T.C. Memo. 2001-301
UNITED STATES TAX COURT
GARY WILSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16382-99. Filed November 14, 2001.
Alan D. Irwin, for petitioner.
Angelique M. Neal, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
BEGHE, Judge: Respondent determined the following
deficiencies, late-filing addition, and accuracy-related
penalties with respect to petitioner’s Federal income tax:
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Accuracy-related
Addition to Tax Penalty
Year Deficiency Sec. 6651(a)(1) Sec. 6662(a)
1992 $5,642 -- $1,128
1993 5,146 $519 1,029
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years at issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure. Respondent’s determination in the notice of
deficiency is presumed correct, and petitioner bears the burden
of proving that it is incorrect. Rule 142(a).1 The issues for
decision2 are whether petitioner (1) properly claimed deductions
for travel expenses, (2) properly claimed deductions for
miscellaneous business expenses, and (3) is liable for accuracy-
related penalties and an addition to tax under sections 6662(a)
and 6651(a), respectively. We sustain respondent’s
determinations, except that we allow some deductions in amounts
less than claimed by petitioner for miscellaneous business
expenses, resulting in reductions to the deficiencies, to be
given effect in the Rule 155 computation.
1
Sec. 7491 does not apply because respondent’s examination
was commenced before July 23, 1998.
2
Petitioner presented no evidence to rebut respondent’s
determinations that petitioner failed to report unemployment
compensation and interest income in 1993. Respondent’s
determinations are sustained.
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FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated by this reference.
Petitioner resided in Cascade, Idaho, at the time of filing
the petition.
Petitioner has been employed in the construction industry
for 20 years. In 1987 petitioner began working for Kiewit
Pacific Co. (Kiewit). Kiewit employed petitioner for most of
1990, all of 1991, all of 1992, most of 1993, and part of 1994.
During 1992 and 1993, the years in issue, petitioner was employed
by Kiewit as a demolition foreman, drilling crew foreman, part-
time mechanic, and master mechanic. Petitioner’s employment
relationship with Kiewit has continued off and on through the
time of trial.
In 1992 petitioner was employed by Kiewit at the following
times and construction projects in southern California: January
1 to 23, 1992, Pasadena, California; January 27 to March 12,
1992, El Segundo, California; and March 19 to December 31, 1992,
UCLA/Westwood, California. In 1992 petitioner filed a State
income tax return only for the State of California. Petitioner
did not earn any income in the State of Idaho or seek employment
in Idaho in 1992.
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In 1992 petitioner lived in his recreational vehicle, which
he kept parked in San Dimas, California. Petitioner paid a
campground operator approximately $500 per month to rent a space
for his recreational vehicle in San Dimas.
In 1993 petitioner had employers other than Kiewit and
worked in Idaho toward the end of the year. Petitioner’s
employment in California in 1993 was as follows: For the period
January 1 to April 22, 1993, petitioner was employed by Kiewit in
UCLA/Westwood, California; for the period April 27 to May 28,
1993, petitioner was employed by Contri Construction in Perris,
California; for the period May 31 to September 16, 1993,
petitioner was employed by Kiewit in Moreno Valley, California.
After completing work in Moreno Valley, California, on
September 16, 1993, petitioner worked in Idaho for the remainder
of the year. For the period October 25 to November 26, 1993,
petitioner was employed by Kelly Cole in Bear, Idaho. For the
period November 29 to December 31, 1993, petitioner was employed
by Shorts Bar Logging in Riggins, Idaho.
During the part of 1993 that petitioner worked in
California, he continued to live in the recreational vehicle in
San Dimas until approximately May 21, 1993; then he moved to an
apartment in Hemet, California. Petitioner lived in Hemet until
at least September 16, 1993. Petitioner lived with his parents
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at their home in Pollack, Idaho, while he was employed in Idaho
in 1993. Petitioner did not have a lease or rental agreement
with his parents.
Petitioner usually commuted daily from his respective
California living quarters to the various California jobsites; he
would occasionally stay overnight in a motel near one of the
jobsites in California if he was too tired to drive. Petitioner
also commuted from his parents’ home in Pollack, Idaho, to the
Idaho jobsites.
Petitioner held an Idaho driver’s licence in both 1992 and
1993. In 1993 petitioner held an Idaho resident combination
hunting and fishing license, an Idaho resident regular deer tag,
and an Idaho resident regular elk tag. An individual must
establish that he has been an Idaho resident for 6 months in
order to obtain an Idaho resident combination hunting and fishing
license. Petitioner presented his Idaho driver’s license and was
granted a resident hunting and fishing license. The State of
Idaho made no further inquiries to verify that petitioner was a
resident of Idaho.
