T.C. Memo. 2007-324
UNITED STATES TAX COURT
MICHAEL KEVIN BOLTINGHOUSE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2033-06. Filed October 29, 2007.
Michael Kevin Boltinghouse, pro se.
Blake W. Ferguson, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GOEKE, Judge: Respondent determined a deficiency in
petitioner’s 2003 Federal income tax of $6,841, an addition to
tax under section 6651(a)(1)1 of $1,179.23, an addition to tax
1
All 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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under section 6651(a)(2) of $445.49, and an addition to tax under
section 6654(a) of $132.49. After concessions,2 there are three
issues remaining for decision:
(1) Whether petitioner is entitled to a dependency
exemption deduction under section 151(c) for his daughter. We
hold that he is not;
(2) whether petitioner is entitled to a deduction for
itemized expenses in an amount greater than the standard
deduction. We hold that he is not;
(3) whether petitioner is liable for the addition to tax
under section 6651(a)(1) for failing to file a return. We hold
that he is.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and the accompanying exhibits are
incorporated herein by this reference.
Petitioner resided in Mebane, North Carolina, at the time he
filed his petition.
2
The parties agree that petitioner received $44,883.20 of
gross income in 2003. Respondent concedes that petitioner is not
liable for the addition to tax under sec. 6651(a)(2) or sec.
6654. Respondent also concedes that petitioner is entitled to
deduct a portion of his medical and dental expenses and taxes
paid, although those concessions would not allow petitioner
itemized deductions in an amount greater than the standard
deduction.
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During 2003, petitioner was employed as a store manager of
the Men’s Warehouse in Durham, North Carolina. Petitioner earned
gross income of $44,883.20 consisting of compensation for his
work at The Men’s Warehouse and a small amount of dividend
income. Of this amount, $1,591.04 was withheld as Federal income
tax.
I. Failure To File a Return
On or before April 15, 2004, petitioner timely mailed and
the Internal Revenue Service (IRS) timely received a Form 1040A,
U.S. Individual Income Tax Return, for 2003. Petitioner listed
his wages and total income as zero, claimed one personal
exemption, claimed the standard deduction, and requested a refund
of $1,600.84 as income tax that had been withheld. Petitioner
attached a document to his Form 1040A in which he presented
unfounded arguments as to why he was not liable for Federal
income tax. The IRS did not process the Form 1040A as an income
tax return.
In December of 2004, petitioner submitted a Form 1040NR,
U.S. Nonresident Alien Income Tax Return, for 2003 to the IRS.
Petitioner listed his wages and total income as zero, claimed an
exemption for himself, and requested a refund of $1,598.80 that
had been withheld. On the information sheet accompanying his
Form 1040NR, petitioner answered all questions by writing “N/A”
to assert that none of the questions applied to him.
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II. Settlement Attempt
Respondent issued a notice of deficiency to petitioner on
October 31, 2005, and petitioner timely filed a petition for
redetermination with this Court.
While preparing his case, petitioner gave respondent an
unsigned Form 1040, U.S. Individual Income Tax Return (the
proposed Form 1040) for 2003 and a Schedule A, Itemized
Deductions. On the proposed Form 1040, petitioner reports his
income and dividends consistently with his Form W-2, Wage and Tax
Statement, and Form 1099-DIV, Dividends and Distributions. He
also claims a personal exemption for himself, a dependency
exemption, and itemized deductions of $12,999. Respondent
concedes that petitioner has allowable itemized deductions of
$920.94, which is less than the standard deduction of $4,750 for
2003, and therefore respondent asserts that petitioner is
entitled only to the standard deduction.3
A. Dependency Exemption Deduction for Petitioner’s Daughter
Petitioner and his ex-wife have a daughter, Brandi, who was
born in March 1985. In 1991, petitioner and his ex-wife
divorced.
3
There is a slight discrepancy between the total amount of
deductions that respondent concedes and our calculation, which is
based on respondent’s brief of the total amount of deductions he
concedes, but the discrepancy does not alter our conclusions.
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In a prior case before the Court regarding the tax year
1998, Boltinghouse v. Commissioner, T.C. Memo. 2003-134, the
Court decided that petitioner could claim Brandi as a dependent.
