Stockwell v. Comm'r

T.C. Memo. 2007-149

UNITED STATES TAX COURT

LEONARD STOCKWELL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 21954-05. Filed June 13, 2007.

Leonard Stockwell, pro se.

Lisa R. Woods, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

KROUPA, Judge: Respondent determined a $5,588 deficiency in

petitioner’s Federal income tax for 2003. After concessions,1 we

are asked to decide two issues. First, we are asked to decide

whether petitioner was away from home when he worked as an

1
See infra note 3 for the concessions each party made.
 - 2 -

airline mechanic for Northwest Airlines (NWA) in Milwaukee and

Detroit to determine whether petitioner is entitled to deduct

expenses for his vehicle, meals, and lodging while away from

Savage, Minnesota, in the Minneapolis area where he normally

lived. We conclude that he was not away from home. Second, we

are asked to decide whether petitioner substantiated various

other expenses. We conclude that petitioner has substantiated

and is entitled to deduct some of these other expenses.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

Petitioner resided in Savage, Minnesota, at the time he filed the

petition.

Petitioner’s Employment With Northwest Airlines

Petitioner began as an airline mechanic for NWA in 1991 and

worked for NWA through 2005.2 Petitioner worked in Minneapolis

for most of his career with NWA.

NWA sent layoff notices to some of its employees when it

experienced financial difficulties. The employees receiving the

notices could either choose to accept the layoff or exercise

their seniority. Seniority depended on the length of time an

employee had worked for NWA regardless of where the airline

facility was located. An employee with higher seniority could

2
Although petitioner did experience a layoff for
approximately 13 months near the beginning of his employment with
NWA, it is of no moment to our decision.
 - 3 -

exercise his or her seniority to bump an employee with less

seniority and take that employee’s position. The employee with

less seniority could then take the layoff or find another

employee with less seniority to bump. This seniority bumping

arrangement was in place across the country, so that an NWA

mechanic looking to keep his or her job at NWA had to look at

several different cities to find a less senior employee to bump.

Most employees exercised their seniority in the way that would

give them positions in cities as close as possible to their

families.

Petitioner received a bump notice in April 2003. Petitioner

chose to exercise his seniority and bump another employee rather

than accept the layoff. Bumping another employee meant

petitioner could stay an NWA employee and could retain his health

benefits. Some of the most senior mechanics were able to bump to

positions in Duluth, Minnesota, but petitioner did not have the

seniority to get a spot in this nearby city. Petitioner was able

to bump to the next closest location, Milwaukee, Wisconsin. He

started working in Milwaukee in April 2003.

Petitioner’s position in Milwaukee had no specific end date.

Petitioner expected to return to Minneapolis as soon as there was

an NWA job available in Minneapolis that he had enough seniority

to obtain. The timing of a return to Minneapolis would depend on
 - 4 -

NWA’s needs for mechanics in that city as well as the choices of

the other mechanics also subject to the seniority system.

Petitioner worked in Milwaukee until August 2003 when NWA

again notified him that he would be laid off from his position in

Milwaukee. Petitioner once again chose to bump another employee,

this time taking a position in Detroit, Michigan. He started in

Detroit in early September 2003 and worked there for almost 2

years until August 2005.

Petitioner maintained a residence in Minneapolis throughout

2003 although he was working in Milwaukee and then Detroit for

part of the year. Petitioner sometimes rented hotel rooms and

sometimes stayed with other employees in hotel rooms they rented

in Milwaukee and Detroit. Occasionally petitioner’s work

schedule allowed him to return to Minneapolis and stay at his

residence. Petitioner had Internet access at his Minneapolis

residence for August through November 2003.

Petitioner used some of his own tools in his work for NWA.

Petitioner purchased most of these tools in his first 5 years

working for NWA, so some of them were approximately 12 years old

by 2003, the year at issue. Petitioner also had a cellular

phone. His cellular phone number was the personal contact number

he gave NWA.

