Hamper v. Comm'r

T.C. Summary Opinion 2011-17

UNITED STATES TAX COURT

ANIETRA Y. HAMPER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 22375-09S. Filed February 24, 2011.

Anietra Y. Hamper, pro se.

Anita A. Gill, for respondent.

DEAN, 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
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section references are to the Internal Revenue Code, and all Rule

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

Respondent determined the following deficiencies in

petitioner’s Federal income taxes and accuracy-related penalties:

Accuracy-Related Penalty
Year Deficiency Section 6662

2005¹ $3,242 $648.40
2006 4,138 827.60
2007 4,760 952.00
2008 4,352 870.40

¹Petitioner signed Form 872, Consent to Extend the Time to
Assess Tax, for 2005 but alleged she was pressured and tricked
into signing the document. She did not explain or otherwise
provide evidence that she did not understand Form 872 and its
contents.

The issues for decision are whether petitioner is entitled

to deduct unreimbursed employee business expenses claimed on

Schedules A, Itemized Deductions, and whether she is liable for

the section 6662 accuracy-related penalties for the years at

issue.1

Background

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

The stipulation of facts and supplemental stipulation of facts

and the exhibits received into evidence are incorporated herein

1
Respondent determined that petitioner failed to report
interest income of $29 and $24 for 2005 and 2007, respectively.
Petitioner did not present any credible evidence or otherwise
allege that she did not receive interest income in 2005 and 2007
as respondent determined. The issue is deemed conceded. See
Rule 34(b).
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by reference. At the time petitioner filed her petition, she

resided in Ohio.

On Schedules A of her Federal income tax returns for the

years at issue, petitioner claimed deductions for unreimbursed

employee business expenses of $20,713, $18,604, $22,602, and

$21,759, for 2005, 2006, 2007, and 2008, respectively. These

deductions for unreimbursed employee business expenses included

expenses for clothing, a cell phone, mileage expenses,

professional expenses, subscriptions, union dues, supplies,

promotional products, legal expenses, hair, nail, and makeup

expenses, office expenses, dry cleaning costs, educational and

self-defense class costs, and Internet expenses.

During the years at issue petitioner was employed as a

morning and noon television news anchor. As a television news

anchor petitioner is required to maintain a specified

professional appearance as described in the Women’s Wardrobe

Guidelines (guidelines). The guidelines provide that the “ideal

in selecting an outfit for on-air use should be the selection of

‘standard business wear’, typical of that which one might wear on

any business day in a normal office setting anywhere in the USA.”

The guidelines point out that there is no correlation between the

cost of an outfit and its appropriateness for use, and generally

a conservative outfit purchased “off the rack” at a local
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department store is more acceptable than excessively stylish

items purchased at a designer boutique.

The guidelines also recommend avoiding certain clothing such

as those with flamboyant or loud patterns which may be

distracting on camera, heavy tweed suits, and outfits with

buttons or accessories that are overly large, as television tends

to make them look even larger.

The general guideline is that petitioner maintain a

professional and conservative appearance. She must maintain her

hair in a neat and conservative cut and maintain her fingernails

at a reasonable length, finished with conservatively colored nail

polish.

In addition to her duties as a news anchor, which include

writing, selecting, and preparing news stories for broadcast,

petitioner is required to attend promotional appearances

throughout the year. Because she is an ambassador of her

station, she must maintain a professional image and demeanor at

all times. She is also required to have an overnight bag ready

at all times, in the event she is called out of town, in which

she maintains several changes of clothing.

Consistent with the requirement that petitioner maintain a

neat, professional, and conservative appearance, and as a part of

her community appearances, she incurred considerable expenses for
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clothing and for maintaining her appearance during the years at

issue.

On June 30, 2009, respondent issued to petitioner a notice

of deficiency disallowing a portion of her business expense

deductions2 asserting that they are nondeductible personal

expenses or do not otherwise satisfy the strict substantiation

requirements of section 274.

Discussion

I. Burden of Proof

Generally, the Commissioner’s determinations are presumed

correct, and the taxpayer bears the burden of proving that those

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

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

U.S. 111, 115 (1933).

Section 7491(a)(1) provides that, subject to certain

limitations, where a taxpayer introduces credible evidence with

respect to a factual issue relevant to ascertaining the

taxpayer’s tax liability, the burden of proof shifts to the

Commissioner with respect to that issue.

Petitioner maintains that she has satisfied the requirements

of section 7491(a) and therefore the burden of proof should shift

2
Respondent stipulated that although petitioner did not
enter into evidence receipts for 2006, 2007, and 2008, she did in
fact substantiate a portion of her expenses as provided in the
stipulations.
 - 6 -

to respondent. She alleges that she fully cooperated with all

reasonable requests by respondent and provided all documentation

and information relating to her expense deductions.

