§262 — Personal, living, and family expenses

262; 26 C.F.R. sec. 1.262-1(a), (b)(5), Income Tax Regs. Mr. Santos admitted at trial that 5Ifsection 274(d) does not apply, then "the Cohan rule", derived from Cohan v.

ds that his flight training expenses and the costs ofhis training flights are deductible as "educational expenses." To give rise to deductible business expenses, the education in question must maintain or im- 4The cases petitioner cites to support the business relatedness ofhis training flights are inapposite.

ds that his flight training expenses and the costs ofhis training flights are deductible as "educational expenses." To give rise to deductible business expenses, the education in question must maintain or im- 4The cases petitioner cites to support the business relatedness ofhis training flights are inapposite.

Also, she is not entitled to a depreciation and/or section 179 expense deduction because she did not adequately distinguish between personal use and business use with respect to the items to which those deductions relate, and we . have insufficient infor n tion to formulate a reasonable allocation between use that would allow for a deduction and use that would not. See sec. 262; Vanicek v.

Also, she is not entitled to a depreciation and/or section 179 expense deduction because she did not adequately distinguish between personal use and business use with respect to the items to which those deductions relate, and we . have insufficient infor n tion to formulate a reasonable allocation between use that would allow for a deduction and use that would not. See sec. 262; Vanicek v.

Also, she is not entitled to a depreciation and/or section 179 expense deduction because she did not adequately distinguish between personal use and business use with respect to the items to which those deductions relate, and we . have insufficient infor n tion to formulate a reasonable allocation between use that would allow for a deduction and use that would not. See sec. 262; Vanicek v.

However, under section 262, no portion of the cost of operating an automobile that,is attributable to personal use is deductible. A passenger vehicle is listed property under section 280F(d) (4) and subject to strict substantiation under section 274(d). The rule in Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), does not apply to expenses related to listed property.

Nevertheless, petitioner made no attempt to distinguish between personal use and business use for any charges shown on . any of the statements, and we have insufficient information to formulate a reasonable allocation. See sec..1.274- 5T(b) (6) (i) (B), Temporary Income Tax Regs., supra. Consequently, petitioner is not entitled to a deduction for phone and cellular service fees. See sec. 262.

However, under section 262, no portion of the cost of; operating an automobile that is attributable to personal use is deductible . Ordinary commuting expenses are not deductible . Neal v . Commissioner, 681 F .2d 1157 (9th Cir. 1982), affg . T .C . Memo . 1981-407 . A passenger vehicle is listed property under section . 280F(d)(4) subject to strict substantiation under section 274(d) . The rule in Cohan does not apply to expenses relating to listed property, which generally includes any passeng

Therefore section 7491 does not apply here.

Therefore, it is unclear whether any ofthe business items stored in the former residence were actually covered by the homeowners insurance policy.

Even though the magazine does appear to contain some in- vestment-related articles and Schmeets testified that H & M subscribed to Bottom Line for its investment advice, we are not convinced the magazine was an ordinary and necessary business expense and therefore sustain the Commissioner's disallow- ance.

We are not convinced by respondent's argument, which is inconsistent with our finding, based upon petitioner's unopposed proposed finding of fact, that the boyfriend used the funds taken from petitioner's business to pay his personal expenses.

"Because petitioner has failed to satisfy the exclusive use test, we need not decide whether petitioner's home office was his principal place of business or a place of business used by clients or customers in meeting or dealing with petitioner in the course of his trade or business.

7491(a) may shift the burden of proof to the Commissioner in specified circumstances, we need not decide which party bears the burden of proof because the outcome in this case does not depend on the burden of proof .

Thus, we are not convinced that petitioner’s desire to continue working as a part-time real estate agent established a business purpose for renting the - 21 - Thousand Oaks home.

Section 262 provides that, “except as otherwise expressly provided in this chapter, no deduction shall be allowed for personal, living, or family expenses.” This includes a capital loss from the sale of a personal residence.

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.

Unreimbursed Employee Expenses Section 262 provides that a taxpayer generally cannot deduct personal, living, or family expenses.

For the reasons set forth below, we hold for respondent.

Section 262 provides that no deduction is allowed for personal, living, or family expenses.

Normally, telephone and cable broadband services and home utility charges would constitute personal expenses which are nondeductible pursuant to section 262.

Ifas an incident ofsuch a trip the taxpayer engages in some personal activity such as "sightseeing, social visiting, or entertaining, or other recreation", the portion ofthe expenses attributable to such personal activities is not deductible pursuant to section 262.

We hold he is not entitled to a deduction for that alleged contribution.

Therefore, we hold that the burden ofproofdoes not shift to respondent.

For the reasons that follow, we hold that petitioners have not established that they are entitled to the business expense deductions claimed.

Accordingly, we hold petitioners may not deduct trade or business expenses in addition to those respondenthas already allowed.

Therefore, we hold that the burden ofproofdoes not shift to respondent.

