-9  Cleveland, OHYoungstown, OHMay 11  Youngstown, OHPittsburgh, PHMay 15  Pittsburgh, PACanton, OHMay 16  Canton, OHAkron, OHMay 16  Akron, OHCharleston, WVMay 18  Charleston, WVColumbus, OHMay 22  Columbus, OHSpringfield, OHMay 23  Springfield, OHShreveport, LAShreveport, LAElkhart, INJune 6 Elkhart, INSouth Bend, INJune 7 South Bend, INFt. Wayne, INJune 8 Ft. Wayne, INPerrysburg, OHJune 9 Perrysburg, OHDetroit, MIJune 12-13 Detroit, MILansing, MIJune 15 Lansing, MIBay City, MIJune 16 Bay City, MIGreen Bay, WIJune 19 Green Bay, WIMilwaukee, WIJune 20 Milwaukee, WIMenomonee Falls, WIJune 22 Menomonee Falls, WIGurnee, ILJune 26 Gurnee, ILAurora, ILJune 27 Aurora, ILShreveport, LAShreveport, LADallas, TXJuly 1 Dallas, TXShreveport, LAShreveport, LADallas, TXJuly 8 Dallas, TXShreveport, LAShreveport, LAJoplin, MOJuly 13 Joplin, MOKansas City, MOJuly 14 Kansas City, MOOmaha, NEJuly 17 Omaha, NEDes Moines, IAJuly 18 Des Moines, IAMinneapolis, MNJuly 20 Minneapolis, MNSt. Paul, MNJuly 24 St. Paul, MNMadison, WIJuly 25 Madison, WIDavenport, IAJuly 27 Davenport, IAPeoria, ILJuly 31 Peoria, ILBridgeton, MOAug. 1 Bridgeton, MOShreveport, LAShreveport, LAAustin, TXAug. 11 Austin, TXAmarillo, TXAug. 14 Amarillo, TXAlbuquerque, NMAug. 15 Albuquerque, NMDenver, COAug. 17 Denver, COSalt Lake City, UTAug. 21 Salt Lake City, UTPocatello, IDAug. 22 Pocatello, IDBillings, MTAug. 24 Billings, MTSpokane, WAAug. 28 Spokane, WASeattle, WAAug. 29 Seattle, WABellingham, WAAug. 31 Bellingham, WAWilsonville, ORSept. 5Wilsonville, ORSan Francisco, CASept. 7San Francisco, CALos Angeles, CASept. 19Los Angeles, CASanta Barbara, CASept. 21Santa Barbara, CAEl Paso, TXSept. 23El Paso, TXShreveport, LAShreveport, LAWashington, DCOct. 10-13 Washington, DCCharleston, SCOct. 17 Charleston, SCFt. Wayne, INOct. 19 Ft. Wayne, INShreveport, LAShreveport, LAMetaire, LAOct. 31 Metaire, LANew Orleans, LANov. 2-5 New Orleans, LAHouston, TXNov. 6 Houston, TXCorpus Christi, TXNov. 7 Corpus Christi, TXHarlinger, TXNov. 9 Harlinger, TXBig Spring, TXNov. 13 Big Spring, TXFt. Worth, TXNov. 14 Ft. Worth, TXDallas, TXNov. 16 Dallas, TXShreveport, LAShreveport, LAJackson, MSDec. 4 Jackson, MSColumbus, GADec. 5 Columbus, GAJacksonville, FLDec. 7 Jacksonville, FLDaytona Beach, FLDec. 8 Daytona, Beach, FLFt. Lauderdale, FLDec. 11 Ft. Lauderdale, FLMiami, FLDec. 12 Miami, FLFort Myers, FLDec. 14 Fort Myers, FLSt. Petersburg, FLDec. 15 St. Petersburg, FLShreveport, LA*70 *1170   Petitioners paid $ 1,718.23 in 1977 and $ 2,119.94 in 1978 as interest to Associates Financial Services of America, Inc.The petitioners claimed certain excess itemized deductions and certain Schedule C business or professional deductions on their Federal income tax returns for the taxable years 1977 and 1978.  These Schedule C business expenses included travel away-from-home expenses computed on a per diem basis and certain business mileage. The Commissioner disallowed portions of all of these claimed deductions, including all of petitioner's claimed away-from-home travel and mileage expenses.OPINIONPetitioner was self-employed as the community relations director for the Liberty Lobby.  In this capacity, he traveled and lectured extensively.The first issue concerns itemized deductions in excess of the amount allowed by the Commissioner in his statutory notice of deficiency.  The respondent has conceded that certain of these amounts are deductible. Petitioners, who have the burden of proof ( Welch v. Helvering, 290 U.S. 111">290 U.S. 111 (1933)), have presented this Court no affirmative evidence concerning these deductions except as to certain interest*71  expense payments which we have set forth above.  Accordingly, we find the amounts determined by the Commissioner's notice, as adjusted by the interest expense payments and the concessions of respondent, to be correct.*1171  The second issue concerns petitioner Courtney Smith's away-from-home 2 travel expenses, other than mileage. Petitioner, relying upon a publication of the Internal Revenue Service, the 1976 Instructions for Form 1040, claims a per diem deduction of $ 44 per day for travel away from home.  