T.C. Summary Opinion 2004-76
UNITED STATES TAX COURT
LIONEL D. JONES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7827-03S. Filed May 27, 2004.
Lionel D. Jones, pro se.
Laura A. McKenna, for respondent.
COUVILLION, Special Trial Judge: This case was heard
pursuant to section 7463 of the Internal Revenue Code in effect
at the time the petition was filed.1 The decision to be entered
is not reviewable by any other court, and this opinion should not
be cited as authority.
1
Unless otherwise indicated, subsequent section
references are to the Internal Revenue Code in effect for the
year at issue. Rule references are to the Tax Court Rules of
Practice and Procedure.
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Respondent determined a deficiency of $6,436 in petitioner’s
Federal income tax for the year 2001. After concessions,2 the
issues for decision are: (1) Whether petitioner is entitled to
deduct certain unreimbursed employee expenses; and (2) whether
petitioner is entitled to a deduction for charitable
contributions under section 170.3
Some of the facts were stipulated. Those facts, with the
annexed exhibits, are so found and are made part hereof.
Petitioner’s legal residence at the time the petition was filed
was Memphis, Tennessee.
Petitioner was employed in two separate occupations during
the year at issue, firefighting and law enforcement. As a
firefighter, he was employed by the City of Memphis and worked
24-hour shifts. On his days off from that job, he worked for the
police department of the Memphis Housing Authority. Petitioner
was required to purchase uniforms for both his firefighting and
law enforcement occupations. He received a small uniform
2
Respondent conceded petitioner's entitlement to two
dependency exemption deductions and head-of-household filing
status. Petitioner conceded an unreported interest income
adjustment.
3
Deductions are a matter of legislative grace, and
petitioner bears the burden of proving that he is entitled to the
deductions claimed. Rule 142(a); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). The burden of proof has not
shifted to respondent pursuant to sec. 7491 since petitioner has
not complied with the requirements of sec. 7491(a)(2)(A) and (B).
Higbee v. Commissioner, 116 T.C. 438 (2001).
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allowance from the city for this purpose, which approximated the
cost of three pairs of firefighter uniform pants and one uniform
shirt, but other expenses were out of pocket. Neither the police
nor the firefighter uniform was suitable for off-duty use, and in
fact such use was prohibited.
Petitioner attended church regularly during the year at
issue. Sometimes he would attend his father’s church and other
times his grandfather’s, but he contributed to both churches. He
made weekly payments using offering envelopes provided by the
churches. He put both cash and checks into these envelopes.
Petitioner also made a contribution by cash or check to the
Salvation Army during the year at issue.
On his 2001 Federal income tax return, which was self-
prepared, petitioner reported $64,561 in wage income. On
Schedule A, Itemized Deductions, he claimed a deduction for
$6,600 in unreimbursed employee expenses.4 He also claimed a
charitable contributions deduction of $6,045. Respondent
disallowed the charitable contributions and miscellaneous
employee expenses deductions for lack of substantiation.
With respect to the unreimbursed employee expenses, section
162 allows a deduction for ordinary and necessary expenses that
4
The claimed expenses yielded a deduction of $5,309
after the application of the 2-percent limitation under sec.
67(a).
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are paid or incurred during the taxable year in carrying on a
trade or business. Sec. 162(a); Deputy v. du Pont, 308 U.S. 488,
495 (1940). A trade or business includes the trade or business
of being an employee. O’Malley v. Commissioner, 91 T.C. 352,
363-364 (1988).
In the case of travel expenses and certain other expenses,
such as entertainment, gifts, and expenses relating to the use of
listed properties, including cellular telephone or other similar
telecommunications equipment described in section 280F(d)(4)(A),
section 274(d) imposes stringent substantiation requirements to
document particularly the nature and amount of such expenses.
For such expenses, substantiation of the amounts claimed by
adequate records or by other sufficient evidence corroborating
the claimed expenses is required. Sec. 274(d); sec. 1.274-
5T(a)(4), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6,
1985). To meet the adequate records requirements of section
274(d), a taxpayer "shall maintain an account book, diary, log,
statement of expense, trip sheets, or similar record * * * and
documentary evidence * * * which, in combination, are sufficient
to establish each element of an expenditure". Sec. 1.274-
5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov.
6, 1985). These substantiation requirements are designed to
encourage taxpayers to maintain records, together with
documentary evidence substantiating each element of the expense
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to be deducted. Sec. 1.274-5T(c)(1), Temporary Income Tax Regs.,
50 Fed. Reg. 46017 (Nov. 6, 1985).
At trial, petitioner did not produce canceled checks or
credit card receipts to substantiate the claimed employee
business expenses. Rather, he presented a worksheet entitled
Fire Fighter and Law Enforcement Deductions listing expenses
totaling $4,838.99, as follows:
Description of Item Amount
Uniforms $ 200.00
Dry cleaning/laundry 1,820.00
Association dues 285.00
Professional dues 375.00
Range dues 220.00
Ammunition 104.00
Camera 49.99
Guns 650.00
Telephone (2nd line) 485.00
Telephone (cellular) 650.00
Total $4,838.99
Petitioner gave explanations for all of the expenses listed
on the worksheet. The dues were paid to the Fraternal Order of
Police, a firefighters union, and the Progressive Black
Firefighters. The range dues and ammunition were unreimbursed
expenses petitioner incurred at a firing range in connection with
his occupation as a police officer. Petitioner purchased the
camera to take pictures of crime scenes and to bolster his police
reports. He also purchased his own weapon for police use, a .40
caliber Sig Sauer P-229 pistol. The $485 telephone expense was
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for a telephone line required in petitioner’s home by both the
police and fire departments. The $650 cellular expense was for a
cellular telephone that he used in both jobs.