However, in that year Brandi was 13 years old, while in the year
at issue she was no longer a minor.
Brandi turned 18 years old in March 2003, and she filed her
own Form 1040 with the IRS for 2003 on which she claimed a
personal exemption for herself. Brandi lived with her mother in
Virginia and was a full-time college student during that year.
However, petitioner claims Brandi as a dependent on the proposed
Form 1040.
B. Itemized Deductions
On the Schedule A attached to the proposed Form 1040,
petitioner claims he is entitled to itemized deductions of
$12,999 after properly making adjustments based upon his adjusted
gross income (AGI).
1. Medical and Dental Expenses
On the Schedule A attached to the proposed Form 1040,
petitioner claims to have incurred $4,162 of medical and dental
expenses in 2003. As evidence, petitioner provided receipts for
medical and dental insurance premiums paid, physician visits,
medications and vitamins, and other miscellaneous items
purporting to be medical expenses. Respondent concedes that
petitioner is entitled to deductions for the medical and dental
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premiums paid and for certain transportation costs, as well as a
portion of the other medical expenses.
2. Taxes Paid
On the Schedule A attached to the proposed Form 1040,
petitioner seeks to deduct $598 for income taxes paid to the
State of North Carolina and $313 for personal property taxes
paid. Respondent concedes that petitioner is entitled to
deductions for the State income taxes paid and for $263.33 of the
personal property taxes paid. As to the remaining $49.67,
petitioner provided a certificate showing that a portion of this
amount was $25 to renew his vehicle registration, but he
presented no evidence as to the remaining $24.67.
3. Charitable Contributions
Petitioner asserts on the Schedule A attached to the
proposed Form 1040 that he made a charitable gift by cash or
check of $256 and that he made noncash charitable gifts of
$2,057. Petitioner did not offer to substantiate the reported
gift by cash or check. However, in order to substantiate the
noncash gifts, petitioner provided three receipts from the
Goodwill Community Foundation indicating that he made donations
of various items with a total value of $2,313. The receipts give
a general description of the donated items, indicating a couch, a
stereo stand, household goods, seven pieces of men’s clothing
(slacks, shoes, and pants), a coffee table, flatware, plates, and
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bowls. However, the receipts do not provide any information as
to the age, quality, or condition of the donated items or any
information as to who valued them or what method was used.
4. Business Deductions
Petitioner reports on the Schedule A attached to the
proposed Form 1040 $9,211 of unreimbursed business expenses.
a. Transportation and Travel Expenses
Petitioner claims that he is entitled to a deduction for
$2,122 of vehicle expenses, $52 of other travel expenses, and
$737 of overnight travel expenses. In 2003, petitioner’s job
required him to go to the post office, the bank, other stores,
meetings, and locations where he was involved with recruiting
potential employees.
As evidence of the claimed expenses, petitioner provided a
receipt for payment for a rental car, some airline boarding
passes, some receipts from hotels, and other miscellaneous
receipts that purport to be from expenses he incurred while
traveling.
b. Business Gifts
Petitioner seeks to deduct $165.14 for business gifts.
Petitioner provided receipts for nine purchases that purport to
be business gifts, but no additional specific information.
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c. Entertainment and Business Meals
On the Schedule A attached to the proposed Form 1040,
petitioner asserts that he is entitled to a deduction of 50
percent of his meals and entertainment expenses, which he
calculated to be $977. To substantiate this deduction,
petitioner offered receipts from various convenience stores,
video rental stores, entertainment venues, and restaurants, as
well as his electricity bills for 2003. Petitioner estimates
that he entertained about 100 potential customers or employees at
his home during 2003. He also occasionally bought lunch, sodas,
and snacks for employees in order to meet The Men’s Warehouse’s
corporate goal of establishing a “high-quality work environment”.
