T.C. Summary Opinion 2006-69
UNITED STATES TAX COURT
GREGORY S. ROBINETTE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16875-04S. Filed April 26, 2006.
Gregory S. Robinette, pro se.
William J. Gregg, for respondent.
GOLDBERG, Special Trial Judge: This case was heard pursuant
to the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent 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.
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Respondent determined a deficiency in petitioner’s Federal
income tax of $4,964 for the taxable year 2002.
The issues for decision are: (1) Whether petitioner is
entitled to a charitable contribution deduction in 2002; and (2)
whether petitioner is entitled to miscellaneous itemized
deductions for the 2002 taxable year.
Background
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. Petitioner resided in
Fort Ashby, West Virginia, on the date the petition was filed in
this case.
During the year in issue, petitioner was employed by Sprint
as an installation technician. Petitioner began working for
Sprint early in 2001. From that time through the year in issue
petitioner worked out of Sprint’s office in Pennausken, New
Jersey. Also during this time, petitioner maintained his
residence in Cumberland, Maryland, because of its proximity to
his friends’ and to his family’s residences. Petitioner, when
working, traveled approximately 480 miles round trip from
Cumberland to Pennausken. Additionally, while working at Sprint
during 2001 and 2002, petitioner’s “territory” was Pennsylvania,
New Jersey, and New York. Petitioner would travel to different
job locations within these States during his employment with
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Sprint. Sprint considered Pennausken, New Jersey, petitioner’s
home office, and, therefore, only reimbursed petitioner for all
employment-related travel expenses incurred while away from
Pennausken.
Petitioner electronically filed his Federal income tax
return for 2002 in a timely manner on December 10, 2003.
Petitioner attached to his 2002 Federal income tax return a
Schedule A. On his 2002 Schedule A, petitioner claimed as
follows, in pertinent part:
Itemized Deductions Amount
Line 5 State and local income taxes $1,860
Line 9 Total taxes 1,860
Line 15 Gifts to charity by cash or check 2,600
Line 16 Other than by cash or check 460
Line 18 Total contributions to charity 3,060
Line 20 Unreimbursed employee business exp. 27,689
Line 23 Total limited misc. expenses 27,689
Line 26 Net limited misc. deduction 26,489
Line 28 Total itemized deductions 31,409
In the notice of deficiency, respondent denied petitioner
the claimed charitable contribution deduction and the claimed
miscellaneous itemized deductions. Because the remaining
itemized deductions were less than the standard deduction for
taxable year 2002, respondent calculated petitioner’s deficiency
using the 2002 standard deduction of $4,700.
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct. Welch v. Helvering,
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290 U.S. 111, 115 (1933). In pertinent part, Rule 142(a)(1)
provides the general rule that “The burden of proof shall be upon
the petitioner”. In certain circumstances, however, if the
taxpayer introduces credible evidence with respect to any factual
issue relevant to ascertaining the proper tax liability, section
7491 places the burden of proof on the Commissioner. Sec.
7491(a)(1); Rule 142(a)(2). Credible evidence is “‘the quality
of evidence which, after critical analysis, * * * [a] court would
find sufficient * * * to base a decision on the issue if no
contrary evidence were submitted’”.1 Baker v. Commissioner, 122
T.C. 143, 168 (2004) (quoting Higbee v. Commissioner, 116 T.C.
438, 442 (2001)). Section 7491(a)(1) applies only if the
taxpayer complies with substantiation requirements, maintains all
required records, and cooperates with reasonable requests by the
Commissioner for witnesses, information, documents, meetings, and
interviews. Sec. 7491(a)(2). Although neither party alleges the
applicability of section 7491(a), we conclude that the burden of
proof has not shifted to respondent with respect to any of the
issues in the present case.
Moreover, deductions are a matter of legislative grace and
are allowed only as specifically provided by statute. INDOPCO,
1
We interpret the quoted language as requiring the
taxpayer’s evidence pertaining to any factual issue to be
evidence the Court would find sufficient upon which to base a
decision on the issue in favor of the taxpayer. See Bernardo v.
Commissioner, T.C. Memo. 2004-199.
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Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934).
Section 6001 and the regulations promulgated thereunder
require taxpayers to maintain records sufficient to permit
verification of income and expenses. As a general rule, if the
trial record provides sufficient evidence that the taxpayer has
incurred a deductible expense, but the taxpayer is unable to
adequately substantiate the precise amount of the deduction to
which he or she is otherwise entitled, the Court may estimate the
amount of the deductible expense, bearing heavily against the
taxpayer whose inexactitude in substantiating the amount of the
expense is of his own making, and allow the deduction to that
extent. Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930).
However, in order for the Court to estimate the amount of an
expense, the Court must have some basis upon which an estimate
may be made. Vanicek v. Commissioner, 85 T.C. 731, 742-743
(1985). Without such a basis, any allowance would amount to
unguided largesse. Williams v. United States, 245 F.2d 559, 560-
561 (5th Cir. 1957). With these well-established propositions in
mind, we must determine whether petitioner has satisfied his
burden of proving that he is entitled to the claimed deductions
mentioned above.
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1. Gifts to Charity
As previously stated, on petitioner’s Schedule A filed with
his Federal income tax return for taxable year 2002, he reported
the following gifts to charity:
Itemized Deductions Amount
Gifts by cash or check $2,600
Gifts other than by cash or check 460
Total gifts $3,060
Respondent determined that petitioner did not adequately
substantiate that any of the claimed gifts to charity were made.
Accordingly, respondent disallowed the total amount of
petitioner’s claimed gifts to charity.
Deductions for charitable contributions are allowable only
if verified under regulations prescribed by the Secretary. Sec.