On September 22, 1993, petitioner opened two bank accounts
with Key Bank of Idaho: A savings account with a $4,000 deposit
and a checking account with a $314.81 deposit. Thereafter, in
1993 petitioner made three checks payable to his mother totaling
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$417. Petitioner filed 1993 State income tax returns for
California and Idaho. In 1993 petitioner purchased a parcel of
vacant land in Valley County, Idaho.
On August 21, 1995, petitioner filed his 1992 Form 1040,
U.S. Individual Income Tax Return. On this return, petitioner
showed his address as 3800 W. Devonshire, Hemet, California 92545
(the Hemet address). Petitioner designated his filing status as
single and claimed only his personal exemption. Petitioner
attached to his return a Form 2106, Employee Business Expenses,
on which he claimed the following deductions for unreimbursed
employee business expenses:
Expense Amount
1. Vehicle $5,443.20
2. Parking fee 867.00
3. Travel 8,211.00
4. Business not on lines 1-3 5,290.00
5. Meals 1,492.80
Total claimed deductions 21,304.00
On August 21, 1995, petitioner filed his 1993 Form 1040.
Petitioner again showed the Hemet address as his address.
Petitioner designated his filing status as single and claimed
only his personal exemption. Petitioner attached a Form 2106 to
his return and claimed the following deductions for unreimbursed
employee business expenses:
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Expense Amount
1. Vehicle $6,454
2. Parking fees 855
3. Travel 9,442
4. Business not on lines 1-3 4,988
5. Meals 1,874
Total claimed deductions 23,613
The travel expenses claimed were for the cost of traveling
between Idaho and California and the cost of occasionally staying
in motels near petitioner’s various jobsites. Because of the
nature of his trade, petitioner incurred expenses for safety
boots, coveralls, tools, and union dues, which he claimed as
miscellaneous business deductions on his 1992 and 1993 returns.
At trial, petitioner offered two “employee [statements]” showing
amounts contributed as “Supplemental Union Dues” in 1992 of
$714.65.
OPINION
Petitioner claimed business expense deductions for travel
expenses incurred for trips between California and Idaho, and
between his living quarters and various places of employment, and
various miscellaneous expense deductions related to his
employment in the construction industry. Respondent disallowed
the deductions petitioner claimed for unreimbursed travel
expenses on the grounds that petitioner was not “away from home”
within the meaning of section 162(a)(2) when the expenses were
paid, and for lack of substantiation as required by section
274(d). Respondent disallowed the miscellaneous business expense
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deductions on the grounds that petitioner did not prove that he
incurred the expenses pursuant to section 162(a), and that he did
not maintain adequate records to establish the specific amounts
of the deductions as required by section 6001.
1. Travel Expenses
Section 162 allows taxpayers to deduct the “ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business, including * * * traveling
expenses * * * while away from home”. Sec. 162(a)(2). Section
274(d) and its implementing regulations impose stringent
substantiation requirements for the deduction of travel expenses
under section 162(a).
a. “Away From Home”
Petitioner must meet three requirements in order to deduct
travel expenses under section 162(a)(2): The expenses must be
(1) reasonable and necessary; (2) incurred while away from home;
and (3) incurred in pursuit of a trade or business. Flowers v.
Commissioner, 326 U.S. 465, 470 (1946). Respondent contends that
the travel expenses petitioner claimed do not satisfy the second
Flowers requirement, that petitioner be “away from home.” We
agree with respondent.
Section 162(a)(2) “reflects congressional concern both for
the unavoidable duplication of expenses and for the fact that
meals and lodging are more costly for a person who must travel
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than they are for a person who can maintain a year-round home.”
Rambo v. Commissioner, 69 T.C. 920, 924 (1978). “The purpose of
the ‘away from home’ provision is to mitigate the burden of the
taxpayer who, because of the exigencies of his trade or business,
must maintain two places of abode”. Kroll v. Commissioner, 49
T.C. 557, 562 (1968).
As a general rule, a taxpayer’s “home” for purposes of
section 162(a)(2) is the vicinity of his principal place of
employment, irrespective of where his personal residence is
located. Mitchell v. Commissioner, 74 T.C. 578, 581 (1980);
Sanderson v. Commissioner, T.C. Memo. 1998-358. Petitioner was
employed at construction sites in California for all of 1992 and
most of 1993. Thus, under the general rule, petitioner’s tax
home was the vicinity of those sites in California. However,
petitioner relies on an exception to the general rule to argue
that his tax home was Idaho, where his parents resided and where
he lodged when he was physically present in that State.