Petitioner wore a uniform while he worked for NWA. He

needed to clean his uniforms often because his work involved
 - 5 -

airline fuel and oil and was messy. He estimated that he worked

approximately 22 days per month.

Petitioner claimed he contributed some items to Goodwill and

made cash contributions to his church in 2003.

Petitioner’s Return

Petitioner claimed certain expenses on Schedule A, Itemized

Deductions, on the return for 2003. Respondent examined the

return and issued petitioner a deficiency notice in which he

disallowed many of the expenses. Of the expenses still in

dispute,3 petitioner assert he is entitled to deduct claimed cash

and noncash charitable contributions as well as unreimbursed

employee business expenses. The unreimbursed employee business

expenses petitioner claimed included expenses for his vehicle,

lodging, and meals while in Milwaukee and Detroit as well as

expenses for Internet access, uniform cleaning, depreciation of

tools, and cellular telephone.

Petitioner timely filed a petition.

OPINION

The parties resolved many of the disputed expenses before

trial. We are asked to determine whether petitioner is entitled

to deduct the remaining expenses. We begin by considering

3
Respondent concedes that petitioner is entitled to deduct
State and local taxes, real estate taxes, home mortgage interest,
certain amounts for tools, union dues, and tax preparation fees.
The parties agree that petitioner is entitled to deduct a portion
of his personal property taxes and points.
 - 6 -

whether petitioner was away from home when he incurred expenses

for his vehicle, meals, and lodging in Milwaukee and Detroit.

Travel Expenses While Away From Home

We begin by briefly outlining the rules for deducting travel

expenses. A taxpayer may deduct reasonable and necessary travel

expenses such as vehicle expenses, meals, and lodging incurred

while away from home in the pursuit of a trade or business.

Secs. 162(a)(2), 262(a).4 A taxpayer must show that he or she

was away from home when he or she incurred the expense, that the

expense is reasonable and necessary, and that the expense was

incurred in pursuit of a trade or business. Commissioner v.

Flowers, 326 U.S. 465, 470 (1946). The determination of whether

the taxpayer has satisfied these requirements is a question of

fact. Id.

The purpose of the deduction for expenses incurred away from

home is to alleviate the burden on the taxpayer whose business

needs require him or her to maintain two homes and therefore

incur duplicate living expenses. Kroll v. Commissioner, 49 T.C.

557, 562 (1968). The duplicate costs are not deductible where

the taxpayer maintains two homes for personal reasons. Sec. 262;

Commissioner v. Flowers, supra at 474.

4
All section references are to the Internal Revenue Code in
effect for 2003, and all Rule references are to the Tax Court
Rules of Practice and Procedure, unless otherwise indicated.
 - 7 -

A taxpayer may deduct the expenses he or she incurred while

away from home. Sec. 162(a)(2). The word “home” for purposes of

section 162(a)(2) has a special meaning. It generally refers to

the area of a taxpayer’s principal place of employment, not the

taxpayer’s personal residence. Daly v. Commissioner, 72 T.C.

190, 195 (1979), affd. 662 F.2d 253 (4th Cir. 1981); Kroll v.

Commissioner, supra at 561-562.

There is an exception to the general rule that a taxpayer’s

tax home is his or her principal place of employment. Peurifoy

v. Commissioner, 358 U.S. 59, 60 (1958). The taxpayer’s tax home

may be the taxpayer’s personal residence if the taxpayer’s

employment away from home is temporary. Id.; Mitchell v.

Commissioner, T.C. Memo. 1999-283. On the other hand, the

exception does not apply and the taxpayer’s tax home remains the

principal place of employment if the employment away from home is

indefinite. Kroll v. Commissioner, supra at 562.