170(a). Section 1.170A-13, Income Tax Regs., in turn, sets forth
the types of substantiation necessary to support deductions for
charitable contributions.
The applicable regulations require a taxpayer to maintain
for each contribution of money a canceled check, a receipt from
the donee organization showing the date and amount of the
contribution, or other reliable written records showing the name
of the donee and the date and amount of the contribution. See
sec. 1.170A-13(a)(1), Income Tax Regs. For charitable
contributions of property other than money, taxpayers generally
must maintain for each contribution a receipt from the donee
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showing the following information: (1) The name of the donee;
(2) the date and location of the contribution; and (3) a
description of the property in detail reasonably sufficient under
the circumstances. Sec. 1.170A-13(b)(1), Income Tax Regs. The
amount of the contribution is the fair market value of the
property at the time of the contribution. Sec. 1.170A-1(c)(1),
Income Tax Regs.
Petitioner has not maintained any of the records required to
substantiate his claimed charitable contributions. Petitioner
testified, at trial, that during 2002 he made weekly cash
contributions of between $40 and $50 at the Sunday services of
the Methodist Church in Shortgap, West Virginia. Petitioner
further testified that he contributed clothing to the Salvation
Army during the year in issue. Petitioner has not offered into
evidence any documentary substantiation in support of his claimed
charitable contributions.
On the basis of the record, we find petitioner’s testimony
credible as to the portion of charitable gifts made to the
Methodist Church. Although petitioner has no records, we
conclude that petitioner is entitled to a deduction for cash
charitable gifts for the taxable year 2002 of $1,000. However,
he is not entitled to a deduction for gifts other than by check
or cash.
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2. Miscellaneous Itemized Deductions
On his 2002 Schedule A, petitioner deducted unreimbursed
employee business expenses of $27,689. Respondent determined
that petitioner did not adequately substantiate any of the
claimed unreimbursed employee business expenses. In the
alternative, respondent argued that if petitioner did
substantiate the unreimbursed employee business expenses,
petitioner is not entitled to deduct such expenses pursuant to
section 162(a)(2) because the expenses were not incurred away
from home.
Before we determine whether petitioner has substantiated his
claimed unreimbursed employee business expenses, we first decide
whether petitioner incurred these expenses away from home.
A taxpayer generally may not deduct personal, living, and
family expenses. Sec. 262(a). However, section 162(a) allows a
taxpayer to deduct all ordinary and necessary business expenses
paid or incurred during the taxable year in carrying on any trade
or business. To be “necessary” an expense must be “appropriate
and helpful” to the taxpayer’s business. Welch v. Helvering, 290
U.S. at 113-114. To be “ordinary” the transaction which gives
rise to the expense must be of a common or frequent occurrence in
the type of business involved. Deputy v. Du Pont, 308 U.S. 488,
495 (1940).
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The performance of services as an employee constitutes a
trade or business. See sec. 1.162-17(a), Income Tax Regs. The
employee must show the relationship between the expenditures and
the employment. See Evans v. Commissioner, T.C. Memo. 1974-267,
affd. in part, revd. in part 557 F.2d 1095 (5th Cir. 1977). The
taxpayer bears the burden of substantiation. Hradesky v.
Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d
821 (5th Cir. 1976).
Further, section 162(a)(2) generally permits a deduction for
traveling expenses incurred while away from home in the pursuit
of a trade or business. Bochner v. Commissioner, 67 T.C. 824,
827 (1977).
This Court has generally defined the word “home” as used in
section 162(a)(2) to refer to the vicinity of a taxpayer’s
principal place of employment and not to the place where the
taxpayer’s personal residence is located, if that personal
residence is different from the principal place of employment.
Daly v. Commissioner, 72 T.C. 190, 195 (1979), affd. 662 F.2d 253
(4th Cir. 1981); Kroll v. Commissioner, 49 T.C. 557, 561-562
(1968). An exception is made if the taxpayer’s place of
employment in another area is temporary as opposed to indefinite;
in that case the taxpayer’s personal residence may be his tax
home. Peurifoy v. Commissioner, 358 U.S. 59, 60 (1958); Mitchell
v. Commissioner, T.C. Memo. 1999-283. Additionally, if a
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taxpayer does not have a principal place of employment, his
permanent residence is his tax home for purposes of section
162(a)(2). Johnson v. Commissioner, 115 T.C. 210, 221 (2000).
A place of business is temporary if the employment is such
that termination within a short period could be foreseen.
Mitchell v. Commissioner, 74 T.C. 578, 581 (1980); see Michaels
v. Commissioner, 53 T.C. 269 (1969). Conversely, employment is
indefinite if termination could not 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.
In the present case, petitioner’s expenses were incurred in
traveling from Cumberland, Maryland, to Pennausken, New Jersey,
and in staying overnight in Pennausken. Petitioner began working
out of Sprint’s Pennausken office in 2001. Sprint considered
Pennausken petitioner’s home office and only reimbursed
petitioner for expenses while away from Pennausken. Petitioner
testified that his choice to live in Cumberland, Maryland, and to
make the approximate 480 mile round trip to Pennausken was a
personal choice.
It is clear from the record that Pennausken, New Jersey, was
not a temporary place of business for petitioner. Therefore, we
conclude that Pennausken, New Jersey, was petitioner’s “tax home”
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for taxable year 2002. Because petitioner was not away from home
when he incurred his claimed unreimbursed employee business
expenses, he is unable to deduct these expenses under section
162(a)(2). Therefore, we need not and do not decide whether
petitioner has substantiated his claimed miscellaneous itemized
deductions. Accordingly, respondent’s determination on this
issue is sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.2
2
Because the remaining itemized deductions were less than
the standard deduction for 2002, respondent’s calculation of
petitioner’s deficiency using the 2002 standard deduction is
correct.