Under the exception, if the principal place of business is
temporary, and not indefinite, the taxpayer’s personal residence
may be considered the tax home. Peurifoy v. Commissioner, 358
U.S. 59, 60 (1958); Kroll v. Commissioner, supra at 562. If the
taxpayer incurs substantial and continuous living expenses at the
personal residence, he or she may deduct the expenses associated
with traveling to, and living at, the jobsite. Barone v.
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Commissioner, 85 T.C. 462, 465 (1985), affd. without published
opinion 807 F.2d 177 (9th Cir. 1986); Kroll v. Commissioner,
supra at 562.
A place of business is temporary if the employment is such
that termination within a short period could be reasonably
foreseen. Albert v. Commissioner, 13 T.C. 129, 131 (1949).
Conversely, employment is indefinite if termination cannot be
foreseen within a “reasonably short period”. Stricker v.
Commissioner, 54 T.C. 355, 361 (1970), affd. 438 F.2d 1216 (6th
Cir. 1971). Whether employment is temporary or indefinite is a
question of fact. Peurifoy v. Commissioner, supra at 60-61.
The Court of Appeals for the Ninth Circuit, to which any
appeal in this case would ordinarily lie, has expressed the
temporary versus indefinite distinction as follows:
An employee might be said to change his tax home
if there is a reasonable probability known to him that
he may be employed for a long period of time at his new
station. What constitutes a ‘long period of time’
varies with circumstances surrounding each case. If
such be the case, it is reasonable to expect him to
move his permanent abode to his new station, and thus
avoid the double burden that the Congress intended to
mitigate. * * * [Harvey v. Commissioner, 283 F.2d 491,
495 (9th Cir. 1960), revg. 32 T.C. 1368 (1959).]
Subsequent opinions by the Court of Appeals for the Ninth
Circuit reveal that its approach to the exception to the general
“tax home” rule does not differ materially from the view of this
Court. Both courts focus on whether a taxpayer could reasonably
expect his employment outside the area of his residence to
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continue beyond a “short” period of time. Wills v. Commissioner,
411 F.2d 537, 541 (9th Cir. 1969), affg. 48 T.C. 308 (1967); see
also Coombs v. Commissioner, 608 F.2d 1269, 1274-1276 (9th Cir.
1979), affg. in part and revg. in part 67 T.C. 476 (1976).
Petitioner asserts that his employment was temporary because
each job he took had a definite end that he could estimate
beforehand. According to petitioner, the ability to predict the
duration of a particular job necessarily means that the job
cannot be indefinite, and therefore must be temporary.
Petitioner’s employment in California was not temporary.
Construction projects are typically, if not always, of limited
duration. Weichlein v. Commissioner, T.C. Memo. 1995-553.
However, this does not end the inquiry. This Court has
recognized that when the taxpayer has a series of jobs with one
employer, the actual duration of the employment relationship
between the taxpayer and employer should be considered when
determining whether the employment was indefinite. Norwood v.
Commissioner, 66 T.C. 467, 471 (1976). This is true
notwithstanding that the employment relationship consists of a
series of shorter assignments. Id. Where the employee is highly
regarded by the employer, as appears to be the case here, the
relationship between the two parties is a continuing one, subject
only to the availability of projects requiring the employee’s
skills. Weichlein v. Commissioner, supra. When a taxpayer has
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an ongoing relationship with an employer because he or she works
on a succession of shorter projects, the taxpayer’s employment
status is not characterized as temporary for Federal income tax
purposes. See id.; see also Yeates v. Commissioner, T.C. Memo.
1988-259, affd. 873 F.2d 1159-1161 (8th Cir. 1989).
Petitioner’s relationship with Kiewit began in 1987 and
continued through the time of trial. Kiewit employed petitioner
for most of 1990, all of 1991, all of 1992, most of 1993, and
part of 1994. All of the construction projects petitioner worked
on while employed by Kiewit in the years at issue were in
Southern California. The relationship between petitioner and
Kiewit, his primary employer, was clearly a continuing one
because of the substantial length of petitioner’s continuing
employment. Thus, it cannot be said that termination of
petitioner’s employment with Kiewit could be foreseen within a
reasonably short period of time. Albert v. Commissioner, supra
at 131.
