T.C. Summary Opinion 2008-134
UNITED STATES TAX COURT
JOSE A. AND SYLVIA M. GARCIA, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 26361-06S. Filed October 28, 2008.
Jose A. and Sylvia M. Garcia, pro sese.
Vicki L. Miller, for respondent.
VASQUEZ, Judge: This case was heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect
when the petition was filed.1 Pursuant to section 7463(b), the
decision to be entered is not reviewable by any other court, and
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for the
year in issue, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
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this opinion shall not be treated as precedent for any other
case.
Respondent determined a deficiency of $2,815 in petitioners’
2003 Federal income tax. The issue for decision is whether
petitioners’ unreimbursed employee business expenses claimed on
Schedule A, Itemized Deductions, of their 2003 return are
deductible pursuant to section 162.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time they filed
the petition, petitioners resided in New Mexico.
During 2003 Jose A. Garcia (petitioner) worked for two
different employers in the construction industry. Petitioner
worked for Wolf Corp. (Wolf) from January 1 through May 5, 2003.
Wolf had a reimbursement policy in effect for employee business
expenses and miles driven in the course of employment. Wolf
would have reimbursed petitioner for the mileage incurred in the
course of his employment during 2003 if he had submitted a
request for reimbursement; petitioner did not submit a request.
From June 26 through December 29, 2003, petitioner worked
for Lockwood Construction Co. (Lockwood). Lockwood did not have
an employee expense reimbursement policy in effect during the
time of petitioner’s employment.
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Petitioner owned a 1988 Ford Ranger truck and drove it for
business purposes in 2003.
Petitioners filed a joint return in 2003, claiming
deductions of $24,986.32 for unreimbursed employee expenses of
vehicle expenses, parking, and overnight travel. Petitioner
claimed to have driven 65,212 miles for work during 2003. In
applying the standard mileage rate of $0.36 to this figure,
petitioner calculated a vehicle expense deduction of $23,476.32.
Petitioner also claimed $160 in parking fees and $1,350 in
overnight travel expenses during 2003.
Petitioner submitted copies of the first and last pages of a
mileage log to document the miles driven. Petitioner had lost
the actual mileage log and did not attempt to reconstruct the
mileage log. Petitioner made entries in the mileage log at the
end of every day. The first page logged trips from January 6 to
February 6 and listed a starting odometer reading of 230,156.
The last page logged trips from the last 3 weeks in November
through the end of the year and listed an ending odometer reading
of 295,368. The first page of the mileage log reports 4,635
miles driven and the last page of the mileage log reports 6,553
miles driven. The log provides the day of the week, the date,
the destination(s), the mileage driven during the day, and the
starting and ending mileage for 2003.
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Petitioner was not able to produce any oil change receipts or
similar receipts which would have listed the mileage.
Discussion
Petitioners have neither claimed nor shown that they
satisfied the requirements of section 7491(a) to shift the burden
of proof to respondent with regard to any factual issue.
Accordingly, petitioners bear the burden of proof. See Rule
142(a). Deductions are a matter of legislative grace, and the
taxpayer has the burden of showing that he is entitled to any
deduction claimed. Rule 142(a); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934).
Section 162(a) allows a taxpayer to deduct all 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. Lucas v. Commissioner, 79 T.C. 1, 6 (1982). An
employee cannot deduct trade or business expenses to the extent
that the employee is entitled to reimbursement from his or her
employer for expenditures related to his or her status as an
employee. Id. at 7; Kennelly v. Commissioner, 56 T.C. 936, 943
(1971), affd. without published opinion 456 F.2d 1335 (2d Cir.
1972); Stolk v. Commissioner, 40 T.C. 345, 356 (1963), affd. 326
F.2d 760 (2d Cir. 1964).
Daily mileage automobile expenses otherwise deductible as a
business expense under section 162(a) will be disallowed in full
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unless the taxpayer satisfies the strict substantiation
requirements of section 274(d) as automobiles are “listed
property”. Secs. 274(d)(4), 280F(d)(4)(A)(i). If an expense is
subject to section 274(d), no deduction is allowable on the basis
of any approximation or the taxpayer’s unsupported testimony.
Sanford v. Commissioner, 50 T.C. 823, 826-827 (1968), affd. per
curiam 412 F.2d 201 (2nd Cir. 1969); Sec. 1.274-5T(a), Temporary
Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). The
taxpayer must substantiate each element of use with “adequate
records” or present “sufficient evidence” corroborating his or
her statement. Sec. 1.274-5T(c)(1), Temporary Income Tax Regs.,
50 Fed. Reg. 46016, 46017 (Nov. 6, 1985). The elements of use
required to be substantiated are as follows: (1) The amount of
each use (i.e., mileage) and the total use of the listed property
for the taxable period, (2) the date of each use, and (3) the
business or investment purpose of each use. Sec. 1.274-
5T(b)(6)(i) through (iii), Temporary Income Tax Regs., 50 Fed.