Respondent stipulated most of the factual issues relating to

petitioner’s claimed expense deductions. In this case the

determination of whether an expense is an unreimbursed employee

business expense is a question of law; therefore, section 7491 is

inapplicable. To the extent respondent has not stipulated the

remaining factual determinations, the Court resolves those issues

on a preponderance of the evidence, without regard to the burden

of proof.

II. Claimed Business Expense Deductions

Deductions are strictly a matter of legislative grace, and

taxpayers must satisfy the specific requirements for any

deduction claimed. See INDOPCO, Inc. v. Commissioner, supra at

84; New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).

Taxpayers bear the burden of substantiating the amount and

purpose of any claimed deduction. See Hradesky v. Commissioner,

65 T.C. 87 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).

Section 262 expressly denies a deduction for “personal,

living, or family expenses.” On the other hand, section 162(a)

allows a deduction for all ordinary and necessary expenses paid

or incurred in carrying on any trade or business. Generally, the

performance of services as an employee constitutes a trade or
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business. Primuth v. Commissioner, 54 T.C. 374, 377 (1970).

Whether expenditures are for ordinary and necessary business

expenses is a question of fact, and the taxpayer must demonstrate

that the purpose of the expenditure was primarily business rather

than personal and that the business in which the taxpayer is

engaged benefited or was intended to be benefited by the

expenditure. Hynes v. Commissioner, 74 T.C. 1266, 1289 (1980);

Chapman v. Commissioner, 48 T.C. 358 (1967).

A. Clothing and Accessory Costs

Although a business wardrobe is a necessary condition of

employment, the cost of the wardrobe has generally been

considered a nondeductible personal expense pursuant to section

262. See Kennedy v. Commissioner, T.C. Memo. 1970-58, affd. 451

F.2d 1023 (3d Cir. 1971). The general rule is that where

business clothes are suitable for general wear, a deduction for

them is not allowable. See Donnelly v. Commissioner, 262 F.2d

411 (2d Cir. 1959), affg. 28 T.C. 1278 (1957); Hynes v.

Commissioner, supra at 1290; Roth v. Commissioner, 17 T.C. 1450

(1952). Such costs are not deductible even when it has been

shown that the particular clothes would not have been purchased

but for the employment. Stiner v. United States, 524 F.2d 640

(10th Cir. 1975); Donnelly v. Commissioner, supra.

There are recognized exceptions to the general rule where,

for example, the clothing was useful only in the business
 - 8 -

environment in which the taxpayer worked. See, e.g., Mortrud v.

Commissioner, 44 T.C. 208 (1965); Harsaghy v. Commissioner 2 T.C.

484 (1943); Meier v. Commissioner, 2 T.C. 458 (1943). The rules

for determining whether the cost of clothing is deductible as an

ordinary and necessary business expense are: (1) The clothing is

required or essential in the taxpayer’s employment; (2) the

clothing is not suitable for general or personal wear; and (3)

the clothing is not so worn. Yeomans v. Commissioner, 30 T.C.

757, 767 (1958). When the cost of acquiring clothing is

deductible, then the cost of maintaining such clothing is

likewise deductible as an ordinary and necessary business

expense. Mortrud v. Commissioner, supra.

During the years at issue petitioner purchased clothing for

her position as a news anchor. She wears her business clothing

only at work and maintains her business clothing separately from

her personal clothing. She explained that the requirement to

wear conservative clothing makes her business clothing unsuitable

for everyday wear.

Petitioner purchased most of her business clothing and

accessories from typical clothing stores such as Nordstrom’s,

Kohl’s, Victoria’s Secret, Macy’s, Old Navy, JCPenney, Sportmart,

Casual Corner, DSW, Ann Taylor Loft, Dick’s Sporting Goods,

Marshall’s, Charlotte Russe, and other local clothing stores.
 - 9 -

Petitioner’s clothing purchases for work consisted of such

items as traditional business suits, lounge wear, a robe,

sportswear, active wear, lingerie, cotton bikini and cotton thong

underwear, and evening wear. She also deducted expenses for an

Ohio State jersey, jewelry, bedding, running and walking shoes,

and dry cleaning costs.

Petitioner used a self-described criterion for determining

whether a clothing expense was deductible. She would ask herself

“would I be buying this if I didn’t have to wear this” to work,

“and if the answer is no, then I know that I am buying it

specifically” for work, and therefore, it is a deductible

business expense.