Petitioner paid for these expenses out of his own pocket even
though he had a discretionary budget for such entertainment
expenses and it was not a common practice for managers to spend
such a high amount for food and beverages for employees.
d. Cable Television and Telephone
Petitioner also seeks to deduct $523.44 for his home cable
television and $619.07 for his home telephone for 2003 after
conceding that 10 percent of his telephone use was for
nonbusiness purposes. Petitioner used the cable to determine
whether the weather was too severe to open the store, and he used
the telephone service to make himself available in case of an
emergency and to enable him to make long-distance calls to his
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supervisors. However, about two-thirds of the cost of the long
distance calls was attributable to calls made to family members.
e. Laundry, Dry Cleaning, Cost of Clothing, and
Haircuts
Petitioner seeks to deduct $3,604.65 as the combined cost of
clothing purchases, laundry and dry cleaning, and haircuts. The
clothing purchased consists of suits, sport coats, slacks, ties,
socks, and alterations. These expenses were necessary for
petitioner’s continued employment at The Men’s Warehouse because
his dress code required him to wear a suit or a sport coat and
slacks combination with a tie and to be well groomed.
5. Casualty Loss
Petitioner claims that he suffered a $500 casualty loss in
2003 because he tore a business suit on a piece of glass while at
work.
6. Tax Preparation Software and Publications
On the proposed Form 1040, petitioner claims a $166.49
deduction for tax preparation software and publications.
OPINION
I. Dependency Exemption Deduction for Petitioner’s Daughter
A taxpayer bears the burden of proving that the
Commissioner’s determinations set forth in the notice of
deficiency are incorrect. Rule 142(a)(1); Welch v. Helvering,
290 U.S. 111, 115 (1933). Tax deductions are a matter of
legislative grace, and a taxpayer has the burden of proving that
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he is entitled to the deductions claimed. Rule 142(a)(1);
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). In
addition, a taxpayer must keep sufficient records to substantiate
any deductions claimed. Sec. 6001; New Colonial Ice. Co. v.
Helvering, supra at 440. Section 7491(a) does not apply in this
case because petitioner did not introduce credible evidence that
he is entitled to the deduction he seeks.
In general, under section 151(a) and (c), a taxpayer is
allowed a dependency exemption deduction for each dependent.
Sec. 152(a)(1). The definition of a “dependent” provided by
section 152(a) includes a child of the taxpayer over half of
whose support for the year was provided by the taxpayer. See
sec. 1.152-1(a), Income Tax Regs. In the case of a child of
divorced parents, the child generally is treated as receiving
over half his support from the parent having custody for the
greater portion of the year. Sec. 152(e)(1) and (2).
In order to satisfy the support test of section 152(a) so as
to be entitled to a dependency exemption deduction, the taxpayer
must prove the amount of total support the child received during
the year and establish that the support that the taxpayer
provided exceeds half the total. Rule 142(a); Stafford v.
Commissioner, 46 T.C. 515, 517-518 (1966); Vance v. Commissioner,
36 T.C. 547, 549 (1961); Lear v. Commissioner, T.C. Memo. 2004-
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253. Petitioner is not required to provide the precise total
amount of support for his daughter but must at least provide
convincing evidence that he provided more than half of it in
2003. See Seraydar v. Commissioner, 50 T.C. 756, 760 (1968).
Petitioner failed to maintain and provide sufficient records
establishing the total amount of support his daughter received in
2003 and the amount he provided. While petitioner testified at
trial that he paid tuition, child support, and insurance premiums
benefiting his daughter, he failed to provide any evidence to
substantiate how much these payments amounted to.4 Further,
petitioner did not offer any evidence as to how much support his
ex-wife provided, who paid his daughter’s other living expenses,
or whether his daughter was employed during 2003. Therefore, we
hold that petitioner failed to carry his burden of establishing
that he met the support test of section 152(a) so as to be
entitled to claim a dependency exemption deduction for his
daughter for 2003.
Petitioner also does not qualify for the deduction under the
special support test for children of divorced parents. Sec.
152(e)(1). Section 152(e)(1) applies only when the child is in
the custody of one or both parents for more than one-half of the
4
Petitioner’s argument that respondent never asked him for
substantiation is without merit. A taxpayer who fails for any
reason to substantiate a claimed deduction does so at his peril.
See Sanford v. Commissioner, 50 T.C. 823, 830 (1968), affd. 412
F.2d 201 (2d Cir. 1969).
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calendar year. We have held that once a child reaches the age of
majority under State law, she is no longer in the custody of
either parent for purposes of section 152(e). Ferguson v.
