White v. Comm'r

T.C. Summary Opinion 2007-199

UNITED STATES TAX COURT

ROBERT A. WHITE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8881-06S. Filed November 26, 2007.

Robert A. White, pro se.

Michael A. Raiken and Scott Hovey, for respondent.

PANUTHOS, Chief 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.

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. Unless otherwise

indicated, subsequent section references are to the Internal
 - 2 -

Revenue Code in effect for the year in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

Respondent determined a deficiency of $6,175 in petitioner’s

2003 Federal income tax. After a concession,1 the issue for

decision is whether petitioner is entitled to certain deductions

claimed on Schedule A, Itemized Deductions.

Background

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

incorporate the stipulation of facts and attached exhibits herein

by this reference. At the time the petition was filed,

petitioner resided in Fort Washington, Maryland.

Petitioner was a staff sergeant in the National Guard and

also worked as a customs and immigration inspector for the U.S.

Immigration and Naturalization Service (INS). After a

reorganization, petitioner was employed by the Department of

Homeland Security (DHS) during tax year 2003.2 DHS stationed

petitioner at points of entry to inspect persons entering the

country. Petitioner’s regular duty location was the Baltimore

1
Respondent conceded that petitioner is not liable for
$1,178 identified in the notice of deficiency as “uncollected
FICA tax”. Respondent has failed to provide an explanation as to
this adjustment.
2
The Court notes that on Mar. 1, 2003, the Department of
Homeland Security absorbed the U.S. Immigration and
Naturalization Service (INS). Thereafter, a new organization
called U.S. Customs and Border Protection combined INS
inspectors, Border Patrol, and Customs inspectors. See 6 U.S.C.
251 (Supp. II, 2002).
 - 3 -

Washington International Airport (BWI), where he worked a

regular, set schedule of about 40 hours per week. He also worked

some overtime assignments, often at BWI and sometimes at other

locations, such as seaports in and around Baltimore, Maryland.

These overtime assignments sometimes began and ended hours before

or after his regular shifts.

JD Tax and Accounting Services prepared petitioner’s 2003

Federal income tax return, which was timely filed.

Petitioner reported the following items on Schedule A:

Taxes paid

State and local income tax $4,191

Charitable contributions

Cash contributions 755
Noncash contributions 4,960
Total charitable contributions 5,715

Job expenses and other miscellaneous deductions:

Unreimbursed employee expenses

Vehicle expenses 7,196
Parking fees and tolls 1,285
Business expenses 5,190
Job search 325
Resume 155
Business cards 105
Briefcase 210
Cellular telephone 875
Uniform and cleaning 1,965
Shoes 225
Haircuts 215
Supplies 525
Accounting fees 360
Computer 2,285
Total unreimbursed employee expenses 20,916
2% of adjusted gross income (1,364)
Total miscellaneous after 2% floor 19,552
Total itemized deductions 29,458
 - 4 -

Respondent allowed the deduction for State and local taxes

and disallowed all other claimed deductions. In the notice of

deficiency, respondent allowed petitioner the standard deduction

for 2003 of $4,750 because it was greater than the total itemized

deductions allowed.

Petitioner filed a timely petition to this Court, asserting

that he is entitled to the itemized deductions claimed on the

return.

Discussion

In general, the Commissioner’s determinations set forth in a

notice of deficiency are presumed correct, and the taxpayer bears

the burden of proving that these determinations are in error.

Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

Pursuant to section 7491(a), the burden of proof as to factual

matters shifts to the Commissioner under certain circumstances.

Petitioner has neither alleged that section 7491(a) applies nor

established his compliance with the requirements of section

7491(a)(2)(A) and (B) to substantiate items, maintain records,

and cooperate fully with respondent’s reasonable requests.

Petitioner therefore bears the burden of proof.

The issue in this case is whether petitioner is entitled to

the itemized deductions claimed for 2003, and, if so, in what

amounts. Deductions are a matter of legislative grace, and the

taxpayer bears the burden of proving that he is entitled to any
 - 5 -

deduction claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79,

84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440

(1934). Taxpayers are required to maintain records sufficient to

enable the Commissioner to determine their correct tax liability.

Such records must substantiate both the amount and purpose of the

claimed deductions. Sec. 6001; Higbee v. Commissioner, 116 T.C.

438 (2001); sec. 1.6001-1(a), Income Tax Regs.

When a taxpayer establishes that he has incurred a

deductible expense but is unable to substantiate the exact

amount, we are generally permitted to estimate the deductible

amount. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.

1930). To apply the Cohan rule, however, the Court must have a

reasonable basis upon which to make an estimate. Vanicek v.