The amount of expenses listed on the worksheet totaled
$1,761.01 less than the amount petitioner claimed on Schedule A
of his income tax return. Petitioner testified that he also
incurred unreimbursed job-related expenses for socks and shoes,
belts, short pants, bed linen, and food, which accounts for the
difference between the $4,838.99 listed on the worksheet and the
$6,600 claimed on his return.
With respect to the $485 claimed for the second telephone
line in petitioner's home and the $650 claimed for the cellular
telephone, petitioner maintained no contemporaneously prepared
records to document his employee-related uses of these devices.
At the time his return was under audit by respondent, petitioner
prepared a worksheet to support the claimed deductions. Such
evidence does not suffice to satisfy the substantiation
requirements for use of the cellular telephone because a cellular
telephone is listed property under section 280F(d)(4)(A)(v).
Moreover, with respect to the second telephone line, the Court is
not bound to accept petitioner's uncorroborated or self-serving
testimony that the amount claimed related to his employee-related
use of that line, and that there was no personal use involved.
Petitioner, therefore, has failed to sustain his burden on that
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item. Respondent, therefore, is sustained on the claimed second
telephone and cellular telephone expenses. Brodsky v.
Commissioner, T.C. Memo. 2001-240.
With respect to the uniforms, dry cleaning and laundry,
association and professional dues, firing range expenses,
ammunition, camera, and gun expenses, the strict substantiation
rules do not apply, and the Court is satisfied that petitioner
did incur deductible expenses for these items. Although
petitioner admitted he was “not the world’s best record-keeper,”
he testified credibly with respect to these items and their
business purpose. In the absence of adequate substantiation,
this Court may, if convinced by the evidence, estimate the amount
of deductible expenses incurred. Cohan v. Commissioner, 39 F.2d
540, 543-544 (2d Cir. 1930). Therefore, under the Court's
discretionary authority pursuant to Cohan, the following amounts
are allowed as unreimbursed employee business expense deductions
on Schedule A: Uniforms, $200; dry cleaning and laundering of
uniforms, $500; association and professional dues, $500; firing
range and ammunition costs, $100; firearm and camera, $200, for a
total of $1,500. See McGovern v. Commissioner, 42 T.C. 1148
(1964) (expense for nurse’s uniforms allowed under Cohan rule),
affd. 17 AFTR2d 944, 66-1 USTC par. 9455 (6th Cir. 1966); Fisher
v. Commissioner, 23 T.C. 218 (1954) (purchase and laundering of
formal clothing expenses of professional musician allowed under
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Cohan), affd. 230 F.2d 79 (7th Cir. 1956). The Court declines to
allow any deduction for the claimed job-related expenses of socks
and shoes, belts, short pants, bed linen, and food because, under
section 262(a), no deduction is allowed for personal, living, or
family expenses. These items constitute personal expenses.
With respect to the charitable contributions, section 170
allows a deduction for charitable contributions during the
taxable year, if verified as provided in the regulations. Sec.
170(a)(1). The charitable contributions deduction is subject to
certain substantiation requirements. Sec. 170(f)(8). No
deduction is allowed for any contribution of $250 or more unless
the taxpayer substantiates the contribution by a contemporaneous
written acknowledgment of the contribution by the qualified donee
organization. Sec. 170(f)(8)(A). The standards for record
keeping and return requirements for deductions for charitable
contributions are set forth in section 1.170A-13, Income Tax
Regs. Under the applicable provisions, a taxpayer claiming a
charitable contribution deduction shall maintain for each
contribution one of the following:
(i) A cancelled check.
(ii) A receipt from the donee charitable organization
showing the name of the donee, the date of the contribution,
and the amount of the contribution. A letter or other
communication from the donee charitable organization
acknowledging receipt of a contribution and showing the date
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and amount of the contribution constitutes a receipt for
purposes of this paragraph (a).
(iii) In the absence of a canceled check or receipt from the
donee charitable organization, other reliable written
records showing the name of the donee, the date of the
contribution, and the amount of the contribution.
Sec. 1.170A-13(a)(1)(i)-(iii), Income Tax Regs. The reliability
of the written records described “is to be determined on the
basis of all of the facts and circumstances of a particular
case.” Sec. 1.170A-13(a)(2)(i), Income Tax Regs.
Petitioner did not present any canceled checks or credit
card receipts with respect to his 2001 charitable contributions,
and he had no record of the amount of his contribution to the
Salvation Army. However, he did produce letters from Antioch
Baptist Church and Understanding for Life Ministries
acknowledging contributions by petitioner of $3,735 and $4,466,
respectively, in 2001. These contributions total $8,201, and
exceed the $6,045 claimed on petitioner’s return.5 Petitioner
asked to have his contributions and evidence considered to the
fullest extent possible. The Court is satisfied with the
credibility of petitioner’s testimony as verified by his
documentation under the cited legal standards and, therefore,
allows a charitable contribution deduction of $8,201 for the year
at issue.
5
Petitioner attributed the error to filing his tax
return in haste; he did not file an amended return.
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Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
under Rule 155.