Commissioner, T.C. Memo. 1994-114; Kaechele v. Commissioner, T.C.
Memo. 1992-457. Petitioner’s daughter was a resident of Virginia
in 2003, and under Virginia law an individual reaches the age of
majority when she becomes 18 years of age. Va. Code Ann. sec. 1-
204 (2005). Petitioner’s daughter became 18 years of age in
March 2003, and therefore could not be in the custody of either
parent for more than one-half of the calendar year. Therefore,
we hold that for 2003, petitioner is not entitled to claim a
dependency exemption deduction under section 152(e) for his
daughter.
II. Deductions
Petitioner also bears the burden of proving that he is
entitled to the itemized deductions he claims and that he has
maintained sufficient records to substantiate those deductions.
See sec. 6001; Rule 142(a)(1); INDOPCO, Inc. v. Commissioner,
supra at 84; New Colonial Ice Co. v. Helvering, supra at 440.
A. Medical and Dental Expenses
Section 213(a) allows deductions for medical and dental
expenses only to the extent that they exceed a floor of 7.5
percent of the taxpayer’s AGI. Petitioner claims to have
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incurred $4,162 of medical and dental expenses in 2003 before
subtracting 7.5 percent of his AGI ($3,366).
Respondent concedes that petitioner is entitled to a
deduction for medical and dental insurance premiums paid, $26.92
for physician visits, $156.59 for medications, and certain
transportation expenses, leaving $446.01 for physician visits,
$48.50 for medications, and $14.96 for contour replacement grips.
Petitioner offered no evidence to substantiate $187.02 of the
amount claimed on the Schedule A; thus he is not entitled to a
deduction for that amount.
As evidence of the disputed expenses, petitioner provided
three Explanation of Benefits statements showing that he made
copayments totaling $65 for physician visits, two statements that
he owed a total of $401.01 for physician visits, two receipts
that he paid $48.50 for vitamins, and one receipt that he paid
$14.96 for two contour replacement grips.
Respondent appears to have misread the Explanation of
Benefits statements that petitioner provided regarding three of
the physician visits, which clearly indicate that petitioner made
copayments totaling $65 during those visits (however, petitioner
may be liable for an additional $65, which petitioner is not
claiming), and therefore petitioner has met his burden regarding
that amount. However, respondent correctly points out that as to
the two statements indicating that petitioner owed a total of
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$401.01, there is no evidence to establish that petitioner paid
that amount. Therefore he may not claim a deduction for that
amount.
The $48.50 for medications that respondent disputes consists
of payments for vitamins. Under section 213(b), amounts paid for
medicines or drugs are deductible only if they are prescribed or
are insulin. The vitamins in question are neither, and therefore
their costs are not deductible.
Petitioner has not provided any medical reason for
purchasing contour replacement grips, and therefore we agree with
respondent that he is not entitled to a deduction for that
expense.
Consequently, including those amounts respondent concedes,
we hold that petitioner is entitled to deductions of $3,242 for
medical and dental premiums paid, $91.92 for physician visit
copayments made, $156.29 for medication expenses, and $20 for
transportation expenses, to the extent that the total exceeds 7.5
percent of petitioner’s AGI.
B. Taxes Paid
Section 164(a) allows a taxpayer deductions for State and
local income taxes, real property taxes, and personal property
taxes. On the proposed Form 1040, petitioner seeks to deduct
$911 for State and local taxes paid, of which respondent has
conceded $861.33.
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Of the remaining $49.67, petitioner claims he is entitled to
a deduction of $25 for vehicle registration fees and has provided
a certificate reflecting this amount. Section 164(b)(1) defines
a “personal property tax” as an annual ad valorem tax that is
imposed upon personal property. Petitioner has not provided any
evidence that any of this fee is an ad valorem fee as opposed to
an annual flat fee, and therefore it is not deductible. See N.C.
Gen. Stat. sec. 20-87(5) (2005).
Petitioner has offered no evidence regarding the remaining
$24.67. Therefore, we agree with respondent that petitioner is
entitled to a deduction of only $861.33 for taxes paid.