Petitioner has not established that he maintained a personal
residence in Idaho and incurred duplicate living expenses because
of the exigencies of his work. Petitioner lodged at his parents’
house when he worked in Idaho but did not have a rental agreement
or lease with his parents. According to petitioner, he
sporadically contributed money to his parents’ household for
bills and groceries, but did not have an arrangement with them to
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make regular rental payments. Petitioner offered as evidence of
his contributions three checks totaling $417 drawn on his newly
created checking account, payable to his mother. Petitioner was
physically present in Idaho when he delivered the checks to his
mother. These infrequent and nominal amounts are neither
substantial nor continuous. They are not strong indications that
petitioner was burdened by duplicate living expenses; indeed,
they indicate to the contrary. We accordingly conclude that
petitioner is not entitled to relief on the theory that his
employment in southern California was temporary. Kroll v.
Commissioner, 49 T.C. at 562.
b. Substantiation
For the sake of completeness, we summarily address whether
petitioner substantiated the expenses he claimed as travel
expense deductions. Even if petitioner had persuaded us that the
travel expenses he claimed as deductions were incurred while he
was “away from home”, the deductions would be disallowed because
petitioner has failed to meet the substantiation requirements of
section 274(d). Generally, when evidence shows that a taxpayer
incurred a deductible expense, but the exact amount cannot be
determined, the Court may estimate the amount allowable as a
deduction. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). However, section 274(d) precludes the estimation of
travel expense deductions otherwise allowable under section 162.
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Under section 274(d), all travel expense deductions must meet
stringent substantiation requirements. Petitioner did not
satisfy the substantiation requirements of section 274(d).
Under section 274(d), no deduction is allowed under section
162 for any travel expense:
unless the taxpayer substantiates by adequate records
or by sufficient evidence corroborating the taxpayer’s
own statement (A) the amount of such expense or other
item, (B) the time and place of the travel,
entertainment, amusement, recreation, or use of the
facility or property, or the date and description of
the gift, (C) the business purpose of the expense of
other item. * * *
To substantiate a deduction by adequate records, a taxpayer must
maintain an account book, diary, log, statement of expense, trip
sheets, and/or other documentary evidence, which, in combination,
are sufficient to establish each element of expenditure or use.
Sec. 1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg.
46017 (Nov. 6, 1985).
Petitioner did not produce any records for travel taken
during 1992 and 1993. He did not maintain a log for mileage
deductions claimed, nor did he offer any statement of expense or
receipts for his trips between California and Idaho. Petitioner
offered only his uncorroborated testimony as evidence of the
claimed travel expenses. Section 274(d) expressly requires
corroboration of any statement by the taxpayer as to amounts
expended for travel. Petitioner has failed to meet the strict
substantiation requirements of section 274(d).
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The regulations provide a limited exception to the
substantiation requirements of section 274(d). Under section
1.274-5(c)(5), Income Tax Regs.:
Where the taxpayer establishes that the failure to
produce adequate records is due to the loss of such
records through circumstances beyond the taxpayer’s
control, such as destruction by fire, flood,
earthquake, or other casualty, the taxpayer shall have
a right to substantiate a deduction by reasonable
reconstruction of his expenditures.
Petitioner testified that he kept records of his flights between
California and Idaho, but that those records have been lost.
Petitioner did not present any evidence as to how the loss of the
records occurred, or that the loss was due to “circumstances
beyond * * * [his] control”. The limited exception does not
apply to the loss of petitioner’s records.
2. Miscellaneous Business Expense Deductions
Petitioner also claimed miscellaneous business deductions of
$5,290 and $4,988 on his 1992 and 1993 returns, respectively.
According to petitioner’s testimony, the business expenditures
were for union dues, tools, work clothing, and boots. Respondent
denied the miscellaneous business deductions on the grounds that
petitioner failed to establish that he incurred the expenses
claimed as deductions, and that he failed to maintain adequate
records to establish the specific amounts of the deductions as
required by section 6001.
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A taxpayer is entitled to deduct the ordinary and necessary
expenses he incurs during the taxable year in carrying on a trade
or business. Sec. 162(a). To avail himself of the deduction, a
taxpayer is required to maintain adequate records sufficient to
establish the amounts of the deductions. Sec. 6001; Meneguzzo v.
Commissioner, 43 T.C. 824, 831-832 (1965). The burden of
substantiation rests with the taxpayer. Hradesky v.
