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Solomon v Commissioner of Internal Revenue

Case No. 10359-09 (U.S. Tax Ct., Apr. 25, 2011)

Respondent determined a deficiency of $2,430 in petitioner’s Federal income tax for 2006. The sole issue for decision is whether petitioner is entitled to a miscellaneous itemized deduction based on $17,088 in claimed expenses for 2006.


Some of the facts have been stipulated. We incorporate the stipulated facts into our findings by this reference. Petitioner resided in Missouri when the petition was filed.

In May 2006 petitioner moved from Rockford, Illinois, to Florissant, Missouri, and found a job in sales with MV Marketing, Inc. (MV Marketing), which sold office supplies to businesses. Petitioner worked for MV Marketing from June 2006 through December 2006.

Petitioner’s job with MV Marketing consisted primarily of visiting businesses in her sales territory and attempting to sell office supplies. Petitioner also attempted to generate sales through mailings to businesses both within and without her sales territory. For example, petitioner sent sales flyers to businesses she was familiar with in her hometown of Rockford, Illinois.


Judge(s): Paige Marvel
Jurisdiction: U.S. Tax Court
Related Categories: Employment
Circuit Court Judge(s)
Paige Marvel

Petitioner Lawyer(s) Petitioner Law Firm(s)
Jessica Solomon Pro Se

Respondent Lawyer(s) Respondent Law Firm(s)
Catherine Tyson Internal Revenue Service



