T.C. Summary Opinion 2007-86
UNITED STATES TAX COURT
BRUCE MILLARD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4971-05S. Filed May 29, 2007.
James J. Lombardi III, for petitioner.
Nina P. Ching, for respondent.
CARLUZZO, Special Trial Judge: This case was heard pursuant
to the provisions of section 7463.1 Pursuant to section 7463(b),
the decision to be entered is not reviewable by any other court,
and this opinion shall not be treated as precedent for any other
case.
1
Section references are to the Internal Revenue Code of
1986, as amended, in effect for the relevant period. Rule
references are to the Tax Court Rules of Practice and Procedure.
- 2 -
The issue for decision is whether petitioner is entitled to
trade or business expense deductions in excess of the amounts
allowed by respondent. Agreements between the parties allow
resolution of the issue to depend entirely upon the extent to
which petitioner can substantiate the expenditures that underlie
those deductions.2
Background
Some of the facts have been stipulated and are so found. At
the time the petition was filed, petitioner resided in Jamaica
Plain, Massachusetts.
During the year in issue, petitioner was employed in various
ways relating to the music industry. He was self-employed as a
music teacher3 and performance artist. He also taught students
as an employee for the Brookline Music School (Brookline). As a
self-employed music teacher, petitioner provided music lessons to
his students (petitioner’s private students) either at a music
studio in Milford, Massachusetts, or at petitioner’s residence.
Music lessons for some of the students that petitioner taught as
an employee of Brookline (Brookline’s students) were conducted
2
There are no disputes between the parties regarding the
technical applications of the relevant provisions of the Internal
Revenue Code, including secs. 162, 274, 280A, and 280F.
3
Petitioner instructed students learning to play various
stringed instruments, including the guitar and mandolin.
- 3 -
either at Brookline’s facility, or as in the case of his private
students, at petitioner’s residence.
Petitioner also performed roughly four to eight times per
month during 2001, generally at small clubs, but occasionally at
music festivals. From time to time he was also hired to be a
“side man,” which required that he accompany groups of musicians
on out-of-town trips that often involved overnight stays.
During 2001, petitioner lived in an old house that had been
converted into several apartments. Petitioner rents one of the
apartments from the owner of the house and, as relevant here,
during 2001, paid rent and utilities expenses in the amounts of
$16,625 and $1,173, respectively. Petitioner’s apartment
occupies portions of two levels of the house, and in addition to
hallway spaces, consists of at least six distinct rooms that
spread out over approximately 1,570 square feet. Petitioner
estimates that at least 776 square feet (49.40 percent of the
apartment) was used exclusively for business purposes.
Petitioner and his spouse, who is not a party to this
proceeding, filed a timely joint 2001 Federal income tax return
(petitioner’s return). Petitioner’s return includes a Schedule
A, Itemized Deductions, and a Schedule C, Profit or Loss From
Business. Expenses attributable to petitioner’s employment with
- 4 -
Brookline are deducted as part of the miscellaneous itemized
deduction claimed on the Schedule A.
The Schedule C shows petitioner’s “principal business or
profession” as “music performance and production,” and expenses
attributable to petitioner’s various activities as a music
instructor and performing artist, including home office expenses,
are deducted on this schedule.
In the notice of deficiency that forms the basis for this
case various adjustments, some in petitioner’s favor, are made to
the above-referenced deductions. There is no point in providing
the detail of those adjustments here because the parties, much to
their credit, have by their agreements moved beyond the disputes
suggested by those adjustments.
Discussion
The extent to which the parties have reached agreement on
many of the adjustments leaves us little to do other than examine
the evidence presented, both in the form of documents and
testimony, in order to determine whether petitioner has properly
substantiated, and is therefore entitled to deductions for
various expenses in excess of the amounts stipulated.
In so doing, we find that in addition to the amounts
stipulated by the parties, petitioner is entitled to deductions
for the following expenses in the following amounts: (1) Travel
- 5 -
- $561; (2) items included in the deduction for “other expenses”
- $1,385; and (3) home office - $6,500.
To reflect the foregoing,
Decision will be entered
under Rule 155.