Commissioner, 65 T.C. 87, 89-90 (1975), affd. 540 F.2d 821 (5th
Cir. 1976).
Beyond two statements reflecting amounts contributed as
supplemental union dues, petitioner did not proffer any records
to substantiate his entitlement to the deductions claimed.
Petitioner did not meet the record-keeping requirements of
section 6001. Petitioner did, however, offer his own testimony
regarding the nature and amounts of the expenses.
When there are no records to substantiate deductions, the
Court can estimate the amounts of allowable deductions if (1)
there is evidence that the expenses were in fact incurred, and
(2) there is a basis upon which an estimate may be made. Cohan
v. Commissioner, supra at 543-544; Vanicek v. Commissioner, 85
T.C. 731, 742-743 (1985).
Petitioner’s testimony as to the amount of each expense
claimed was as follows: Approximately $200 for work boots at
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least twice per year; $50-$60 for coveralls each year; $2,400 per
year for tools; and $30 per month for union dues.
With respect to the deductions for work boots and coveralls,
work clothing may be deductible under section 162 if the taxpayer
can establish that: (1) The clothing was required or essential
in the taxpayer’s employment; (2) the clothing was not suitable
for general or personal wear; and (3) the clothing was not so
worn. Yeomans v. Commissioner, 30 T.C. 757, 767-769 (1958);
Kozera v. Commissioner, T.C. Memo. 1986-604.
The Court is satisfied that petitioner incurred expenses for
work boots and coveralls. Petitioner’s credible testimony to
that effect, and the nature of his jobs, which included working
as a demolition foreman, a drilling crew foreman, and a master
mechanic, are satisfactory evidence to support the deductions.
Because petitioner’s trade was labor intensive, work boots
and coveralls were essential to his employment in the
construction industry. We also find that the type of boots and
coveralls this sort of work requires, for safety reasons, may not
be suitable for general or personal wear. Accordingly, “bearing
heavily” on petitioner, whose “inexactitude is of his own
making”, we allow a deduction of $100 for each of the tax years
for the cost of work boots. Cohan v. Commissioner, 39 F.2d at
544. Similarly, while petitioner testified that he spent up to
$60 per pair of coveralls, he had no records to substantiate that
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amount. The Court will again bear heavily on petitioner and
allow him a $30 deduction for coveralls for each of the 1992 and
1993 years.
Petitioner also claimed as a deduction amounts contributed
as dues to the labor union of which he is a member. At trial,
petitioner testified that he spent up to $30 per month on union
dues. This Court found petitioner to be a credible witness, and
we are satisfied that some amount was contributed to petitioner’s
labor union. Consistent with our treatment of the work boots and
coveralls, a deduction of $15 per month for union dues is allowed
for 1992 and 1993. Petitioner is entitled to an additional
deduction for supplemental union dues paid in 1992 of $714.65,
which was substantiated by two “employee [statements]”.
The foregoing miscellaneous business expense deductions to
which petitioner is entitled are all deductible on petitioner’s
Schedule A, Itemized Deductions. As itemized deductions, they
are subject to the 2-percent limitation. Sec. 67(a).
Petitioner’s outlay for tools poses a more difficult
problem. Petitioner did not make an election under section 179
that would permit him to deduct currently up to $10,000 of the
cost of depreciable property in the year it was placed in
service. Having made no section 179 election, petitioner is
within the general rules regarding depreciation. See Alisobhani
v. Commissioner, T.C. Memo. 1994-629.
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While small tools with a useful life of less than 1 year
are currently deductible, Clemons v. Commissioner, T.C. Memo.
1979-273, the cost of tools with a useful life that exceeds 1
year are recovered by depreciation, secs. 167(a) and 168(b);
Clemons v. Commissioner, supra.
At trial, petitioner testified that he spent, on average,
$2,400 per year on tools. He failed, however, to describe the
type, number, expected useful life, and cost of each tool
purchased. Some of the tools he used may have required at least
annual replacement, which would be a currently deductible
expense. Others could have been expected to survive well beyond
the year in which they were purchased, and their costs would be
recoverable through depreciation deductions over a number of
years. Without evidence of these matters, we have no basis for
an appropriate estimate.
Petitioner has specified neither the amount of the deduction
that should be allowed for each tool he purchased in 1992 and
1993 nor the amounts spent for tools in these and prior years for
which depreciation should be allowed. With no guidance in the
record beyond petitioner’s own testimony of the total amounts
spent on tools, we will not speculate on the amount that
petitioner should be allowed to deduct. To allow any deduction
would be “unguided largesse.” Williams v. United States, 245
F.2d 559, 560 (5th Cir. 1957). We sustain respondent’s position
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disallowing any deduction for the cost of tools.