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and includes no information regarding where petitioner drove, the received commission income of $3,307 from mv marketing. mv 9 are less than 2 percent of her 2006 adjusted gross income, which expenses on the basis of any estimate or approximation or the during her employment with mv marketing, petitioner began stipulated facts into our findings by this reference. petitioner visiting businesses in her sales territory and attempting to sell some of the facts have been stipulated. we incorporate the other expenses. t.c. memo. 2010-191; sec. 1.274-5t(b)(6), (c)(2), temporary expenses, nor has she presented any evidence that would allow us statement, whether written or oral, containing specific petitioner's testimony that mv marketing did not, and would not, as a fire, flood, or other casualty. even if we were to assume, - 8 - expenses were incurred, and on the basis of petitioner's reconstruction where a taxpayer can show that the absence of 1.274-5t(c)(3), temporary income tax regs., supra. moreover, we 123 actually filled out and signed the check. deficiency. check for $127 dated november 10, 2006.8 2006. if we were to allow the deduction in full, petitioner's total motors. the receipt for $119 bears the name of another individual. in claimed expenses for the record reflects the following expenses: business expenses generally are deductible under section 162(a). well as a shoebox full of receipts, to h&r block, and a return 12 as preparation fees generally are deductible under section 212(3) as noted above, unreimbursed employee business expenses in petitioner's federal income tax for 2006. the sole issue for sales territories were typically assigned weekly but would choice but to deny in full petitioner's deduction for mileage use (i.e., the mileage), (2) the time and place of the use, and return. respondent disallowed all of petitioner's unreimbursed commissioner, 39 f.2d 540, 543-544 (2d cir. 1930); vanicek v. from mv marketing's office.5 marketing. the vehicle's odometer reflected 65,779 miles on the allowable only to the extent of $123, and her tax preparation sec. 1.274-5t(c)(3)(i), temporary income tax regs., 50 fed. reg. fees are disallowed in full. petitioner's allowable deductions and place of the travel, entertainment, or expense; (3) the entitled to the deductions claimed. rule 142(a); new colonial relate to expenses incurred before petitioner began her to concede that she cannot substantiate any additional expenses. but also are subject to the 2-percent floor for miscellaneous section 162(a) generally allows a deduction for all ordinary respondent's determination with respect to the tax preparation july 24, 2006 during part of her employment with mv marketing, petitioner fees is sustained. in an unrelated investigation was a circumstance beyond her daily mileage log. however, there are several problems with the own statement (1) the amount of the expense or item; (2) the time united states tax court as noted above, vehicle expenses that are deducted as 6 were reimbursable under the employer's reimbursement policy 543-544. consequently, respondent's determination is sustained sometimes change during the week if, for example, the salesperson 19 all rule references refer to the tax court rules of practice and however, such expenses are miscellaneous itemized deductions, see of an unrelated investigation. satisfies strict substantiation requirements. secs. 274(d), cir. 1957). 280f(d)(4). as applicable to vehicle expenses, section 274(d) maintain records to substantiate the deduction. instead, secs. 62(a)(1), 67(b), and are deductible only to the extent such miscellaneous itemized deductions would be allowed. finally, petitioner conceded that taxpayers must maintain adequate records to substantiate and december 2006) and $8,274 of other business expenses. unreimbursed employee business expenses. findings of fact we have considered all other arguments raised by the parties with respect to the remaining claimed expenses. 4 at the beginning and end of each workday. decision is whether petitioner is entitled to a miscellaneous in some instances, a taxpayer must satisfy strict date expense amount and necessary expenses paid or incurred during the taxable year corroborative evidence sufficient to establish such element." as credible petitioner's testimony that she recorded her mileage 2006 federal income tax return because they were issued in procedure. respondent. 14 petitioner then spent the rest of her workday 3 petitioner's testimony was not detailed or specific enough to office supplies. at the end of each workday, petitioner returned whether the return preparer made any attempt to distinguish $14 irrelevant, moot, or without merit. miscellaneous itemized deductions would still be far less than 2 petitioner's deduction for mileage expenses is denied in full. see cohan v. commissioner, 39 f.2d at requirement of section 274(d), petitioner did not present any (continued...) all monetary figures have been rounded to the nearest ii. conclusion cir. 1969). consequently, we are precluded from allowing vehicle transportation. section 274(d) supersedes the cohan rule with chevrolet cavalier that she used primarily for her work with mv 8 9 expense, a taxpayer may establish an element by "his own percent of her adjusted gross income and thus no deduction for july 13, 2006 precludes deducting such expenses as unreimbursed employee in summary, we conclude that petitioner's claimed mileage visiting businesses in her sales territory and attempting to sell office supplies. petitioner also attempted to generate sales 274(d) provides that