Hynes v. Commissioner, supra, involved a taxpayer in

circumstances very similar to petitioner’s. The taxpayer in

Hynes worked as a television news anchor and deducted business

expenses for wardrobe, laundry and dry cleaning, haircuts and

makeup, hotels and meals, and car expenses and depreciation. The

taxpayer purchased a particular wardrobe that was restricted in

terms of color and pattern that he was able to wear on the air.

The Court reasoned that the restriction on the taxpayer’s

selection of business attire, however, was not significantly

different from that applicable to other business professionals

who must also limit their selection of clothing to conservative

styles and fashions. The Court further reasoned that the fact
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that the taxpayer chose not to wear the business clothing while

away from the station did not signal that the clothing was not

suitable for private and personal wear. In fact, as the Court

noted, most professionals typically do not wear their business

clothes for private or personal wear.

Similarly, petitioner does not satisfy the requirement that

her clothing not be suitable for everyday personal wear.

Although she is required to purchase conservative business

attire, it is not of a fashion that is outrageous or otherwise

unsuitable for everyday personal wear. Given the nature of her

expenditures, it is evident that petitioner’s clothing is in fact

suitable for everyday wear, even if it is not so worn.

Consequently, the Court upholds respondent’s determination that

petitioner is not entitled to deduct expenses related to

clothing, shoes, and accessory costs, as these are inherently

personal expenses. Additionally, because the costs associated

with the purchase of clothing are a nondeductible personal

expense, costs for the maintenance of the clothing such as dry

cleaning costs are also nondeductible personal expenses.

B. Contact Lenses, Makeup, and Grooming Expenses

Petitioner incurred expenses for the purchase of contact

lenses in the years at issue and testified that she wears for

work a different contact lens prescription that enables her to

read the teleprompter. In addition to the cost of prescription
 - 11 -

contact lenses, she also deducted the costs for contact lens

solution and Softsoap morning mist pump soap. There is no

indication beyond her own testimony and she presented no credible

evidence that she was required to and did obtain an additional

prescription for work.

Petitioner also purchased makeup and testified that the

makeup was designed for on-the-air appearances and provided

significantly more coverage than ordinary makeup.3

Petitioner typically purchased her makeup from Nordstrom’s

and drugstores that sell ordinary cosmetics. The receipts

offered into evidence do not indicate purchases for special

makeup designed for on-camera use but simply indicate purchases

for ordinary makeup suitable for everyday wear. The Court is

unable to determine whether the makeup she purchased was

primarily for business use.

Petitioner also obtained regular haircuts and manicures.

Other maintenance expenditures included teeth whitening and skin

care product purchases.

Petitioner’s expenditures for manicures, grooming, teeth

whitening, and skin care are inherently personal expenditures.

Although these expenses may be related to her job, expenses that

are inherently personal are nondeductible personal expenses. As

3
Petitioner’s contract with NBC provided that NBC would
provide the makeup necessary for on-the-air performances. She
testified that her employer did not purchase on-the-air makeup.
 - 12 -

in Hynes v. Commissioner, 74 T.C. at 1292, the fact that

petitioner’s employment contract with the station required her to

maintain a neat appearance does not elevate these personal

expenses to a deductible business expense.

C. Self-Defense Class Expenses

Petitioner deducted, as a business expense, expenses she

incurred for self-defense classes in the form of gym membership

fees.

Petitioner’s position as a news anchor made her a public

figure in her local area. Petitioner was one of the unfortunate

public figures affected by stalking and was advised by the local

police to undertake self-defense classes as a protective measure.

Although petitioner testified that she enrolled in self-

defense classes with a private instructor, the only

substantiation relating to self-defense classes for the years at

issue was her gym membership dues at Lifetime Fitness.

Furthermore, petitioner’s daily log for 2005, which provided a

detailed account of her weekly schedule, does not indicate that

she attended self-defense classes. On an almost-daily basis

petitioner noted her workout for each day, which included

kickboxing, yoga, running, walking, weights, and cardio. But any

reference to self-defense classes was notably missing from the

log.
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Generally, costs incurred in maintaining good health are

inherently personal expenditures, and to be entitled to a

deduction, the taxpayer must demonstrate that the expenses were

different from or in excess of what he would have spent for

personal purposes. See, e.g., Fred W. Amend v. Commissioner, 55

T.C. 320, 325-326 (1970) (“some expenses are so inherently

personal that they simply cannot qualify for section 162

treatment irrespective of the role played by such expenditures in

the overall scheme of the taxpayers’ trade or business”), affd.

454 F.2d 399 (7th Cir. 1971); Sutter v. Commissioner, 21 T.C.

170, 173 (1953).