Commissioner, 85 T.C. 731, 742-743 (1985).

I. Charitable Contributions

Section 170(a) allows as a deduction any charitable

contribution made within the taxable year. Deductions for

charitable contributions are allowable only if verified under the

regulations prescribed by the Secretary. Sec. 170(a)(1).

Petitioner claimed a deduction for $755 of cash

contributions during 2003. He did not provide any canceled

checks, receipts, or other reliable written records to verify the

claimed contributions. He did not provide any contemporaneous,

written acknowledgments.
 - 6 -

Petitioner testified that in an average year he contributed

approximately $100 to the Combined Federal Campaign (CFC) and

that it was possible that he did so in 2003. His practice was to

write a check to CFC, and the reason for his uncertainty about

2003 was his lack of a canceled check. He further stated that he

normally contributes $20 each time he goes to church and that he

probably attended church “maybe three times in 2003.”

Petitioner’s testimony was vague and uncertain.

In general, the regulations require the taxpayer to maintain

one of the following for each contribution of money: (1) A

canceled check; (2) a receipt from the donee; or (3) in the

absence of a check or receipt, other reliable written records.3

Sec. 1.170A-13(a)(1), Income Tax Regs. The taxpayer must

establish the reliability of the written records. Sec. 1.170A-

13(a)(2)(i), Income Tax Regs. Any contribution of $250 or more

shall not be allowed unless the taxpayer substantiates the

contribution by a contemporaneous written acknowledgment of the

contribution by the donee organization.4 Sec. 170(f)(8).

3
Both receipts and reliable written records should include
the name of the donee, the date of the contribution, and the
amount of the contribution. Sec. 1.170A-13(a)(1)(ii) and (iii),
Income Tax Regs.
4
The written acknowledgment must state the amount of cash
and a description (but not necessarily the value) of any property
other than cash the taxpayer donated and also whether the donee
provided any consideration to the taxpayer. Sec. 1.170A-
13(f)(2), Income Tax Regs.
 - 7 -

We do not accept petitioner’s testimony as a reasonable

basis to estimate his cash charitable contributions.

Respondent’s determination as to the claimed cash charitable

contributions is sustained.

Petitioner claimed a deduction of $4,950 for noncash

charitable contributions. To substantiate his noncash charitable

contributions, petitioner provided copies of two receipts from

the Salvation Army and two self-prepared logs. One of the

receipts does not state the date on which the property was

contributed. The other receipt indicates that the contribution

was made on May 4, 2006. Neither receipt contains the value of

the items contributed.

To verify a charitable contribution for property other than

money, the regulations require the taxpayer to maintain a receipt

from the donee for each contribution showing the following: (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. Where it is “impractical” to obtain a

receipt, the taxpayer must maintain “reliable written records” of

the noncash contributions.5 See id. However, deductions for

5
A reliable written record for purposes of substantiating a
noncash contribution shall contain the name and address of the
donee, the date and location of the contribution, a description
of the property, and the fair market value of the property at the
(continued...)
 - 8 -

contributions of $250 or more under section 170(a), whether cash

or property, must be substantiated by a contemporaneous written

acknowledgment of the contribution by the donee organization.

Sec. 170(f)(8).

The contribution logs are neither receipts nor

acknowledgments prepared by the donee organization. The receipts

and contribution logs do not meet the substantiation requirements

of section 1.170A-13(b)(1), Income Tax Regs., nor do they meet

the heightened substantiation requirements of section 170(f)(8).6

Respondent’s determination as to the claimed noncash charitable

contributions is sustained.

II. Miscellaneous Itemized Deductions

On his 2003 Schedule A, petitioner reported unreimbursed

employee expenses totaling $20,916. After accounting for the

2-percent floor of section 67(a), petitioner claimed a

miscellaneous itemized deduction of $19,552.

Respondent disallowed all of the miscellaneous itemized

deductions because petitioner did not prove to respondent that he

paid or incurred the expenses in 2003 or that the expenses were

5
(...continued)
time of the donation. Sec. 1.170A-13(b)(2)(ii), Income Tax Regs.
6
Petitioner told his return preparer that he donated used
clothes and furniture in 2003. However, he had no idea how his
return preparer arrived at the deduction claimed in the amount of
$4,950; “when I saw the 4,000 I couldn’t phantom [sic] donating
4,000 worth of clothes.”
 - 9 -

ordinary and necessary for petitioner’s business. Respondent

asserts that petitioner was eligible for reimbursement from DHS

for expenses incurred performing his duties.