no deduction is allowed with respect to, docket no. 10359-09. filed april 25, 2011. i. deductions seek reimbursement from his or her employer for expenses that he or she incurred the costs and of maintaining appropriate 46020 (nov. 6, 1985). c. tax preparation fees taxpayer's uncorroborated testimony. id. dollar. unless otherwise indicated, all section references refer was $44,263 and, therefore, petitioner is not entitled to deduct 2 corroborating records or testimony regarding the specific businesses she was familiar with in her hometown of rockford, requires a taxpayer to substantiate the expenses by adequate preparation of a tax return. hughes v. commissioner, t.c. memo. - 12 - marketing did not reimburse petitioner for mileage, postage, or clothing company that was run by petitioner's then boyfriend, and 4 petitioner's job with mv marketing consisted primarily of at the beginning and end of each day. without such a basis, any allowance would amount to "unguided it is well established that expenses incurred in commuting territory.3 petitioner deducted tax preparation fees of $474 but did not section 212(3) allows a deduction for costs incurred in the deductions, in the aggregate, exceed 2 percent of the taxpayer's petitioner does not assert that section 7491(a) shifts the burden each workday with a sales meeting at mv marketing's office in st. through mailings to businesses both within and without her sales (9th cir. 1986), affg. t.c. memo. 1984-533; lucas v. sec. 1.274-5t(c)(5), temporary income tax regs., 50 fed. - 5 - however, petitioner presented only limited receipts to 2008-249. however, the taxpayer bears the burden of proving that personal, living, or family expenses. sec. 262. miscellaneous itemized deductions. in may 2006 petitioner moved from rockford, illinois, to commissioner, 50 t.c. 823, 827-828 (1968), affd. 412 f.2d 201 (2d with respect to the remaining claimed expenses, i.e., commissioner, 79 t.c. 1, 7 (1982). we accept as credible statement, for all of the companies she worked for in 2006,4 consequently, generally are deductible under section 162(a), subject to the 2- employment with mv marketing. after eliminating these expenses, testimony, we are satisfied that the expenses were related to t.c. memo. 2011-91 - 3 - commissioner, 85 t.c. 731, 742-743 (1985). in these instances, business expenses will be disallowed in full unless the taxpayer year 2006 from mv marketing, omni consumer tax, inc., and general dated november 10 and 17, 2006, respectively, as well as a voided income tax return, petitioner did not substantiate the deduction, - 11 - postage preparer at h&r block completed her return. it is not clear information in detail as to such element", and by "other in carrying on any trade or business. unreimbursed employee records is due to circumstances beyond his or her control, such $17,088 generated a deduction amount of $16,203. preparation fees claimed on her 2006 federal income tax return. incurred some expense to have h&r block prepare her 2006 federal of the chevrolet cavalier from june through december 2006. mileage log was prepared contemporaneously. however, we accept petitioner worked for mv marketing from june 2006 through 1.6001-1(a), income tax regs. respondent also argues there is no evidence that the to reflect the foregoing, opinion 55 largesse." williams v. united states, 245 f.2d 559, 560 (5th process the $127 payment. it is not clear why petitioner a. vehicle expenses tax preparation fees is something of a moot point. indeed, even the receipts were lost when authorities seized the store as part louis, missouri. at the meeting, petitioner was assigned a sales employee business expenses and tax preparation fees. petitioner office of a retail store where her then boyfriend worked and that respect to section 280f(d)(4) listed property. sanford v. although we do not doubt that petitioner used her chevrolet and the voided check in the same amount appear to relate to a postage expenses in 2006. burden of proof with respect to all factual issues. on or about june 8, 2006, petitioner purchased a 2001 passenger automobile or any other property used as a means of to corroborate the bare information contained in the mileage log, 1 postage persons she visited. second, petitioner included in the mileage purpose of the trip, or petitioner's business relationship to the business purpose of the entertainment or expense; and (4) the arguendo, that the seizure of petitioner's records by authorities (on the basis of 18,741 miles driven for business between june and there is no evidence in the record that would allow us to records or other corroborating evidence of (1) the amount of each reimburse her for expenses incurred in her work. dec. 26, 2006 ice co. v. helvering, 292 u.s. 435, 440 (1934). if the taxpayer to respondent, and the record does not permit us to conclude that petitioner has met her burden of establishing that these at trial petitioner submitted only 14 receipts to produces credible evidence with respect to any factual issue whose inexactitude is of his or her own making. cohan v. nor did she testify with any specificity regarding her vehicle commissioner of internal revenue, respondent moreover, the receipts cannot possibly relate to petitioner's petitioner received forms w-2 with respect to her taxable jessica solomon, pro se. total from one's home to one's place of employment are nondeductible. petitioner's mileage log does not satisfy the adequate records deficiency with respect to petitioner's 2006 federal income tax given our conclusion that petitioner's mileage expenses are petitioner deducted other business expenses of $8,274. business expenses. orvis v. commissioner, 788 f.2d 1406, 1408 inter alia, any listed property (as defined in section - 2 - to mv marketing's office for an evening meeting where she turned business books t.c. 183, 186 (1999); sec. 1.6001-1(a), income tax regs. when a itemized deductions. sec. 67(a); see, e.g., crouch v. reg. 46022 (nov. 6, 1985), allows substantiation by reasonable commissioner, t.c. memo. 1995-289. no deduction is allowed for petitioner kept track of her automobile mileage using a the commissioner with respect to these factual issues. expenses. these expenses consisted of $8,340 in vehicle expenses november 2006; i.e., before petitioner's 2006 taxable year had the absence of adequate records to substantiate an element of an petitioner submitted receipts for $127 and $119 from h&r block, decision will be entered for application of the 2-percent floor, these expenses totaling adjusted gross income, sec. 67(a); alexander v. commissioner, - 6 - petitioner's 2006 federal income tax return was prepared by 280f(d)(4)), unless the taxpayer substantiates by adequate nov. 6, 2006 worked part time. timely filed a petition with this court contesting the notice of 7 control, petitioner failed to reconstruct her records through the court is permitted to make as close an approximation of the petitioner also claimed $474 in tax preparation fees. after on january 28, 2009, respondent issued a notice of log the roughly 27 miles she drove each workday commuting to and commissioner, supra at 544. to estimate the amount of an e.g., randolph v. commissioner, 74 t.c. 284, 292 (1980). deductible from nondeductible expenses or whether the return t.c. memo. 1995-51, affd. 72 f.3d 938 (1st cir. 1995). tax income tax regs., 50 fed. reg. 46016, 46017 (nov. 6, 1985). in 5 concluded. while we are inclined to believe that petitioner expenses. for the reasons discussed in the preceding paragraph, illinois. h&r block. petitioner brought her forms w-2, wage and tax reading on petitioner's car at the beginning and end of each day the receipt for $127 had exhausted the territory. itemized deduction based on $17,0881 relevant to ascertaining the taxpayer's liability and meets section 280f(d)(4) defines listed property as, inter alia, any only to the extent of $123, petitioner's claimed deduction for the voided check appears to have been submitted in order to aug. 17, 2006 estimate the deductible amount (the cohan rule). cohan v. disallowed in full and her other business expenses are allowed preparer simply added up the receipts and deducted the sum as sept. 20, 2006 on her 2006 form 1040, u.s. individual income tax return, expenses incurred. b. other business expenses taxpayer's relationship to the person or persons entertained. percent floor of section 67(a). however, a taxpayer's failure to - 10 - - 7 - taxpayer establishes that he or she has incurred a deductible and, to the extent not discussed above, we conclude they are date of purchase, and petitioner recorded the vehicle's mileage allowable expense as it can, bearing heavily against the taxpayer their claimed deductions. sec. 6001; shea v. commissioner, 112 petitioner's job in sales for mv marketing. petitioner appears cavalier for business between june and december 2006, we have no substantiate the claimed deductions, and some of the records inc. (mv marketing), which sold office supplies to businesses. section 7491(a) applies. consequently, petitioner bears the records to substantiate the deduction. see sec. 6001; sec. she may have included some personal trips in the mileage log.6 petitioner also submitted a mileage log with respect to her use appointment books, calendars, or maps of her sales territories, substantiation requirements to deduct expenses that would substantiate the unreimbursed employee business expenses and tax satisfy the requirements of section 274(d) and section estimate the amount of the deductible expense.9 catherine s. tyson, for respondent. - 9 - mileage log. first, the mileage log simply notes the odometer postage expense, however, the court must have some basis upon which to territory. for example, petitioner sent sales flyers to section 274(d) supersedes the cohan rule. consequently, jessica solomon, petitioner v. memorandum findings of fact and opinion resided in missouri when the petition was filed. deductions are a matter of legislative grace, and the are not permitted to estimate petitioner's mileage because certain other requirements, section 7491(a) shifts the burden to - 13 - petitioner did not present any evidence at trial, such as petitioner claimed $16,614 in unreimbursed employee business postage documentary evidence to corroborate the mileage log, and to estimate the amounts.7 petitioner explained that she kept most of her receipts in the $8,151, petitioner has not established that she incurred those expense but is unable to substantiate the exact amount, we may florissant, missouri, and found a job in sales with mv marketing, taxpayer generally bears the burden of proving he or she is in her sales figures for the day. marvel, judge: respondent determined a deficiency of $2,430 expenses are disallowed in full, her other business expenses are make an estimate. vanicek v. commissioner, supra at 742-743. (...continued) otherwise be deductible under section 162. for example, section - 4 - petitioner was paid solely on commission. in 2006 she (3) the business purpose of the use. see fessey v. commissioner, to the internal revenue code in effect for the year in issue, and records or by sufficient evidence corroborating the taxpayer's december 2006.2

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