Respondent maintains that petitioners may not rely upon the IRS publication and, in any event, have not substantiated these claimed deductions as required by section 274(d).Informal publications of the Internal Revenue Service, such as the one relied upon by the petitioners, are not authoritative sources *72  of law.  Zimmerman v. Commissioner, 71 T.C. 367">71 T.C. 367, 371 (1978), affd. without published opinion 614 F.2d 1294">614 F.2d 1294 (2d Cir. 1979). Even if these instructions were authoritative, they clearly speak to the allowance of a per diem to an employee, which petitioner Courtney Smith is not.Section 274(d) requires that taxpayers substantiate away-from-home traveling expenses as a prerequisite for claiming such expenses as deductions.  Section 274 provides in pertinent part as follows:SEC. 274. DISALLOWANCE OF CERTAIN ENTERTAINMENT, ETC., EXPENSES.(d) Substantiation Required -- No deduction shall be allowed -- (1) under section 162 or 212 for any traveling expense (including meals and lodging while away from home),* * * *unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating his own statement (A) the amount of such expense * * * (B) the time and place of the travel, entertainment * * * (C) the business purpose of the expense * * *This statute clearly provides that a taxpayer who seeks to deduct travel expenses must prove by his records or by his corroborated testimony the amount he spent, *73  when he spent it, where he spent it, and how the expenditures related to his business.  Thus, section 274(d) sets forth elements that a taxpayer must prove and the kind of proof needed to establish those elements.  Regulations have been promulgated to explain further the elements and the standards of proof.  See secs.  1.274-5(b)(2) and 1.274-5(c), Income Tax Regs.Congress has *1172  chosen to impose a rigorous test of deductibility in the area of travel expenses. Each of the foregoing elements must be proved for each separate expenditure. General vague proof, whether offered by testimony or documentary evidence, will not suffice.  See Dowell v. United States, 522 F.2d 708 (5th Cir. 1975), vacating 370 F. Supp. 69">370 F. Supp. 69 (N.D. Tex. 1974). In contrast to the per diem for employees authorized by section 1.274-5(f)(2), Income Tax Regs., independent contractors fall under the general substantiation rules of section 1.274-5, Income Tax Regs., except as to certain reimbursement provided for in section 1.274-5(g), Income Tax Regs. The petitioners have not offered this Court any evidence which might meet the substantiation*74  requirements of section 274(d).  The petitioners have failed to meet their burden of proof. We hold for respondent on this issue.The remaining issue concerns business auto mileage of petitioner Courtney Smith.  Unlike general travel expenses, the Commissioner allows business mileage at a standard rate both to employees and self-employed individuals.  3 Respondent, however, contends that away-from-home business mileage is subject to the same section 274(d) substantiation requirements as other away-from-home travel expenses and that the petitioners have failed to meet these requirements as to their claimed deductions.We agree with respondent that section 274(d) applies to away-from-home business mileage. It speaks in very general terms to "any traveling expense." As set forth above, section 274(d) requires substantiation of the amount, time and*75  place, and business purpose of travel expenses.  The substantiation requirements for away-from-home business mileage are relatively easy to meet, however, because of the nature of the expense.  The amount of mileage can be substantiated by any reasonable means, such as the use of a contemporaneous log of business travel or, in the instant case, by proving that a taxpayer traveled between certain cities and then by referring to an authoritative automobile map to determine the amount of mileage.*1173 The amount of the expense for away-from-home business mileage can be determined on the basis of a mileage allowance. The Commissioner is authorized to establish mileage allowances that will be deemed to satisfy the substantiation requirements as to amount.  