T.C. Memo. 1996-562
UNITED STATES TAX COURT
MARIO R. SANHUDO, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12089-95. Filed December 30, 1996.
Mario R. Sanhudo, pro se.
Blaise G. Dusenberry and Randall B. Pooler, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of section 7443A(b)(3) and Rules 180,
181, and 182.1
1
All section references are to the Internal Revenue Code
in effect for the tax years at issue. All Rule references are to
the Tax Court Rules of Practice and Procedure.
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Respondent determined deficiencies in petitioner's Federal
income taxes for the taxable years 1991 through 1993 as follows:
Year Deficiency
1991 $1,274
1992 1,120
1993 1,568
The issue for decision is whether petitioner may deduct
claimed employee business expenses for the years in issue.
FINDINGS OF FACT
Some of the facts have been stipulated, and they are so
found. The stipulation and the attached exhibits are
incorporated herein by this reference. At the time of filing the
petition herein, petitioner resided at Cape Canaveral, Florida.
During the years in issue petitioner was a civilian mariner
assigned to the ship USNS Vanguard T-AG 194 with a port at Cape
Canaveral, Florida. The ship was part of the Military Sealift
Command (MSC). MSC is part of the U.S. Department of Defense
and, specifically, the U.S. Navy. Civilian employees operate,
maintain, and navigate the vessel to various locations as
designated by the Navy. The USNS Vanguard is operated by a
private company under contract with the U.S. Navy. Petitioner
worked as an engineer on the USNS Vanguard during the years in
issue.
During 1991 through 1993, petitioner apparently incurred
living, automobile, and travel expenses while the ship was in
port. On his Federal income tax returns for the years in issue,
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petitioner claimed employee business expenses (prior to the
limitation provided by section 67(a)) as follows:
Year Amount
1991 $9,023
1992 8,491
1993 9,530
The returns in issue were prepared by Space Coast Bookkeeping and
Taxes, Inc. (Space Coast).
In the notice of deficiency, respondent disallowed the
claimed employee business expense deductions. At trial
respondent conceded that the itemized deductions claimed by
petitioner were incurred and paid. Respondent also conceded that
petitioner is entitled to a portion of the claimed deductions.2
OPINION
Respondent asserts that petitioner has failed to establish
that the claimed expenses, over and above those allowed, are
ordinary and necessary business expenses incurred while carrying
on petitioner's trade or business as an employee. Petitioner
argues that the Internal Revenue Service (IRS) acted unfairly in
examining his returns, and that the examination was the result of
2
Respondent agreed that petitioner is entitled to deduct
60 percent of the claimed automobile expenses for each of the
years in issue. Also respondent agreed that petitioner is
entitled to deduct $510, $501, and $510 for the taxable years
1991, 1992, and 1993 respectively, relating to claimed employee
business expenses other than vehicle, parking fee, toll, and
travel expenses.
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an investigation of his return preparer, Space Coast. Petitioner
also complains that the IRS failed to respond to his inquiries.
The determinations of the Commissioner in a notice of
deficiency are presumed correct, and the burden of proof is on
the taxpayer to show that the determinations are incorrect. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Deductions
are a matter of legislative grace, and petitioner bears the
burden of proving entitlement to any claimed deductions. New
Colonial Ice Co. v. Helvering, 292 U.S. 435 (1934).
Section 162(a) permits a deduction for "ordinary and
necessary" expenses incurred while carrying on a trade or
business. Since petitioner is an employee, any deductions to
which he might be entitled would be included as employee expense
deductions on Schedule A. Primuth v. Commissioner, 54 T.C. 374,
377 (1970).
Petitioner has failed in his burden of proof. Petitioner
did not present any documents or testimony in this case upon
which we can make a finding that there was a business purpose to
the claimed employee expenses. In fact, petitioner testified
that some of the expenses related to visiting family members.
Thus, there is no question but that some of the claimed expenses
are personal in nature and nondeductible. Sec. 262.
With respect to petitioner's complaints that he was unfairly
selected for examination, we note that the Commissioner, in an
attempt to ascertain the correctness of a taxpayer's return, may
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examine any books, papers, records, or other data which may be
relevant to such an inquiry. Sec. 7602(a). Petitioner cites no
specific authority as a basis for his position, simply alleging
that it is improper for the Commissioner to examine taxpayers
based solely upon their connection with a particular preparer.
Respondent's decision to examine petitioner's return, even if
based solely upon petitioner's connection with Space Coast, does
not constitute an improper reason to select petitioner's return
for examination. Karme v. Commissioner, 673 F.2d 1062 (9th Cir.
1982), affg. 73 T.C. 1163 (1980). Petitioner, therefore, has not
established that his selection for examination was improper.
We understand petitioner's frustration in circumstances
where the IRS failed to timely respond to inquiries.
Nevertheless, such a failure by the IRS does not alter the
obligation of petitioner to satisfy the Court that the claimed
expenses qualify as employee business expenses. Petitioner has
failed to do that.
Based on the foregoing, respondent's determination is
sustained except to the extent respondent made concessions at
trial.
Decision will be entered
under Rule 155.