It is presumed that a taxpayer will generally choose to live

near his or her place of employment. Frederick v. United States,

603 F.2d 1292, 1295 (8th Cir. 1979). A taxpayer must, however,

have a principal place of employment and accept temporary work in

another location to be away from home. Kroll v. Commissioner,

supra. A person who has no principal place of business nor a

place he or she resides permanently is an itinerant and has no

tax home from which he or she can be away. Deamer v.
 - 8 -

Commissioner, 752 F.2d 337, 339 (8th Cir. 1985), affg. T.C. Memo.

1984-63; Edwards v. Commissioner, T.C. Memo. 1987-396.

All the facts and circumstances are considered in

determining whether a taxpayer has a tax home. See Rev. Rul. 73-

529, 1973-2 C.B. 37 (describing objective factors the

Commissioner considers in determining whether a taxpayer has a

tax home). The taxpayer must generally have some business

justification to maintain the first residence, beyond purely

personal reasons, to be entitled to deduct expenses incurred

while temporarily away from that home. Hantzis v. Commissioner,

638 F.2d 248, 255 (1st Cir. 1981); Bochner v. Commissioner, 67

T.C. 824, 828 (1977); Tucker v. Commissioner, 55 T.C. 783, 787

(1971). Where a taxpayer has no business connections with the

area of primary residence, there is no compelling reason to

maintain that residence and incur substantial, continuous, and

duplicative expenses elsewhere. See Henderson v. Commissioner,

143 F.3d 497, 499 (9th Cir. 1998), affg. T.C. Memo. 1995-559;

Deamer v. Commissioner, supra; Hantzis v. Commissioner, supra.

In that situation, the expenses incurred while temporarily away

from that residence are not deductible. Hantzis v. Commissioner,

supra; Bochner v. Commissioner, supra; Tucker v. Commissioner,

supra; see McNeill v. Commissioner, T.C. Memo. 2003-65; Aldea v.

Commissioner, T.C. Memo. 2000-136.
 - 9 -

Once petitioner was bumped from Minneapolis, he had no job

to return to there. His choices were to be laid off and have no

work, or to bump other employees and move to different cities to

continue working. NWA gave petitioner no end date for his

positions in Milwaukee and Detroit. NWA no longer required

petitioner to perform any services whatsoever in the Minneapolis

area once he was bumped. Although petitioner maintained a

residence in the Minneapolis area and returned there occasionally

to stay at the residence, this fact alone does not dictate that

petitioner’s tax home was in Savage, Minnesota, where the

residence was located. Unlike traveling salespersons who may be

required to return to the home city occasionally between business

trips, petitioner’s business ties to the Minneapolis area ceased

when he was bumped.

The Court understands that the NWA mechanics’ lives were

unsettled and disrupted. Mechanics did not know how long they

would have a job in one specific location. They only knew the

system was based on seniority. They could bump less senior

employees, and they could be bumped by more senior employees.

While we acknowledge that petitioner would have liked to return

to the Minneapolis area to work for NWA, petitioner did not know

when such a return would be possible due to the seniority system.

The likelihood of petitioner’s return to a position in

Minneapolis depended on NWA’s needs for mechanics there as well
 - 10 -

as the choices of more senior mechanics. Petitioner did not know

how long he would be in Milwaukee or Detroit or where he might go

next. It was not foreseeable that he would be able to return to

Minneapolis at any time due to the seniority system. Thus, there

was no business reason for petitioner to maintain a home in the

Minneapolis area. Petitioner kept the residence in the

Minneapolis area for purely personal reasons. Petitioner has

failed to prove that he had a tax home in 2003. Accordingly,

petitioner was not away from home in Milwaukee or Detroit, and

the expenses he incurred while there are not deductible.5

Substantiation of Expenses

We next turn to the substantiation issues to determine

whether petitioner is entitled to deduct any remaining expenses.

We begin by noting the fundamental principle that the

Commissioner’s determinations are generally presumed correct, and

the taxpayer bears the burden of proving that these

determinations are erroneous.6 Rule 142(a); INDOPCO, Inc. v.

Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering, 290

U.S. 111 (1933). Moreover, deductions are a matter of

5
Even if we had found that petitioner’s tax home during 2003
was Savage, Minnesota, petitioner may not be treated as
temporarily away from home while he worked in Detroit because the
position lasted over a year. See sec. 162(a).
6
Petitioner does not claim the burden of proof shifted to
respondent under sec. 7491(a). Petitioner also did not establish
he satisfies the requirements of sec. 7491(a)(2). We therefore
find that the burden of proof remains with petitioner.
 - 11 -

legislative grace, and the taxpayer has the burden to prove he or

she is entitled to any deduction claimed. Rule 142(a); Deputy v.

du Pont, 308 U.S. 488, 493 (1940); New Colonial Ice Co. v.

Helvering, 292 U.S. 435, 440 (1934); Welch v. Helvering, supra.

This includes the burden of substantiation. Hradesky v.

Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d

821 (5th Cir. 1976).

A taxpayer must substantiate amounts claimed as deductions

by maintaining the records necessary to establish he or she is

entitled to the deductions. Sec. 6001; Hradesky v. Commissioner,

supra. The taxpayer shall keep such permanent records or books

of account as are sufficient to establish the amounts of

deductions claimed on the return. Sec. 6001; sec. 1.6001-1(a),

(e), Income Tax Regs. The Court need not accept a taxpayer’s

self-serving testimony when the taxpayer fails to present

corroborative evidence. Beam v. Commissioner, T.C. Memo. 1990-

304 (citing Tokarski v. Commissioner, 87 T.C. 74, 77 (1986)),

affd. without published opinion 956 F.2d 1166 (9th Cir. 1992).

Unreimbursed Employee Business Expenses

We shall now consider whether petitioner is entitled to

deduct the claimed expenses, beginning with the unreimbursed

employee business expenses petitioner claimed on Schedule A.

In general, all ordinary and necessary expenses paid or

incurred in carrying on a trade or business during the taxable
 - 12 -

year are deductible, but personal, living, or family expenses are

not deductible. Secs. 162(a), 262. Services performed by an

employee constitute a trade or business. O’Malley v.

Commissioner, 91 T.C. 352, 363-364 (1988); sec. 1.162-17(a),

Income Tax Regs.

If a taxpayer establishes that he or she paid or incurred a

deductible business expense but does not establish the amount of

the deduction, we may approximate the amount of the allowable

deduction, bearing heavily against the taxpayer whose

inexactitude is of his or her own making. Cohan v. Commissioner,

39 F.2d 540, 543-544 (2d Cir. 1930). For the Cohan rule to

apply, however, a basis must exist on which this Court can make

an approximation. 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

(5th Cir. 1957).

Certain business expenses may not be estimated because of

the strict substantiation requirements of section 274(d). See

sec. 280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827

(1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969). For such

expenses, only certain types of documentary evidence will

suffice.
 - 13 -

Internet Access Expenses

We now examine those expenses not subject to the strict

substantiation requirements. Petitioner claimed $210 for

Internet access expenses during 2003. We have characterized

Internet expenses as utility expenses. Verma v. Commissioner,

T.C. Memo. 2001-132. Strict substantiation therefore does not

apply, and we may estimate the business portion of utility

expenses under the Cohan rule. See Pistoresi v. Commissioner,

T.C. Memo. 1999-39.

Petitioner introduced copies of credit card statements

indicating that Microsoft charged him a total of $109.75 in 2003.

The Microsoft charges were incurred in August through November

2003, months when he was in Milwaukee, Wisconsin, and Detroit,

Michigan. Petitioner admitted that he did not have documentation

that his employer, NWA, required him to have Internet access.

Petitioner testified that he used the Internet to look up

information about his health insurance.

Petitioner has not proven that his employer required him to

have Internet service or that he used the Internet for his work

at NWA. Petitioner is therefore not entitled to deduct any

Internet access expenses as employee business expenses for 2003.