3. Accuracy-Related Penalties and Addition to Tax
Respondent also determined accuracy-related penalties under
section 6662(a) for 1992 and 1993. Section 6662(a) imposes a 20-
percent penalty on underpayments attributable to negligence or
disregard of rules or regulations. Sec. 6662(b)(1).
“Negligence” is the failure to make a reasonable attempt to
comply with the provisions of the Internal Revenue Code, or the
“failure to do what a reasonable and ordinarily prudent person
would do under the circumstances.” Neely v. Commissioner, 85
T.C. 934, 947 (1985). No accuracy-related penalty may be imposed
on any portion of an underpayment if it is shown that there was a
“reasonable cause” for such portion and that the taxpayer acted
in “good faith” with respect to such portion. Sec. 6664(c)(1).
The determination of whether a taxpayer acted in good faith is
made case by case, taking into account all pertinent facts and
circumstances. Sec. 1.6664-4(b), Income Tax Regs. The most
important factor is the extent of the taxpayer’s efforts to
determine the proper tax liability. Id.
On brief, petitioner argues that for 1992 and 1993 he
calculated his business expense deductions the same way he had
done for several prior years, and that he did not receive any
deficiency notices for those years. Petitioner argues that his
reliance on respondent’s failure to take exception to his
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deduction claims for prior years amounts to “reasonable cause”
for his underpayments in the years at issue. In support of this
assertion, petitioner cites Estate of Phillips v. Commissioner,
T.C. Memo. 1955-139, revd. on other grounds 246 F.2d 209 (5th
Cir. 1957). In Estate of Phillips, the Commissioner had examined
the taxpayer’s records in prior years and had not assessed or
asserted deficiencies. We held that the taxpayer may use the
Commissioner’s tacit approval to rebut the presumption of
correctness of the Commissioner’s determination of the negligence
penalties for the years at issue.
Petitioner’s reliance on Estate of Phillips is misplaced.
In Estate of Phillips the Commissioner had examined prior years
and had taken no exception to the prior years’ returns. However,
the Commissioner’s approval of a prior year did not purge the
negligence of a later year. We simply held that the
Commissioner’s tacit approval of the prior years’ returns shifted
to the Commissioner the burden of coming forward with evidence of
the taxpayer’s negligence, a “burden he has not sustained.”
Petitioner did not offer any evidence to show that
respondent examined any tax year prior to 1992. Therefore, there
is no evidence in the record that respondent ever tacitly
approved petitioner’s method of calculating his Federal income
tax. Even if it can be said--and we do not agree-–that by
failing to audit petitioner’s prior returns respondent somehow
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tacitly approved petitioner’s methodology, respondent has come
forward with sufficient evidence to prove petitioner’s
negligence. Petitioner did not maintain a contemporaneous
mileage log for the claimed mileage deductions. Petitioner
claimed deductions for the occasional motel he stayed in when he
did not feel like driving back to his recreational vehicle or
apartment. However, petitioner failed to offer any receipts or
explain how he calculated these expenses. Petitioner claimed
deductions for flights between Idaho and California, and the
associated parking expenses, but failed to proffer this Court any
records, receipts, or reconstruction for submission into
evidence.
The most important factor in deciding whether a taxpayer was
negligent is the extent of the taxpayer’s efforts to determine
the proper tax liability. Sec. 1.6664-4(b), Income Tax Regs. In
light of the many deductions petitioner claimed, his failure to
maintain adequate records was not a reasonable attempt to comply
with the Internal Revenue Code. We therefore sustain
respondent’s position.
In addition to the accuracy-related penalties for 1992 and
1993, respondent determined an addition to tax pursuant to
section 6651(a) for late filing for 1993. The addition is 5
percent of the amount required to be shown as tax on the
delinquent return for each month the return is late (not to
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exceed 25 percent). Sec. 6651(a)(1). A taxpayer is excused from
the late-filing addition to tax if he shows that the late filing
was due to reasonable cause and not due to willful neglect. Id.
However, the taxpayer bears the burden of proof on this issue.
Rule 142(a). Petitioner offered no evidence to rebut
respondent’s determination. We sustain respondent’s
determination.
To give effect to our partial allowance of some deductions
petitioner claimed,
Decision will be entered
under Rule 155.