T.C. Summary Opinion 2011-125
UNITED STATES TAX COURT
SHARON R. WRIGHT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5831-10S. Filed October 24, 2011.
Sharon R. Wright, pro se.
Carrie L. Kleinjan, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect when 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 Revenue Code in effect for the year in issue,
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and all Rule references are to the Tax Court Rules of Practice
and Procedure.
Respondent issued a notice of deficiency to petitioner in
which he determined a deficiency of $2,665 for 2007. The issue
for decision is whether petitioner is entitled to deductions
claimed for unreimbursed employee business expenses reported on
Schedule A, Itemized Deductions.1
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by reference. Petitioner resided in New
Jersey when she filed her petition.
In 2007 petitioner was employed by EVO Merchant Services
(EVO) as a sales manager. Her job entailed, inter alia, field
training, which required her to travel. EVO had a reimbursement
policy for travel and entertainment expenses incurred on behalf
of the business. EVO would reimburse employees for the following
expenses: (1) Air travel, (2) ground transportation, (3) local
expenses, i.e., taxi or subway fares, (4) auto rentals, (5)
overnight lodging, (6) meals, (7) entertainment, (8) tips and
1
Respondent also disallowed petitioner’s claimed deduction
for $200 of “job search fees”. Petitioner did not address her
job search fees in her petition or at trial; therefore, the Court
deems this issue conceded. See Rule 34(b)(4). Other adjustments
made to petitioner’s itemized deductions are computational and
will not be discussed.
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gratuities, (9) laundry, (10) organization and club memberships,
(11) insurance, (12) telephone, and (13) business gifts. EVO
would not reimburse expenses for the following: (1) Civil fines
incurred during company business because of parking, speeding, or
other violations, (2) child care fees, (3) airline and/or car
rental club memberships, (4) ordinary personal phone calls unless
traveling on business, (5) annual fees for personal credit cards
or traveler’s checks, (6) donations to charitable organizations,
(7) flight insurance, or (8) subscriptions for business
publications.
Petitioner submitted monthly expense reports to EVO. Each
expense report listed four areas of expenses: Transportation,
accommodation, meals and entertainment, and miscellaneous.
Petitioner timely filed her 2007 Federal income tax return
and deducted $14,063 for unreimbursed employee business expenses.
Respondent issued petitioner a notice of deficiency
disallowing the deduction for all of petitioner’s unreimbursed
employee business expenses.
Discussion
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). In some cases the burden of proof with
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respect to relevant factual issues may shift to the Commissioner
under section 7491(a). Petitioner did not argue or present
evidence that she satisfied the requirements of section 7491(a).
Therefore, petitioner bears the burden of proof with respect to
the issues in the notice of deficiency.
Deductions and credits are a matter of legislative grace,
and the taxpayer bears the burden of proving that he or she is
entitled to any deduction or credit claimed. Rule 142(a); Deputy
v. du Pont, 308 U.S. 488, 493 (1940); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). Additionally, a taxpayer
must substantiate all expenses. Sec. 6001; Hradesky v.
Commissioner, 65 T.C. 87, 89 (1975), affd. per curiam 540 F.2d
821 (5th Cir. 1976).
Section 162 generally allows a deduction for ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. The performance of services as
an employee is considered a trade or business for section 162
purposes. Primuth v. Commissioner, 54 T.C. 374, 377 (1970).
Employees cannot deduct such expenses, however, to the extent
that they are entitled to reimbursement from their employers for
expenditures related to their status as employees. Robinson v.
Commissioner, T.C. Memo. 2011-99 (citing Orvis v. Commissioner,
788 F.2d 1406, 1408 (9th Cir. 1986), affg. T.C. Memo. 1984-533,
and Lucas v. Commissioner, 79 T.C. 1, 7 (1982)).
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Petitioner testified that EVO reimbursed only expenses that
had been approved in advance and that EVO’s reimbursement policy
was not available to the division for which she worked. She also
testified that through telephone conversations she was denied
reimbursement of certain expenses when she requested it.
Petitioner provided no evidence corroborating her testimony that
EVO’s reimbursement policy was not available to her and that EVO
denied reimbursement of her expenses. Petitioner’s testimony is
self-serving, and the Court does not have to accept it as the
truth. See Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).
EVO had a policy to reimburse employees for expenses related
to their employment, and petitioner received reimbursement for
certain expenses under the policy. Petitioner did not provide
any credible evidence that her request for reimbursement for
other expenses was or would have been denied. Therefore,
respondent’s determination to disallow the deduction for all of
petitioner’s unreimbursed employee business expenses is
sustained.2
We have considered all of petitioner’s arguments, and, to
the extent not addressed herein, we conclude that they are moot,
irrelevant, or without merit.
2
Even if the Court found that EVO would not have reimbursed
petitioner for her expenses, she has failed to substantiate them
under either sec. 162 or 274.
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To reflect the foregoing,
Decision will be entered
for respondent.