Cleaning Expenses for Uniforms

Petitioner claimed $722 for cleaning expenses for his NWA

uniforms. Expenses for uniforms are deductible if the uniforms
 - 14 -

are of a type specifically required as a condition of employment,

the uniforms are not adaptable to general use as ordinary

clothing, and the uniforms are not worn as ordinary clothing.

Yeomans v. Commissioner, 30 T.C. 757, 767-769 (1958); Beckey v.

Commissioner, T.C. Memo. 1994-514.

We are satisfied that petitioner incurred deductible

expenses for uniform cleaning. Petitioner gave unclear

testimony, however, regarding how he calculated the $722 for

cleaning costs. Petitioner introduced a document on the

letterhead of his CPA that also purports to indicate how the sum

was calculated, but it suggests an excessive amount, 22 loads of

laundry per month, which was the number of days he estimated he

worked each month.

We may estimate the amount of deductible cleaning expenses

under the Cohan rule. Petitioner testified that he paid

approximately $1.50 per load of laundry. We find that petitioner

did approximately eight loads of laundry per month at $1.50 for

each wash cycle and for each dry cycle. Petitioner is therefore

entitled to deduct $288 of uniform cleaning expenses in 2003.

Depreciation Expenses

Petitioner deducted $1,842 for depreciation of the tools he

used at his job at NWA. The costs of tools with useful lives

greater than a year are recoverable by depreciation. Secs.

167(a), 168(b); Seawright v. Commissioner, 117 T.C. 294, 305
 - 15 -

(2001); Clemons v. Commissioner, T.C. Memo. 1979-273.

Petitioner’s testimony that he acquired his tools over the past

15 years and purchased some of them in the first 5 years he

worked at NWA indicates that some tools were approximately 12

years old during the year at issue.

The only documentary evidence petitioner introduced to

support his claimed deduction was a depreciation schedule

indicating that he purchased the tools on January 1, 2001, and

January 1, 2002, contrary to his testimony. Petitioner

introduced no documentary evidence regarding his tools, such as

receipts, that would show their purchase price or the purchase

date. Petitioner also did not describe what specific tools he

depreciated nor the tools’ expected useful lives.

Petitioner has not substantiated that he is entitled to a

depreciation deduction. Further, we are unable to estimate any

amount for depreciation under the Cohan rule because the evidence

petitioner introduced is inadequate. Petitioner is therefore not

entitled to deduct any amount for depreciation.

Cellular Phone Expenses

Petitioner claimed $336 of cellular phone expenses for 2003.

Cellular phones are included in the definition of “listed

property” for purposes of section 274(d)(4) and are thus subject

to the strict substantiation requirements. Gaylord v.

Commissioner, T.C. Memo. 2003-273. A taxpayer must establish the
 - 16 -

amount of business use and the amount of total use for the

property to substantiate the amount of expenses for listed

property. Nitschke v. Commissioner, T.C. Memo. 2000-230; sec.

1.274-5T(b)(6)(i)(B), Temporary Income Tax Regs., 50 Fed. Reg.

46016 (Nov. 6, 1985). Expenses subject to strict substantiation

may not be estimated under the Cohan rule. Sanford v.

Commissioner, 50 T.C. at 827.

Petitioner did not prove that NWA required him to have a

cellular phone. Petitioner provided an NWA employee telephone

listing and copies of his cellular phone bills. The NWA employee

telephone listing indicates only that petitioner’s cellular phone

number was the contact number he gave NWA, not that NWA required

him to have a cellular phone. Petitioner also did not offer any

evidence indicating how much he used his cellular phone for

business use and how much for personal use. Petitioner failed to

establish that he incurred any expenses to use his cellular phone

for business purposes in addition to those he would have incurred

had he used it only for personal purposes. Petitioner is

therefore not entitled to deduct any cellular phone expenses for

2003.

Charitable Contributions

We finally consider petitioner’s charitable contributions.