The Court recognizes that petitioner may have been the

target of stalkers. Unfortunately, petitioner has not shown how

her gym membership fees were related to her business, or that

they were otherwise an ordinary and necessary business expenses

for her position as a news anchor.

D. Professional Associations and Dues and Legal Fees

Respondent stipulated that petitioner incurred and

substantiated legal fees of $2,239 and professional dues of $75

in 2006. Respondent further stipulated that petitioner

substantiated expenses of $50 to the National Academy of

Television Arts and Sciences in both 2005 and 2007 and $207 for

legal fees in 2007. Finally, respondent stipulated that
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petitioner incurred and substantiated expenses of $50 paid for

professional dues in 2008.

Petitioner argues that these expenses are associated with

her business activities and her performance review, which affects

her contract, position, pay, and career.

The Court is satisfied that the foregoing expenses during

the years at issue were substantiated ordinary and necessary

business expenses. To the extent petitioner was unable to

substantiate her legal expenses for 2008, a deduction for the

unsubstantiated expense is denied.

E. Subscriptions

Petitioner testified that she is expected to have constant

access to news. Accordingly, she subscribes to cable television

and Internet, newspapers, magazines such as Cosmopolitan,

Glamour, Newsweek, and Nickelodeon, and satellite radio.

Subscribing to periodicals of general interest does not

generate an ordinary and necessary business expense within the

meaning of section 162. Specifically, the purchase of general

circulation newspapers is a personal expense that taxpayers may

not deduct. Stemkowski v. Commissioner, 690 F.2d 40, 47 (2d Cir.

1982), affg. in part and revg. in part 76 T.C. 252 (1981).

Subscription expenses with respect to trade and professional

magazines relating to a taxpayer’s trade or business may be
 - 15 -

deductible under section 162. See Kasey v. Commissioner, 54 T.C.

1642, 1650 (1970), affd. 457 F.2d 369 (9th Cir. 1972).

Although the foregoing news sources keep petitioner abreast

of relevant breaking news, expenses for access to these news

sources are inherently personal, and petitioner has not shown how

these expenses are ordinary and necessary business expenses. See

sec. 262. Basic cable television, similar to daily newspapers,

contains a significant amount of information which is inherently

personal. As with the purchase of a television or television

repair, cable television access is not deductible, and petitioner

has failed to show that her use of the cable television,

satellite radio, and newspaper subscriptions were ordinary and

necessary business expenses. In addition, petitioner failed to

demonstrate that her magazine subscriptions for Glamour,

Cosmopolitan, Newsweek, and Nickelodeon served a valid business

purpose for her position as a news anchor. Accordingly we hold

that petitioner is not entitled to deduct the foregoing expenses.

F. Section 274 Expenses

Section 274 imposes heightened substantiation requirements

for certain types of deductions, including deductions for car and

truck expenses, meals and entertainment, cellular phones, and

gifts. Secs. 274(d), 280F(d)(4). To claim deductions for these

expenses a taxpayer must keep adequate contemporaneous records
 - 16 -

showing the amount, business purpose, and business relationship

of the expense. Sec. 274(d).

1. Cell Phone Expense

Petitioner testified that she used her cell phone when she

was not at work in order to set up stories and solicit feedback

from viewers. Petitioner did not present credible evidence,

however, sufficient to satisfy the strict substantiation

requirements of section 274. See sec. 1.274-5T(b)(6), Temporary

Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).

Accordingly, petitioner’s claimed deductions for the years at

issue are disallowed.

2. Vehicle Expenses

Pursuant to section 274(d), any deduction claimed with

respect to the use of a passenger automobile will be disallowed

unless the taxpayer substantiates specified elements of the use

by adequate records or by sufficient evidence corroborating the

taxpayer’s own statement. See sec. 1.274-5T(c)(1), Temporary

Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).

To meet the adequate records requirements of section 274(d),

a taxpayer must maintain some form of records and documentary

evidence that in combination are sufficient to establish each

element of an expenditure or use. See sec. 1.274-5T(c)(2),

Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). A

contemporaneous log is not required, but corroborative evidence
 - 17 -

to support a taxpayer’s reconstruction of the elements of an

expenditure or use must have “a high degree of probative value to

elevate such statement” to the level of credibility of a

contemporaneous record. Sec. 1.274-5T(c)(1), Temporary Income

Tax Regs., supra.

The elements that must be substantiated to deduct expenses

for the business use of an automobile are: (1) The amount of the

expenditure; (2) the mileage for each business use of the

automobile and the total mileage for all use of the automobile

during the taxable period; (3) the date of the business use; and

(4) the business purpose of the use of the automobile. See sec.