If as an incident of such trip the taxpayer engages in some personal activity such as "sightseeing, social visiting, or entertaining, or other recreation", the portion of the expenses attributable to such personal activities is not deductible pursuant to section 262.

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.

Accordingly, we hold that petitioner is not entitled to vehicle expense deductions beyond those conceded by respondent .

Section 262 provides that a taxpayer generally c nnot deduct personal, living, or family expenses .

Accordingly, we hold that petitioner is not entitled to educt these expenses.

Accordingly, we hold that petitioner is not entitled to educt these expenses.

ecords in support of her charitable contributions were not convincing in proving either that she made - 9 - the claimed contributions or that they ere charitable expenditures and deductible under secti n 170 rather than expenditures for personal, family, or 1 ving expenses which are not deductible pursuant to section 262 .

records in support of her charitable contributions were not convincing in proving either that she made 9 - the claimed contributions or that they wore charitable expenditures and deductible under sectioi 170 rather than expenditures for personal, family, or li ing expenses which are not deductible pursuant to section 262 .

Conversely, section 262 provides that no deduction is allowed for personal, living, or family expenses .

We hold that petitioner is not entitled to any of the disallowed miscellaneous deductions in dispute .

' Section 262 provides that a taxpayer generally cannot deduct personal, living, or family expenses .

If, however, a firefighter's payments into a common meal fund are not a condition of employment, then such expenses constitute personal expenses and are not deductible pursuant to section 262.

Telephone Section 262 provides that the first phone line into a taxpayer’s home is not deductible.

We hold that under section 183 petitioner is not entitled to the claimed Schedules C deductions in issue and we sustain respondent’s determinations.

Petitioners' home, however, was not his principal place of business; therefore, section 262 governs in this situation.

Section 262 provides that no deduction is allowed for personal, living, or family expenses.

Determining whether an expense is for a repair or routine maintenance, or for an improvement or replacement, is a fact- dependent inquiry. See Treas. Reg. § 1.263(a)-3. 7 [*7] 1. Wakefield Property Mr. Pesarik claims that the sale of the Wakefield Property produced a capital gain of $55,799, not $187,000 as set forth in the notice of defici

Memo LEXIS 120, at *17-*18 (holding that taxpayer failed to show that funeral expenses for brother-in-law "was a business [expense] as distinguished from a personal expense"); see also Estate ofYetter v. Commissioner, 35 T.C. 737 (1961) (finding that funeral expenses were not properly claimed on estate's fiduciary income tax return but were allowable only as a deduction to the estate under section 2053). Therefore, petitioners are not entitled to a deduction under section 691(b) as the funeral a

These deductions and statements in support ofthe deductions appear duplicative, and some ofthe payments may be for a first residential telephone line, the expenses ofwhich are per se nondeductible pursuantto section 262(b). For these reasons, petitioners are not entitled to deduct any amounts incurred for the home office telephone line or the home office fax line. Petitioners assert they are entitled to a deduction for Internet access fees.4 The Court has characterized Internet expenses as utili

Whereas we agree with respondent that section 262 generally precludes any deduction for personal expenses, and that this mileage is all attributable to petitioner’s personal income taxes, we also observe that the exception in section 212(3) for expenses of contesting tax liabilities was prescribed specifically by the Congress to allow taxpayers to deduct a 2 Although the 165.5 miles wh

it paid the allowances. However, 3Although not in effect for the years in issue, sec. 1.62- 2(j), Example (2), Income Tax Regs., confirms this as the proper treatment. In his dissenting opinion, see infra p. 38 note 3, Judge Swift erroneously cites sec. 262 and United States v. Correll, supra, to support his belief that United’s allowance for its employees’ day trip meal expenses is nondeductible because such payments were for personal living expenses of United’s employees. However, sec. 262 on

Respondent determined that $1,300 of the rent expense was personal and nondeductible under section 262 because it represented a rental payment for petitioners' personal residence.

Respondent determined that $1,300 of the rent expense was personal and nondeductible under section 262 because it represented a rental payment for petitioners' personal residence.

air shows. Rather, the record shows that during 1993 petitioner was paying CAF for his use of its aircraft in order to learn how to fly World War II planes. We conclude that these expenses were personal in nature and are not deductible pursuant to section 262. We sustain respondent's determination on this issue. The fourth issue for decision is whether petitioner is entitled to Schedule A itemized deductions which exceed his claimed standard deduction for 1993. Petitioner prepared his own retur

On the other hand, section 262 expressly disallows a deduction for all personal expenses.