C. Gifts to Charity
Section 170(a) allows a taxpayer a deduction for charitable
contributions, but only if verified under the prescribed
regulations. Section 170(f)(8) provides that no deduction will
be allowed for a contribution of $250 or more unless the taxpayer
substantiates the contribution by a contemporaneous written
acknowledgment from the donee organization. A taxpayer who makes
charitable contributions of property other than money must have a
receipt or letter from the donee or other written record showing
the name of the donee, the date and location of the contribution,
and a description of the property in detail reasonably sufficient
under the circumstances. Sec. 1.170A-13(b)(1) and (2), Income
Tax Regs. On his return, the taxpayer must include the same
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three pieces of information, and additionally, if claiming a
deduction of more than $500, he must maintain records that show
the fair market value of the property at the time of the
contribution and the method used in determining the fair market
value. Sec. 1.170A-13(b)(2)(ii) and (3), Income Tax Regs.
Petitioner asserts on the Schedule A attached to the
proposed Form 1040 that he made a charitable gift by cash or
check of $256, but he has failed to provide any evidence to
substantiate the gift and therefore is not entitled to a
deduction for that amount.
Petitioner asserts on the same Schedule A that he made
noncash charitable gifts of $2,057, and to substantiate his claim
he provided three receipts from the Goodwill Community Foundation
indicating that he made donations of various items totaling
$2,313 in value. Respondent argues that petitioner is not
entitled to a charitable contribution deduction because neither
the receipts nor the Form 8283, Noncash Charitable Contributions,
accompanying petitioner’s proposed Form 1040 contains a
“description of the property in detail reasonably sufficient
under the circumstances” or states the method used in determining
the fair market value.
The receipts identify and quantify the items contributed,
although they do not provide any information regarding the age,
quality, or condition of the donated items, or any information as
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to who valued them or what method was used. We find that under
the circumstances, considering the nature of the items donated
and of the donee institution, the description of the property is
reasonable, and petitioner has substantially complied with the
requirements of section 1.170A-13, Income Tax Regs. However,
petitioner has not provided sufficient substantiation of the fair
market value of the property at the time the contribution was
made or the method used in determining the value provided on the
receipts. Therefore we will not accept his calculation of the
amount of claimed deduction. See Bond v. Commissioner, 100 T.C.
32, 41 (1993). Even if we were to exercise our discretion to
approximate the value of the contributions and allow petitioner a
deduction for the entire amount of noncash charitable
contributions claimed, considering our other findings, petitioner
would still not be entitled to itemized deductions for 2003
greater than the standard deduction applicable for that year.
See Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930);
see also Fontanilla v. Commissioner, T.C. Memo. 1999-156;
Cavalaris v. Commissioner, T.C. Memo. 1996-308; Bernardeau v.
Commissioner, T.C. Memo. 1981-584; cf. Kendrix v. Commissioner,
T.C. Memo. 2006-9. Therefore, we decline to exercise our
discretion under Cohan.
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D. Unreimbursed Employee Expenses
Section 162(a) allows a taxpayer a deduction for ordinary
and necessary expenses paid or incurred during the taxable year
in carrying on a trade or business, including a trade or business
as an employee, subject to the limitation that a taxpayer is
allowed a deduction for miscellaneous itemized deductions only to
the extent that they exceed 2 percent of his AGI. Furthermore, a
taxpayer is not allowed any deductions for personal, living, or
family expenses. Sec. 262.
1. Transportation and Travel Expenses
Section 162(a)(2) allows a taxpayer a deduction for
traveling expenses while away from home and in the pursuit of a
trade or business. However, section 274(d) requires strict
substantiation by adequate records or by sufficient evidence
corroborating the taxpayer’s statement for deductions otherwise
allowed under section 162 and for any expenses related to listed
property such as cars and trucks, travel, and meals and
entertainment expenses. Sec. 280F(d)(4)(A); sec. 1.274-5T(a),
Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
The substantiation must show the amount, time, place, and
business purpose of the expense. Sec. 1.274-5T(b)(2), (6), (c),
Temporary Income Tax Regs., 50 Fed. Reg. 46014-46017 (Nov. 6,
1985).