Petitioner claimed he contributed $225 cash and property worth

$924 to charitable organizations in 2003. Charitable
 - 17 -

contributions a taxpayer makes are generally deductible under

section 170(a). No deduction is allowed, however, for any

contribution of $250 or more unless the taxpayer substantiates

the contribution by a contemporaneous written acknowledgment of

the contribution by a qualified donee organization.7 Sec.

170(f)(8)(A). The deduction for a contribution of property

equals the fair market value of the property on the date

contributed. Sec. 1.170A-1(c)(1), Income Tax Regs.

A taxpayer claiming a charitable contribution is generally

required to maintain for each contribution a canceled check, a

receipt from the donee charitable organization showing the name

of the organization and 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. Sec. 1.170A-

13(a)(1), Income Tax Regs.

We first consider petitioner’s cash contributions.

Petitioner claimed he donated $225 to his hometown church during

2003. Petitioner provided the name and address of the church and

the dates and amounts he contributed in a document he prepared

7
There are now stricter requirements for contributions of
money. Sec. 170(f)(17). No deduction for a contribution of
money in any amount is allowed unless the donor maintains a bank
record or written communication from the donee showing the name
of the donee organization, the date of the contribution, and the
amount of the contribution. Id. This new provision is effective
for contributions made in tax years beginning after Aug. 17,
2006. Pension Protection Act of 2006, Pub. L. 109-280, sec.
1217, 120 Stat. 1080.
 - 18 -

himself when he prepared his tax returns. He offered no receipts

from the donee organization.8 Petitioner stated in the document

he offered that he attended the church three times during the

year and contributed $75 each time. We are convinced that

petitioner attended the church and donated money, but we do not

find the amounts that petitioner claimed to be credible. We may

estimate cash charitable contributions under the Cohan rule. See

Fontanilla v. Commissioner, T.C. Memo. 1999-156. We conclude

that petitioner is entitled to deduct $50 of cash charitable

contributions.

We next turn to petitioner’s contributions of property.

Petitioner provided a Goodwill/Easter Seals tax deduction

statement dated December 24, 2003. Petitioner testified that he

added the dollar value amount to the statement himself.

Petitioner also introduced several pages of a worksheet he

completed when preparing his tax return to determine that the

value of the property he donated was $924. Petitioner reported

8
Petitioner argues on brief that cash charitable
contributions of less than $500 do not require a receipt or other
substantiation. Petitioner is incorrect. All charitable
contribution deductions for cash are subject to substantiation.
Sec. 1.170A-13(a)(1), Income Tax Regs. Moreover, deductions for
cash contributions of over $250 are not allowed unless the
taxpayer substantiates the contribution by a contemporaneous
written acknowledgment by the donee organization. Sec.
170(f)(8). All contributions of property are also subject to
substantiation. Sec. 1.170A-13(b), Income Tax Regs. Additional
recordkeeping requirements apply to deductions claimed in excess
of $500 for contributions of property. Sec. 1.170A-13(b)(3),
Income Tax Regs.
 - 19 -

on his tax return that he acquired the donated property on

January 1, 2000, for $1,450.

Petitioner introduced no documentation to support the claim

on his return that he acquired the property on January 1, 2000.

Petitioner also did not introduce evidence that shows the price

he paid when he acquired the property. Indeed, petitioner

testified that he actually acquired the donated items over time.

Petitioner’s documentation regarding the donation of

property is also inconsistent with other evidence in the record.

For example, petitioner’s calendar indicates that he was working

in Detroit, Michigan, on December 24, 2003, the day of the

purported donation. Petitioner speculated that he may have left

Detroit at 4 a.m. that morning, driven approximately 10 hours to

Minnesota, and brought the donated property to Goodwill before

Goodwill closed on Christmas Eve. We decline to accept

petitioner’s speculative explanation and find that petitioner has

not substantiated that he made charitable contributions of

property in 2003, let alone property worth $924. Petitioner is

therefore not entitled to deduct any amount for charitable

contributions of property.

To reflect the foregoing and the concessions of the parties,

Decision will be entered

under Rule 155.