Reg. 46016 (Nov. 6, 1985).
Adequate records require the taxpayer to maintain a log or
similar record and documentary evidence, which when the two are
combined are sufficient to establish each element of use. Sec.
1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017
(Nov. 6, 1985). The log or similar record is to be prepared or
maintained in such manner that each recording of use is made near
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the time of use. Sec. 1.274-5T(c)(2)(ii), Temporary Income Tax
Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). The level of detail in
such log or similar record is permitted to vary depending upon
the facts and circumstances when a taxpayer is attempting to
establish adequate records for business use of an automobile.
Sec. 1.274-5T(c)(2)(ii)(C)(1), Temporary Income Tax Regs., 50
Fed. Reg. 46018 (Nov. 6, 1985). Specifically, the regulations
list the example of a mixed business and personal use vehicle
driven on an established route and permit the taxpayer to list
the beginning and ending mileage and subtract the trips taken to
establish the total number of miles driven during the taxable
year. Documentary evidence that substantiates such expense
includes items such as receipts, paid bills, or similar evidence
that establishes the amount, date, place, and essential character
of the expenditure. Sec. 1.274-5(c)(2)(iii), Temporary Income
Tax Regs., 50 Fed. Reg. 46019 (Nov. 6, 1985).
Sufficient evidence to corroborate a taxpayer’s detailed
statement of business use must be sufficient to establish each
element of use before the taxpayer will be permitted to deduct
such claimed business use. Sec 1.274-5T(c)(3)(i), Temporary
Income Tax Regs., 50 Fed. Reg. 46020 (Nov. 6, 1985). Only direct
evidence will be sufficient evidence to establish the elements of
amount, time, place, or date of use. Id. Direct evidence is a
statement in writing, oral testimony of other witnesses setting
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forth detailed information about such element, or an account
book, diary, log, etc. Id.
Miles Driven From January 1 to May 5, 2003
During this time petitioner was employed by Wolf and was
entitled to seek reimbursement for his claimed unreimbursed
employee expenses pursuant to Wolf’s policy. Accordingly,
petitioner is not entitled to deduct any expenses incurred while
an employee of Wolf. See Lucas v. Commissioner, supra; Kennelly
v. Commissioner, supra; Stolk v. Commissioner, supra. Petitioner
may not deduct any mileage he drove for work on or before
May 5, 2003.
Miles Driven From June 26 to December 31, 2003
During this time petitioner was employed by Lockwood and
was not entitled to reimbursement for his claimed unreimbursed
employee expenses. Accordingly, if petitioner has satisfied the
substantiation requirements of section 274(d), then petitioner is
entitled to deduct mileage incurred during his employment with
Lockwood.
The last page of the mileage log submitted by petitioner
logs the last 3 weeks in November and December. It lists the
date, the places driven to and from, the miles driven, and the
day of the week. It does not list the purpose of the trip, but
petitioner testified credibly as to the general purpose of the
logged trips.
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The last page of the log submitted by petitioner
substantiates the mileage listed as driven during the last 3
weeks in November through December. This page is sufficient
evidence to corroborate petitioner’s credible testimony that he
drove these miles for business. It contains the mileage driven,
the total use for the year, and the date of each use, and
petitioner credibly testified as to the general purpose of each
trip. Accordingly, petitioner is entitled to deduct unreimbursed
mileage expenses incurred as an employee in the amount of
$2,359.08 for the 6,553 miles driven for business in 2003.
Overnight Travel, Parking, and Toll Expenses
Petitioner has failed to provide any documentary evidence of
the claimed overnight travel, parking, and toll expenses. The
$1,350 in overnight expenses and $160 in parking and tolls have
not been substantiated. Additionally, petitioner has not
provided any dates on which the claimed overnight travel,
parking, and toll expenses were incurred. To the extent they
were incurred during petitioner’s employment with Wolf, he would
not be entitled to deduct such expenses incurred because he was
entitled to reimbursement. See Lucas v. Commissioner, 79 T.C. 1
(1982); Kennelly v. Commissioner, 56 T.C. 936 (1971); Stolk v.
Commissioner, 40 T.C. 345 (1963). Accordingly, petitioner may
not deduct these amounts.
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In reaching all of our holdings herein, we have considered
all arguments made by the parties, and to the extent not
mentioned above, we conclude they are irrelevant or without
merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.