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On the proposed Form 1040, petitioner claims that he is
entitled to a deduction of $2,122 for vehicle expenses, $52 for
other traveling expenses, and $737 for overnight travel expenses.
Petitioner admits that he did not maintain an accurate
mileage log but asserts that he is entitled to a deduction for
mileage while working as an employee of The Men’s Warehouse
because his employment frequently required him to drive to other
locations. This evidence does not satisfy the strict
substantiation requirement of section 274(d).
Petitioner provided receipts and other evidence that he
traveled away from home in 2003. But did not offer any testimony
or other evidence as to whether these expenditures had any
business purpose and provided only minimal evidence as to the
time spent away from home. Furthermore, petitioner did not offer
any testimony or other evidence that his employer did not
reimburse him for his travel expenses. Petitioner has not met
his burden, and we allow no deduction for these transportation
and travel expenses.
2. Business Gifts
Petitioner seeks to deduct $165.14 for business gifts.
Under section 274(b), a taxpayer may not claim a deduction under
section 162 for any expenses for gifts made directly or
indirectly to any individual to the extent the value of the gifts
exceeds $25. To substantiate expenses relating to gifts, a
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taxpayer must provide adequate records or corroborating evidence
showing the costs of the gifts, the dates the gifts were made,
descriptions of the gifts, the business purposes of the gifts,
and the business relationships between the taxpayer and the gift
recipients. Sec. 274(d); sec. 1.274-5T(b)(5), (c), Temporary
Income Tax Regs., 50 Fed. Reg. 46016-46017 (Nov. 6, 1985).
Petitioner introduced no evidence showing the dates of the
gifts and provided only vague, uncorroborated testimony regarding
the business purposes of the gifts and his relationships with the
recipients. Therefore, we agree with respondent that petitioner
is not entitled deduct the costs of the business gifts for 2003.
3. Entertainment and Business Meals
Under section 274(d)(2), a taxpayer may not claim a
deduction for entertainment expenses unless the taxpayer meets
the strict substantiation requirements. To substantiate such an
expenditure, a taxpayer must provide adequate records or have
sufficient evidence corroborating the amount of the expenditure,
the date of the entertainment, the location of the entertainment,
the business purpose of the entertainment, and the business
relationship between the taxpayer and the person entertained.
Sec. 1.274-5T(b)(5), Temporary Income Tax Regs., supra.
Petitioner asserts that he is entitled to a deduction of 50
percent of $977, which he allegedly spent on meals and
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entertainment in 2003. See sec. 274(n). To substantiate his
deduction, petitioner offered receipts from various convenience
stores, video rental stores, entertainment venues, and
restaurants and provided his electricity bills for 2003.
Petitioner also testified that he entertained about 100 potential
customers or employees during 2003, and he occasionally bought
lunches, sodas, and snacks for other employees in order to meet
The Men’s Warehouse’s corporate goal of establishing a “high-
quality work environment”.
The location of the entertainment activities was frequently
apparent from the receipts that petitioner provided, and
petitioner testified that he entertained potential customers and
employees in his home and provided sodas and snacks for employees
at The Men’s Warehouse store. However, petitioner provided only
vague testimony that he incurred expenses entertaining potential
customers and employees, without providing specific names, dates,
corroborating evidence that the expenditures were so spent, or
evidence that he was not reimbursed for these expenses. He also
provided no specific evidence of what the business purposes of
the entertainment activities were other than to keep the other
employees happy. We are not convinced that petitioner has
satisfied the strict substantiation requirements of section
274(d) or that these expenditures were ordinary and necessary
expenses as required by section 162(a).
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Section 274(e) provides that expenses for food and beverages
furnished on the business premises of a taxpayer primarily for
his employees may be deductible and are not subject to the strict
substantiation requirements of section 274(d). See sec. 1.274-
5T(c)(7), Temporary Income Tax Regs., supra. However, this
section does not apply to petitioner’s expenditures because the
employees at the store that petitioner manages are The Men’s
Warehouse’s employees, not petitioner’s employees. This section
is aimed at expenses that are deductible by an employer because
they are in the nature of compensation paid to his employees,
which is not true of the expenses in this case. See Haman v.