Section 162 allows deductions for all ordinary and necessary

business expenses paid or incurred during the taxable year in

carrying on a trade or business. Performing services as an

employee constitutes a trade or business. Primuth v.

Commissioner, 54 T.C. 374, 377-378 (1970). Those expenses that

are (1) ordinary and necessary to the taxpayer’s business and (2)

paid or incurred in a given year are deductible that year. Sec.

162(a); see sec. 1.162-17(a), Income Tax Regs. However,

personal, living, or family expenses are not deductible. See

secs. 162(a), 262(a); sec. 1.162-17(a), Income Tax Regs.

Certain categories of expenses must also satisfy the strict

substantiation requirements of section 274(d) before those

expenses will be allowed as deductions. Expenses subject to

section 274(d) include travel and meal expenses, as well as

expenses for listed property, such as passenger automobiles,

computers, and cellular telephones. Secs. 274(d), 280F(d)(4).

The taxpayer must substantiate the amount, time, place, and

business purpose of the expenditures and must provide adequate

records or sufficient evidence to corroborate his own statement.

See sec. 274(d); sec. 1.274-5T(c)(1), Temporary Income Tax Regs.,

50 Fed. Reg. 46016 (Nov. 6, 1985). In order to meet the
 - 10 -

“adequate records” requirement, a taxpayer is to maintain an

account book, diary, statement of expenses, or similar record and

documentary evidence (such as receipts, paid bills, or similar

evidence) which, when combined, establish each element of the

expense that section 274(d) requires substantiated. Sec.

1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017

(Nov. 6, 1985). Section 274(d) supersedes the general rule of

Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), and prohibits

the Court from estimating the taxpayer’s expenses with respect to

expenses subject to the strict substantiation requirement.

Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per

curiam 412 F.2d 201 (2d Cir. 1969).

We now consider whether petitioner is entitled to some or

all of the claimed miscellaneous itemized deductions.

Vehicle Expenses

Using the standard mileage rate, petitioner claimed a

deduction in the amount of $7,196 for vehicle expenses. At

trial, petitioner testified that because his tax preparer told

him that trips to work outside his normal commute were

deductible, he has been claiming deductions for driving to

overtime shifts since he started working for the Government in

1997. For 2003, he provided his return preparer with the total

number of miles he drove and an estimate of how many miles were
 - 11 -

for overtime work. The preparer calculated the total expense

deduction.

Petitioner introduced 69 Inspection Overtime Forms and 12

monthly printouts of a computer calendar for 2003. The Court

finds that petitioner worked the overtime shifts reflected on the

Inspection Overtime Forms. The monthly computer calendar

printouts purport to substantiate the dates, overtime hours,

locations, and miles driven for petitioner’s overtime shifts.

Petitioner drove to various locations for overtime work,

including BWI, his usual place of business. He typically

returned home before and after performing overtime inspections at

other locations. He rarely drove directly from BWI to a second

work location.

Petitioner did not identify the overtime shifts for which he

drove directly from one work location to a second work location.

Instead, he contends that all transportation for overtime is

deductible if outside his usual commute. Transportation expenses

for trips between two places of business are deductible, but

transportation to and from work, whether for a regular shift or

for an overtime shift, is a nondeductible personal commuting

expense. See Curphey v. Commissioner, 73 T.C. 766, 777 (1980).

Furthermore, petitioner admitted that DHS reimbursed him for

transportation expenses and that DHS provided a Government car

for trips between BWI and the seaport for ship inspection
 - 12 -

assignments during his normal shifts. Petitioner claimed that

DHS told inspectors that they were not authorized for vehicle

expenses reimbursement for overtime shifts because DHS was paying

them overtime. Petitioner has not introduced any evidence to

support his assertion that reimbursement was denied for any of

his transportation in a personal automobile between duty posts

(i.e., noncommuting transportation between business locations).

Where an employee incurs expenses for which he is entitled

to, but does not, seek reimbursement, he is not allowed to deduct

those expenses. Walliser v. Commissioner, 72 T.C. 433, 437 n.4

(1979); Wollesen v. Commissioner, T.C. Memo. 1987-611, affd.

without published opinion 875 F.2d 317 (4th Cir. 1989).

Finally, even if petitioner claimed and DHS denied

reimbursement for the noncommuting expenses, petitioner did not

furnish any evidence to show how many of the miles driven were

between places of business. The Court concludes that the

evidence petitioner presented is insufficient to satisfy the

strict substantiation requirements of section 274(d).

Respondent’s determination as to the claimed vehicle expense

deduction is sustained.