Sec. 1.274-5(f)(3), Income Tax Regs. The Commissioner has established specific mileage allowances in Rev. Proc. 74-23, 2 C.B. 476">1974-2 C.B. 476, as modified by Rev. Proc. 77-40, 2 C.B. 574">1977-2 C.B. 574, as an optional method of substantiating business mileage. The current standard mileage rate is set forth in Rev. Proc. 82-61, 2 C.B. 849">1982-2 C.B. 849.*76 The time and place of the expense could be adequately substantiated by a contemporaneous log of business mileage or by otherwise establishing a taxpayer's business travel. The business purpose of the travel may be established by specific evidence or by the surrounding facts and circumstances.  Section 1.274-5(c)(2)(ii)(b), Income Tax Regs., provides:(b) Substantiation of business purpose.  In order to constitute an adequate record of business purpose within the meaning of section 274(d) and this subparagraph, a written statement of business purpose generally is required.  However, the degree of substantiation necessary to establish business purpose will vary depending upon the facts and circumstances of each case.  Where the business purpose of an expenditure is evident from the surrounding facts and circumstances, a written explanation of such business purpose will not be required.  For example, in the case of a salesman calling on customers on an established sales route, a written explanation of the business purpose of such travel ordinarily will not be required.  Similarly, in the case of a business meal described in section 274(e)(1), if the business purpose of such*77  meal is evident from the business relationship to the taxpayer of the persons entertained and other surrounding circumstances, a written explanation of such business purpose will not be required.In the present case, petitioner Courtney Smith has presented this Court announcement letters for the various meetings at which he lectured as well as newspaper clippings, all of which show the dates and places of the meetings at which he lectured. For the taxable year 1978, he also presented the Court with a personal calendar that showed the dates and places of his 1978 lectures. He testified that, except for one trip to Hawaii and one trip to Washington, D.C., he traveled to all of these meetings in a mobile home.  His testimony was uncontroverted and we believe him.  Although respondent's attorney initially objected to some of the above-mentioned exhibits as hearsay, he stated at trial that he had no objection *1174  to admitting the exhibits to establish that Courtney Smith was at these places.  The Court received these exhibits with this understanding.After carefully reviewing the record, we find that the petitioners have adequately substantiated petitioner-husband's away-from-home*78  business mileage. He has established the time and place of his expenses by showing that he traveled by automobile to his various lecture sites and back home.  Petitioner's business mileage consisted of traveling the circuit of cities at which he lectured, which we have set forth above.  The amount of his business mileage deduction will be determined under a Rule 155 computation in which the parties will determine the mileage that this travel represents and then determine a deductible amount based upon the mileage allowances permitted by the Commissioner.  4 The business purpose of this travel is established by the very nature of the travel, from town to town on an endless lecture circuit.  5Decision will be entered under Rule 155.  Footnotes1. All section references are to the Internal Revenue Code of 1954 as amended.↩2. Petitioner maintained his legal residence in Shreveport, La., and respondent does not contend that this is not his "tax home." Kroll v. Commissioner, 49 T.C. 557">49 T.C. 557↩ (1968).3. Rev. Proc. 74-23, 2 C.B. 476">1974-2 C.B. 476, as modified by Rev. Proc. 77-40, 2 C.B. 574">1977-2 C.B. 574↩.4. References to Rules refer to the Tax Court Rules of Practice and Procedure.↩5. Sherman v. Commissioner, T.C. Memo. 1982-582↩.