Commissioner, T.C. Memo. 1972-118, affd. 500 F.2d 401 (9th Cir.
1974). Therefore, we find that petitioner has failed to carry
his burden, and we will not allow him a deduction for any
entertainment or meal expenses.
4. Cable Television and Home Telephone
Section 262 provides that personal, living, and family
expenses are not deductible unless expressly allowed, and the
regulations specify that personal, living, and family expenses
include utilities provided to a taxpayer’s home unless the
taxpayer uses a part of his home for his business. Sec. 1.262-
1(b)(3), Income Tax Regs. Section 262(b) specifically disallows
any deduction for the first line of basic local telephone service
provided to a taxpayer’s residence.
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After conceding that 10 percent of his telephone use was for
nonbusiness uses, petitioner is attempting to deduct $523.44 for
cable television and $619.07 for his telephone in 2003.
Petitioner has provided no evidence to establish that he uses his
home as a place of business. Furthermore, we find that only a
small portion of petitioner’s cable and telephone use was for
business purposes. Therefore, we agree with respondent that
petitioner’s cable and telephone expenses are nondeductible
personal expenses under section 262. Section 262(b) also
specifically disallows any deductions for local telephone
service. Therefore, we will not allow petitioner a deduction for
cable or telephone expenses.
5. Laundry, Dry Cleaning, Cost of Clothing, and
Haircuts
Petitioner proposes to deduct $3,604.64 as expenses incurred
for purchasing business clothing, laundry and dry-cleaning, and
haircuts. Petitioner argues that these are ordinary and
necessary business expenses because they were required as a
condition of his employment and he would not have made such
expenditures if his employer did not require them.
Expenses for uniforms are deductible under section 162(a) if
the uniforms are required or essential for employment, are not
suitable for general wear, and are not worn as ordinary clothing.
Yeomans v. Commissioner, 30 T.C. 757, 767 (1958); Udoh v.
Commissioner, T.C. Memo. 1999-174. Petitioner testified that the
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clothing he purchased was of a type that people ordinarily wear,
although he himself would not wear such clothing if not required
to. Therefore, because the clothing that petitioner purchased is
suitable for general wear, his clothing expenses are
nondeductible personal expenses under section 262, as are the
expenses incurred for laundering and dry-cleaning his clothing.
Haircuts are nondeductible personal expenses even when required
as a condition of employment. See Hynes v. Commissioner, 74 T.C.
1266, 1291-1292 (1980). Therefore, petitioner is not entitled to
deduct any of the expenses relating to his appearance.
E. Casualty Loss
Under section 165(a), a taxpayer is allowed a deduction for
losses sustained during the taxable year and not compensated for
by insurance or otherwise. Petitioner claims that he suffered a
$500 casualty loss because he tore his suit on a piece of glass
while at work. As discussed in the section above, we have
determined that petitioner’s business clothing is not considered
business property. Thus, he is eligible for a casualty loss
deduction only if he meets the requirements of section 165(c)(3)
and (h). Under section 165(h), petitioner may deduct his net
casualty loss only to the extent that it exceeds 10 percent of
his adjusted gross income, or $4,488 for 2003. Therefore, even
if we were to accept petitioner’s unsubstantiated claim that he
suffered a casualty loss of $500, petitioner still fails to meet
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the threshold requirement under section 165(h), and thus he is
not entitled to a casualty loss deduction.
F. Tax Preparation Software and Publications
Petitioner claims a deduction for $166.49 for purchases of
tax preparation software and publications. Petitioner failed to
introduce any documentation to substantiate his entitlement to
this deduction. See sec. 6001; sec. 1.6001-1, Income Tax Regs.
Therefore, we conclude that petitioner is not entitled to deduct
the $166.49 for tax preparation software and publications.
III. Section 6651(a)(1) Addition to Tax
Section 6651(a)(1) imposes an addition to tax of up to 25
percent of the amount required to be shown as tax for failure to
timely file a Federal income tax return, unless the taxpayer
shows that the failure is due to reasonable cause and not due to
willful neglect. Sec. 6651(a).
Section 7491(c) places the burden of production on the
Commissioner to show that the imposition of an addition to tax or
penalty on a taxpayer is appropriate. To satisfy this burden,
the Commissioner must present sufficient evidence that the
particular penalty is appropriate to impose on the taxpayer.