Parking Fees and Tolls

Petitioner claimed a deduction of $1,285 for unreimbursed

parking fees and tolls. Petitioner did not provide any evidence

to support these expenses, to demonstrate that they were for
 - 13 -

business transportation rather than for personal commuting

expenses, or to show that he was not eligible for reimbursement

from DHS. Furthermore, petitioner testified that he did not know

how his return preparer came up with the figure for this

deduction. Respondent’s determination as to the claimed parking

fees and tolls deduction is sustained.

Business Expenses

Petitioner claimed a $5,190 deduction for other employee

business expenses.7 As with the claimed deduction for parking

fees and tolls, petitioner did not provide any evidence to

support this deduction, and he testified that he did not know how

his return preparer came up with the figure for this deduction.

Respondent’s determination as to the claimed business expense

deduction is sustained.

Job Search and Resume

Petitioner claimed deductions of $325 for job search

expenses and $155 for resume expenses. He testified that the

expenses were for computer ink and ribbons consumed to print job

announcements and his resume and for having his resume

professionally prepared.

7
On line 4 of Form 2106, Employee Business Expenses,
petitioner reported expenses other than vehicle expenses; parking
fees, tolls, and transportation; travel expenses while away from
home overnight; and meals and entertainment.
 - 14 -

To the extent that an employee incurs expenses searching for

new employment in the employee’s same trade or business, the job

search expenses are deductible under section 162(a). See Primuth

v. Commissioner, 54 T.C. at 377-378. However, if the employee is

seeking a job in a new trade or business, the expenses are not

deductible under section 162(a). See Frank v. Commissioner, 20

T.C. 511, 513-514 (1953). Job search expenses include resume

preparation expenses, postage, and travel and transportation

expenses. See Murata v. Commissioner, T.C. Memo. 1996-321.

Petitioner did not provide any documentary evidence that he

actually incurred any job search or resume expenses in 2003. We

do not accept petitioner’s testimony as a reasonable basis to

estimate any job search or resume expenses. Respondent’s

determination as to the claimed job search and resume expense

deductions is sustained.

Business Cards and Briefcase

Petitioner claimed deductions of $105 for business cards and

$210 for a briefcase. Petitioner did not provide any receipts to

document that he purchased these items in 2003.

Petitioner introduced a business card that identifies him as

an immigration inspector for the INS within the Department of

Justice.8 Petitioner testified that “We weren’t allowed business

8
Petitioner began working for the INS in 1997 and did not
specify when he purchased these business cards. These cards were
(continued...)
 - 15 -

cards at that time, so I had to go out and purchase business

cards on my own.”

Petitioner also testified that he may have attended two

training sessions in 2003 and that he purchased a briefcase to

carry materials back from a training session in Georgia. He did

not specify when he bought the briefcase.

We are not convinced that petitioner purchased these items

in 2003, particularly given the short shelf life of any INS

business cards printed in 2003, see supra note 8. We do not

accept petitioner’s testimony as a reasonable basis to estimate a

2003 deduction for these expenses, in the absence of documentary

proof that petitioner actually purchased the business cards and

briefcase in 2003. Respondent’s determination as to the claimed

business card and briefcase expense deductions is sustained.

Cellular Telephone

Petitioner claimed a deduction of $875 for cellular

telephone expenses in 2003. Petitioner asserted that he incurred

these charges making work-related calls when on overtime

assignments. Petitioner did not offer any receipts, bills, or

other documentary support for these expenses.

Petitioner has failed to meet the strict substantiation

requirements required by sections 274(d) and 280F(d)(4)(A)(v) for

8
(...continued)
obsolete by March of 2003, since petitioner worked for a
different organization at that point. See supra note 2.
 - 16 -

cellular telephone expenses, and he has failed to demonstrate

that he was not eligible for reimbursement for any such work-

related expenses. Respondent’s determination as to the claimed

cellular telephone expense deduction is sustained.

Uniform and Cleaning

Petitioner claimed a deduction of $1,965 for the cost of

cleaning his military and DHS uniforms in 2003.

As an immigration inspector, petitioner wore a white shirt

with insignia on the sleeves, blue slacks, and, depending on the

season, a uniform jacket with an insignia on the chest. Normal

washing was at times insufficient to clean the DHS uniform. For

example, if petitioner rubbed against a greasy cable when

inspecting a ship, ordinary laundering would not remove the

stain. Professional cleaning was at times necessary.

Two days each month and 2 weeks each year, petitioner

attended National Guard drills. Petitioner estimated that he

paid $12 each time he had his military uniform cleaned.

Petitioner did not offer any estimate of the cost to clean his

DHS uniform or indicate how often his uniforms required

professional cleaning.