1.274-5T(b)(6), Temporary Income Tax Regs., supra.

For 2005 petitioner presented a mileage log detailing her

business mileage. In addition, petitioner provided a maintenance

vehicle report in corroboration of her mileage log. The mileage

log and odometer readings, however, conflict with the maintenance

vehicle report. Given that petitioner’s mileage log for 2005

substantially conflicts with her vehicle history report, the

Court is unable to conclude that the mileage log is credible in

determining her business mileage for 2005.

As for the remaining years at issue, petitioner has not

presented credible evidence or documentation in support of her

claimed business mileage. Accordingly, respondent’s

determination is sustained in full.
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3. Business Gifts

The heightened substantiation requirements of section 274

also apply to business gifts. Sec. 274(d)(3). Petitioner has

introduced receipts as evidence in support of her claimed

deductions for business gifts for 2005. However, petitioner did

not explain the business purpose of the gifts and the business

relationship with the persons to whom the gifts were given. See

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

46016 (Nov. 6, 1985). Accordingly, the Court sustains

respondent’s determination with regard to the business gifts.

4. Meals and Entertainment

The elements required to prove a business expense for

entertainment include: (1) The amount of the expenditure; (2)

the time and place of the entertainment; (3) the business purpose

for the entertainment; and (4) the taxpayer’s business

relationship with the persons entertained. Sec. 1.274-5T(b)(3),

Temporary Income Tax Regs., 50 Fed. Reg. 46015 (Nov. 6, 1985).

For 2005 petitioner offered into evidence a detailed day

planner documenting her activities throughout 2005. In

corroboration of her events in her day planner, petitioner

offered a limited number of receipts documenting meal

expenditures for 2005.

Although petitioner incurred meal expenses in the years at

issue, as stipulated by respondent, she failed to present any
 - 19 -

credible evidence as to the business purpose for those meal

expenditures and the business relationship with the person(s)

entertained. Accordingly, the Court must deny petitioner’s

claimed deductions for meal and entertainment expenses in the

years at issue.

G. Remaining Expenses

Petitioner claimed expense deductions for other expenses

which included professional expenses, promotional products, and

supplies for 2006 and 2008, items for speaking engagements for

2005, other expenses for 2007, and miscellaneous and office

expenses for 2008. Petitioner did not testify or otherwise

provide substantiating documentation for the foregoing expenses.

Accordingly, respondent’s determination regarding the foregoing

expenses is sustained.

III. Accuracy-Related Penalty

Respondent determined that petitioner is liable for an

accuracy-related penalty under section 6662(a) for each year.

Section 6662(a) and (b) imposes a 20-percent penalty on the

portion of an underpayment attributable to any one of various

factors, including negligence or disregard of rules or

regulations. “Negligence” includes any failure to make a

reasonable attempt to comply with the provisions of the Internal

Revenue Code, including any failure to keep adequate books and

records or to substantiate items properly. See sec. 6662(c);
 - 20 -

sec. 1.6662-3(b)(1), Income Tax Regs. Under section 7491(c),

respondent has the burden of production with respect to the

accuracy-related penalties. See Higbee v. Commissioner, 116 T.C.

438, 446 (2001).

Section 6664(c)(1) provides an exception to the section

6662(a) penalty if it is shown that there was reasonable cause

for any portion of the underpayment and the taxpayer acted in

good faith with respect to such portion. The determination of

whether a taxpayer acted with reasonable cause and in good faith

is made on a case-by-case basis, taking into account all the

pertinent facts and circumstances. Sec. 1.6664-4(b)(1), Income

Tax Regs. The most important factor is the extent of the

taxpayer’s effort to assess his proper tax liability. Id.

Circumstances that may indicate reasonable cause and good faith

include an honest misunderstanding of fact or law that is

reasonable in view of the taxpayer’s experience, knowledge, and

education. Id.

Petitioner alleges that she acted in good faith and with

reasonable cause in deducting her business expenses because the

tax law says that all business expenses that are ordinary and

necessary are deductible and that her deductions are specific to

the job she performs as a news anchor.

The law is well settled that expenditures that are

inherently personal are nondeductible despite the seeming
 - 21 -

relation to a taxpayer’s business. Petitioner has presented no

other credible evidence that she should not be subject to the

accuracy-related penalties for the years at issue. Therefore,

the Court sustains respondent’s determination as to the accuracy-

related penalties.

The Court has considered the other arguments of the parties,

and they are either without merit or not necessary in view of our

resolution of the issues in this case.

To reflect the foregoing,

Decision will be entered

under Rule 155.