T.C. Memo. 2004-114
UNITED STATES TAX COURT
VICTOR WOODS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13056-02. Filed May 11, 2004.
Victor Woods, pro se.
Thomas Yang, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
HAINES, Judge: Respondent determined a deficiency of $3,438
in petitioner’s Federal income tax for 1999.1 The issue to be
decided is whether petitioner is entitled to deduct his claimed
Schedule C expenses for 1999.
1
Amounts are rounded to the nearest dollar.
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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 herein by this reference. At the time he filed the
petition, petitioner resided in Bloomingdale, Illinois.
Petitioner is a self-employed motivational speaker.
Petitioner filed his Federal tax return for 1999, reporting
$16,020 in gross receipts and claiming the following deductions
on Schedule C, Profit or Loss From Business:
Expense Amount
Car and truck expenses $5,781
Insurance (other than health) 984
Legal and professional services 1,000
Office expense 250
Rent or lease
a. Vehicles, machinery, and equipment 900
b. Other business property 1,524
Other expenses
a. Telephone 1,500
b. Business supplies 1,500
c. Credit card payments 1,200
d. Cellular telephone 1,250
Total 15,889
On May 14, 2002, respondent issued a notice of deficiency to
petitioner for 1999 determining an income tax deficiency of
$3,438 after denying petitioner’s claimed deduction for Schedule
C expenses. On August 12, 2002, petitioner timely filed a
petition with the Court disputing respondent’s determination.
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OPINION
Deductions are a matter of legislative grace, and a taxpayer
bears the burden of proving that he has complied with the
specific requirements for any deduction he claims.2 See INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934).
Under section 162,3 a taxpayer may deduct all ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business, if the taxpayer maintains
sufficient records to substantiate the expenses. Sec. 162(a);
see sec. 6001; Deputy v. duPont, 308 U.S. 488, 495 (1940); sec.
1.6001-1(a), Income Tax Regs. However, traveling expenses and
expenses paid or incurred with respect to listed property, i.e.,
a passenger automobile, computer or peripheral equipment, and
cellular telephones, are deductible only if the taxpayer meets
the stringent substantiation requirements of section 274. See
sec. 274(d); sec. 280F(d)(4); Sanford v. Commissioner, 50 T.C.
823, 827 (1968), affd. 412 F.2d 201 (2d Cir. 1969); sec. 1.280F-
6T(b), Temporary Income Tax Regs., 49 Fed. Reg. 42713 (Oct. 24,
2
We need not decide whether the burden of proof shifts to
respondent under sec. 7491(a) because petitioner failed to comply
with respondent’s reasonable requests for information. In any
event, we decide this case on the basis of the preponderance of
evidence on the record.
3
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the year in issue.
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1984). In addition, under section 280A(c)(1)(A), deductions
arising from the use of a dwelling unit that was used by the
taxpayer as a residence are generally disallowed unless the
taxpayer proves a portion of the dwelling unit was used
exclusively and regularly as his principal place of business or
satisfies another of the exceptions in section 280A(c).
On April 22, 2003, petitioner was served with a pretrial
order. Before the trial, petitioner did not cooperate in
informal discovery by providing respondent with any documentary
or written evidence to substantiate his claimed expenses and did
not identify any potential witnesses. In addition, petitioner
made no effort to keep respondent informed of his current address
and telephone number. Petitioner did not sign a stipulation of
facts until the day of trial. The stipulation of facts did not
address any of the substantiation issues for petitioner’s claimed
Schedule C expenses.
During the trial, petitioner presented a July 14, 1999,
Chicago Tribune newspaper article that discussed petitioner’s
background and motivational speeches as an evidentiary
submission. Petitioner presented no admissible documentary
evidence to substantiate any of the claimed expenses and gave
vague and general testimony.
As to section 274 expenses, petitioner testified that he
could recall car payments of approximately $450 per month.
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However, petitioner failed to produce records or documents to
substantiate the mileage and the amount, time, and business
purpose of the expenses paid or incurred for the car. Petitioner
also failed to produce records or documents to substantiate any
business travel, computer or peripheral equipment, or a cellular
telephone. Consequently, petitioner is disallowed a deduction
for any of these expenses. See sec. 274(d); Shea v.
Commissioner, 112 T.C. 183, 187 (1999); Smith v. Commissioner, 80
T.C. 1165, 1171 (1983); Gaylord v. Commissioner, T.C. Memo. 2003-
273; Boler v. Commissioner, T.C. Memo. 2002-155; Wilson v.
Commissioner, T.C. Memo. 2001-301; sec. 1.274-5T, Temporary
Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
With respect to section 280A expenses, petitioner made only
uncorroborated approximations. Petitioner testified that he
recalled the rent to be approximately $1,150 per month, estimated
electricity bills at an average of $80 per month, gas bills
estimated at $54 per month, and an estimated $200 per month for
telephone bills. Petitioner admitted that these expenses were
for his residence but also claimed he did business out of his
home. However, there is no evidence in the record that any part
of petitioner’s home was used exclusively and regularly for
business or otherwise qualifies for an exception from the general
rule of section 280A disallowing expenses of a dwelling unit used
by the taxpayer as a personal residence. Therefore, petitioner
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is not entitled to deduct any of the expenses relating to the use
of his personal residence. See Strohmaier v. Commissioner, 113
T.C. 106, 111 (1999); Krist v. Commissioner, T.C. Memo. 2001-140;
Verma v. Commissioner, T.C. Memo. 2001-132; Tokh v. Commissioner,
T.C. Memo. 2001-45, affd. 25 Fed. Appx. 440 (7th Cir. 2001).
The only other testimony petitioner gave was about legal
expenses. Petitioner testified that he incurred legal expenses
in a custody battle for his daughter. When the Court informed
petitioner that those legal expenses were not business expenses,
petitioner testified that he had also incurred legal expenses
when he had contracts and documents related to his speaking
engagements reviewed by an attorney. Petitioner failed to
provide the Court with any evidence of the amounts paid for these
legal expenses or any of the remaining expenses. In addition,
petitioner did not provide the Court with a basis from which we
could make any estimate under Cohan v. Commissioner, 39 F.2d 540,
543-544 (2d Cir. 1930). Vanicek v. Commissioner, 85 T.C. 731,
742-743 (1985); see Edwards v. Commissioner, T.C. Memo. 2002-169;
Caralan Trust v. Commissioner, T.C. Memo. 2001-241.
Therefore, we hold that petitioner is not entitled to
deduct any of the Schedule C expenses he claimed for 1999.
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In reaching our holding herein, we have considered all
arguments made, and, to the extent not mentioned above, we
conclude that they are irrelevant or without merit.
Decision will be
entered for respondent.