T.C. Memo. 2004-26
UNITED STATES TAX COURT
JON A. AND LINDA A. JEWETT, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16437-02. Filed February 3, 2004.
Steven R. Stolar, for petitioners.
Ric D. Hulshoff, for respondent.
MEMORANDUM OPINION
PAJAK, Special Trial Judge: Respondent determined a
deficiency in petitioners’ Federal income tax of $2,273 for the
taxable year 1999. Unless otherwise indicated, section
references are to the Internal Revenue Code in effect for the
year in issue, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
The issue for decision is whether petitioners are entitled
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to deduct actual travel expenses.
Some of the facts have been stipulated and are so found.
Petitioners resided in Reno, Nevada, at the time their petition
was filed.
Because petitioners did not meet the substantiation and
recordkeeping requirements of section 7491(a)(2), the burden of
proof remains on petitioners. Rule 142(a).
Through 1999, petitioner husband (petitioner) was a merchant
seaman. During 1999, he was the Chief Engineer on the S.S.
Sealand Producer, a container ship. His typical tour of duty was
56 days, plus 1 day travel each way between his home and the port
where his tour began, for a total of 58 days. The ship traveled
to various ports, principally in the Caribbean and Gulf of
Mexico. Meals and lodging were provided by petitioner’s employer
and were available to him during the periods in 1999 that he was
assigned to a vessel and on active status. Petitioner testified
that while in port he would leave the ship and incur expenses on
shore.
Petitioners filed a Form 1040, U.S. Individual Income Tax
Return, for their 1999 taxable year (return). On Schedule A,
Itemized Deductions, attached to petitioners’ return, petitioners
claimed a deduction for “Meals & Incidental Expenses (full M &
IE)” in the total amount of $11,147. Petitioners alleged that
this deduction was “deemed substantiated” pursuant to Rev. Proc.
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98-64, 1998-2 C.B. 825. The parties stipulated that this full M
& IE rate deduction purportedly was supported by a “Sailor Travel
Statement” attached to petitioners’ return.
After petitioners’ return was filed, Johnson v.
Commissioner, 115 T.C. 210 (2000), was issued.
During the examination of petitioners’ return, petitioners
conceded that they were not entitled to the full M & IE rate
deduction as claimed. Instead, petitioners conceded they were
entitled to the lesser total amount of $1,978, which represents
the “incidental expense” portion of the M & IE rate, as allowed
by Johnson v. Commissioner, supra.
The $9,169 adjustment in the notice of deficiency represents
the subtraction of the “incidental expense” of $1,978 from the
$11,147 expense claimed on petitioners’ return.
Petitioners now seek a deduction for “actual expenses”
incurred while in the course of travel.
As this Court noted in Johnson v. Commissioner, supra at
228, “taxpayers, to the extent that the amounts set forth in the
revenue procedures fail to reflect the actual cost of their
incidental expenditures, are entitled to a deduction for their
actual expenses. In such a situation, however, taxpayers must be
prepared to meet all the substantiation requirements, including,
especially, written documentation as to the amounts of those
costs.” The Court goes on to refer to the section 274
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regulations which except taxpayers from strict substantiations in
the case of expenditures of less than a prescribed amount.
Petitioner, like the taxpayer in Johnson, has not shown that he
made any expenditure that fits within these exceptions. Johnson
v. Commissioner, supra at 228 n.11.
Section 274(d) imposes stringent substantiation requirements
for the deduction of travel expenses. Taxpayers must
substantiate by adequate means certain elements in order to claim
deductions, such as the amount of such expenditure, the date of
the expenditure or use, the place of each separate expenditure,
and the business purpose for an expenditure or use. Sec. 274(d);
sec. 1.274-5T(b), Temporary Income Tax Regs., 50 Fed. Reg. 46014
(Nov. 6, 1985). To substantiate a deduction by means of 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. The log must be made at or near
the time of the expenditure. Sec. 1.274-5T(c)(2)(i) and (ii),
Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985).
Petitioner claimed that he prepared a log listing his travel
expenses at or near the times of the expenditures. We are not
required to accept petitioner’s self-serving statements.
Tokarski v. Commissioner, 87 T.C. 74, 77 (1986). Our review of
this log leads us to conclude it was prepared at one time, and
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the entries could not have been made at or near the times of the
expenditures. Respondent also observes that petitioners took the
position on their return that they were entitled to a deduction
based on a per diem rate without the need for substantiation, and
maintenance of a calendar log of actual expenses is inconsistent
with that position. Respondent further commented that the return
had nearly 30 documents attached to it to support petitioners’
claim, but the log was not attached. For the aforesaid reasons,
we do not give the purported log any credence.
Petitioner also referred to the so-called supporting
schedule of expenses attached to the return. This schedule bears
the name of a certified public accountant on each page.
Petitioners’ counsel stated at trial that this was prepared
during the audit. This obviously was not made at or near the
time of any of the expenditures. Moreover, this schedule was
attached to petitioners’ return, which was an exhibit attached to
the parties’ stipulation. This Court has long held that the
return is merely a statement of the petitioners’ claim and does
not establish the facts contained therein. Lamphere v.
Commissioner, 70 T.C. 391, 394 (1978); Roberts v. Commissioner,
62 T.C. 834, 837 (1974); Seaboard Commercial Corp. v.
Commissioner, 28 T.C. 1034, 1051 (1957).
Our review of the record shows there was no record made at
or near the time of any of the expenditures claimed as actual
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expenses nor has petitioner substantiated such expenses by other
sufficient evidence. Johnson v. Commissioner, supra. We reject
petitioners’ position because we find that petitioners did not
substantiate the actual expenses.
We agree that petitioners are entitled to claim the
incidental expenses, as computed in accord with Johnson, and as
allowed by respondent in the notice of deficiency.
Accordingly, we sustain respondent’s determination.
Contentions we have not addressed are irrelevant, moot, or
meritless.
Decision will be entered
for respondent.