Higbee v. Commissioner, 116 T.C. 438, 446 (2001). If the
Commissioner makes such a showing, the burden of proof is on the
taxpayer to raise any issues that would negate the
appropriateness of the penalty, such as reasonable cause. Id.
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Petitioner was required to file a return for tax year 2003,
and he appears to concede this point. See secs. 6011(a),
6012(a). To determine whether a document that a taxpayer files
constitutes a valid return for purposes of section 6651(a), we
follow the test in Beard v. Commissioner, 82 T.C. 766, 777
(1984), affd. 793 F.2d 139 (6th Cir. 1986). Under the Beard
test, a document constitutes a “return” only if it meets four
requirements:
First, there must be sufficient data to calculate tax
liability; second, the document must purport to be a
return; third, there must be an honest and reasonable
attempt to satisfy the requirements of the tax law; and
fourth, the taxpayer must execute the return under
penalties of perjury.
Respondent concedes that petitioner satisfied the second and
fourth requirements by filing two documents that purported to be
tax returns and by executing both documents under penalties of
perjury. However, respondent asserts that neither the Form 1040A
nor the Form 1040NR petitioner submitted constitutes a “return”
within the meaning of the Beard test because neither form
contains sufficient data to calculate tax liability and neither
form indicates that petitioner made an honest and reasonable
attempt to satisfy the requirements of the tax law. Petitioner
does not argue that the unsigned proposed Form 1040 constitutes a
return.
This Court has held that a Federal income tax return
containing only zero entries, particularly when accompanied by
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frivolous arguments that the taxpayer is not liable for Federal
income tax, is not considered a valid return because it fails the
first and third prongs of the Beard test. See Cabirac v.
Commissioner, 120 T.C. 163, 169 (2003); Arnett v. Commissioner,
T.C. Memo. 2006-134, affd. 99 AFTR 2d 3418, 2007-2 USTC par.
50,575 (10th Cir. 2007); Halcott v. Commissioner, T.C. Memo.
2004-214. We have held that the arguments that the petitioner
attached to the purported returns are without merit, and the
inclusion of similar arguments on a purported return is an
indication that the taxpayer is not making an honest and
reasonable attempt to satisfy the requirements of the tax law.
Arnett v. Commissioner, supra; Coulton v. Commissioner, T.C.
Memo. 2005-199; Halcott v. Commissioner, supra. Therefore,
because both the Form 1040A and Form 1040NR that petitioner
submitted contained only zero entries for income and were
accompanied by frivolous arguments, we find that petitioner did
not file a valid return.
Petitioner’s only explanation for not filing a valid return
is his assertion that an IRS agent failed to inform him that his
Form 1040A was not valid. Primary responsibility for filing
Federal income tax returns is on the taxpayer, and the absence of
an objection from the IRS does not amount to “reasonable cause”
for not filing a return under section 6651(a). See United States
v. Boyle, 469 U.S. 241, 251 (1985).
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Therefore, we find that respondent has carried his burden of
production and petitioner has failed to negate his liability.
Petitioner is liable for the addition to tax for failure to file
a return pursuant to section 6651(a)(1).
IV. Conclusion
On the record before us, we hold that petitioner failed to
meet his burden of proving entitlement to a dependency exemption
deduction for his daughter for 2003. Furthermore, we find that
in addition to the itemized deductions respondent conceded,
petitioner would be entitled to an additional $65 deduction for
medical and dental expenses. However, our findings do not alter
respondent’s conclusion that petitioner is not entitled to
itemized deductions in an amount greater than the standard
deduction, and therefore we sustain his determination that
petitioner is entitled only to the standard deduction. Finally,
we find that petitioner has not demonstrated reasonable cause for
failing to file his 2003 tax return. Therefore, we sustain the
imposition of an addition to tax under section 6651(a).
In reaching our holdings, we have considered all the
parties’ contentions, and to the extent that we have not
addressed them, we conclude that they are irrelevant, moot, or
without merit.
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To reflect the foregoing and concessions by the parties,
Decision will be entered
under Rule 155.