Petitioner described only cleaning expenses. He did not

testify that he spent more to purchase uniforms than any uniform

allowance provided by DHS or the National Guard. Petitioner

admitted that he did not know how his return preparer arrived at
 - 17 -

the $1,965 deduction for cleaning expenses and did not offer any

receipts to substantiate any cleaning expenses.

Where business clothes are suitable for general wear, their

cost is generally not deductible. However, where custom and

usage forbid wearing a uniform when off duty, deduction is

allowed. The cost of maintaining clothes for work is deductible

when the purchase price was deductible. Hynes v. Commissioner,

74 T.C. 1266, 1290 (1980).

We accept petitioner’s testimony that professional cleaning

was at times necessary for his uniforms, and we find that it

would have been improper for petitioner to wear either his DHS

uniform or his military uniform when off duty. We conclude that

petitioner is entitled to a deduction for uniform cleaning in the

amount of $480 for 2003.9

Shoes

Petitioner claimed a $225 deduction for expenses relating to

work shoes. Petitioner testified that he had an allowance for

shoes but would occasionally have his shoes repaired and that he

spent $225 in 2003 on shoe repair. Petitioner estimated that

each heel repair cost $25 to $40 but did not offer any receipts

or any details of how often such repairs were necessary.

9
When estimating the taxpayer’s expenses, the Court’s
findings bear heavily against the taxpayer whose inexactitude is
of his own making. Cohan v. Commissioner, 39 F.2d 540, 544 (2d
Cir. 1930). We allow 15 cleanings of his military uniform at $12
each and 50 cleanings of his DHS uniform at $6 each.
 - 18 -

Absent some documentary evidence that petitioner actually

repaired any shoes in 2003 notwithstanding his shoe allowance, we

do not accept petitioner’s testimony as a reasonable basis to

estimate his shoe repair expenses. Respondent’s determination as

to the claimed shoe expense deduction is sustained.

Haircuts

Petitioner claimed a deduction of $215 for haircuts in 2003.

Petitioner testified that he paid $60 per month for haircuts and

that his return preparer advised him that, since DHS and the

military require petitioner to be well groomed, his weekly

haircuts were deductible.

Grooming remains an inherently personal expense and is not

deductible, regardless of whether an employer requires a

particularly neat appearance. Hynes v. Commissioner, supra at

1291-1292. Respondent’s determination as to the claimed haircut

expense deduction is sustained.

Supplies

Petitioner claimed a deduction of $525 for supplies but at

trial testified that the only supply expenses he incurred in 2003

were those related to his job search (discussed above). He was

unable to explain how his return preparer came up with the $525

supplies expense figure. Respondent’s determination as to the

claimed supplies expense deduction is sustained.
 - 19 -

Accounting Fees

Petitioner claimed a deduction in 2003 of $360 for

accounting fees as an unreimbursed employee business expense.10

Petitioner testified that he paid his return preparer in cash.

He did not produce any receipts.

It is apparent from the evidence that petitioner paid to

have his 2003 Federal income tax return prepared.11 We conclude

that petitioner is entitled to a deduction for tax preparation

expenses paid in 2003 in the amount claimed, $360.

Computer

Petitioner claimed a deduction of $2,285 for a computer but

did not produce any receipts or other records to support the

deduction. Computers are listed property, subject to the strict

substantiation requirements of section 274(d). Secs. 274(d),

280F(d)(4)(A)(iv). Accordingly, we may not estimate an allowable

deduction for petitioner’s claimed computer expense.

10
Petitioner testified that he paid this amount to his
return preparer for 2003. The record does not indicate why
petitioner included the accounting fees expense with his
unreimbursed employee business expenses on line 20 of Schedule A,
Itemized Deductions, rather than on line 21, which is labeled Tax
Preparation Fees.
11
Petitioner’s 2003 return includes the name of
petitioner’s return preparer, as well as the preparer’s Social
Security number or paid preparer tax identification number, the
name and address of the firm petitioner used, JD Tax Accounting
Services, and the phone number and employer identification number
of that firm.
 - 20 -

Furthermore, petitioner testified that he bought a computer

but that he was uncertain whether he purchased it in 2003.

Respondent’s determination as to the claimed deduction for

computer expenses is sustained.

To reflect the foregoing,

Decision will be entered

under Rule 155.12

12
The deductions allowed herein do not appear to exceed the
2-percent floor imposed by sec. 67(a) on the miscellaneous
itemized deductions of individuals. Accordingly, the standard
deduction may well exceed petitioner’s allowed itemized
deductions. We leave the calculations to the parties.