Penalties Respondent determined that petitioner is liable for a penalty for fraud under section 6663 for the taxable year 1989. Section 6663(a) provides that there shall be added to the tax an amount equal to 75 percent of the portion of the underpayment that is attributable to fraud. Section 6663(b) provides that if the Commissioner esta

Section 262 takes precedence over section 162. Commissioner v. Idaho Power Co., 418 U.S. 1, 17 (1974); Sharon v. Commissioner, 66 T.C. 515, 522–23 (1976), aff’d per curiam, 591 F.2d 1273 (9th Cir. 1978). Consequently, if the origins of petitioner’s claimed deductions are personal as defined under section 262, we need not consider whether they are o

A taxpayerbears the burden ofsubstantiating the expenses underlying its claimed deductions by keeping and producing records sufficient to enable the IRS to determine the correct tax liability. Sec. 6001; INDOPCO v. Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a), (e), Income Tax Regs. The failure to keep and present such records co

A taxpayerbears the burden ofsubstantiating the expenses underlying its claimed deductions by keeping and producing records sufficient to enable the IRS to determine the correct tax liability. Sec. 6001; INDOPCO v. Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a), (e), Income Tax Regs. The failure to keep and present such records co

Where an expense exhibits both personal and business characteristics, the "test[] requires a weighing and balancing ofall the facts * * * bearing in mind the precedence of section 262, which .denies deductions for personal expenses, over section 162, which allows deductions for business expenses." Sharon v.

Where an expense exhibits both personal and business characteristics, the "test * * * requires a weighing and balancing of all the facts * * * bearing in mind the precedence ofsection 262, which denies deductions for personal expenses, over section 162, which allows deductions for - 38 - [*38] business expenses." Sharon v.

ndent maintains, however, that petitioner's claimed,legal expenses are nondeductible because those expenses-derive from a suit that originated in a personal or family matter and therefore are personal, living, or family expenses within the meaning ofsection 262.. We agree with respondent. . Ordinary and necessary expenses paid for the production or collection of income are generally deductible by taxpayers.6· Sec. 212(1). On the other hand, personal, living, and family expenses are generally not

In instances where both section 162(a) and section 262(a) may be applicable, section 262 takes precedence.

The regulations under section 262 state that "The taxpayer's costs o f commuting to his place of business or employment are personal expenses and do not qualify as deductible expenses ." Sec .

Payment of the judgment obtained by the attorney was a nondeductible personal expense under section 262 and did not increase petitioners' basis in the Del Mar Avenue property under section 1016 .

, Attorney! s fees and other costs paid in connection with a divorce generally are personal expenses and therefore nondeductible . ,Sec . 1 . 262-1 (b) (4) , i Income Tax Regs. - On the other hand, expenses paid for the ,productioh or collection of income, or in connection with the determination collection, or refund of anystax, gener

- expenses were incurred in a trade or business within the meaning of section 162 or for the production of income within the.meaning of section 212. Re'spondent asserts that the expenses are personal expenses, deductions for which are disallowed by section 262. A. Claimed Schedule C Expenses Taxpayers generally may deduct expenses that -are ordinary and necessary in carrying on a trade or'business. Sec. 162(a). Taxpayers also generally may deduct expenses that are ordinary and necessary for (1)

The regulations under section 262 state that "The taxpayer's costs o f commuting to his place of business or employment are personal expenses and do not qualify as deductible expenses ." Sec .

Petitioner's clothing expenses thus are : nondeductible personal expenses under section 262.(a), as are his,, expenses for dry-cleaning .

Section 262 ( a) disallows deductions for personal , living, or family expenses . If a ;taxpayer establishes that an expense is deductible but is unable to substantiate the precise amount, we may estimate the amount, bearing heavily against the taxpayer whose inexactitude is of his own making . Cohan v . Commissioner, 39 F .2d 540, 543- 544 (2d Ci;

Moreover, section 262 takes precedence over section 162 .

Cable Television and Home Telephon e Section 262 provides that personal, living, and family expenses are not deductible unless expressly allowed, and the regulations specify that personal, living, and family expenses include utilities provided to a taxpayer's home unless the taxpayer uses a part of his home for his business .

As noted, however, section 262 prohibits a deduction for expenses that are personal in nature.

Section 262 expressly disallows deductions for personal, living, or family expenses . Petitioners failed to substantiate that any interest expense associated with the credit card charges was other than a nondeductible personal expense . No portion of the interest was shown to be related to the real estate activity . The claimed interest, therefore,

Section 262 provides that a taxpayer generally cannot deduct personal, living, or family expenses. However, section 162(a)(2) allows taxpayers to deduct traveling expenses paid or incurred while away from home in the pursuit of a trade or business. Traveling expenses include travel fares, meals, lodging, and other expenses incident to travel. Sec.

rict substantiation rules of section 274. He is not entitled to a deduction for these expenses. The claimed deduction of $1,969 is for meals petitioner ate. Based on petitioner’s testimony, we find this to be a non- deductible personal expense under section 262. As the Court said at trial: “Not everything in life is deductible.” The deduction for other expenses represents various items. Petitioner testified that $566 was for the purchase of CDs, - 15 - books, DVDs, and sheet music, all of which

ments to the - 11 - contrary. See sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.2 Some of the receipts and invoices petitioners provided have no plausible connection to any trade or business and are clearly nondeductible personal expenses under section 262. For example, petitioners seek to deduct the cost of installing a wireless fencing system for their dog. There are also numerous other expenses which are likely personal with respect to which petitioners have provided inadequate explanatio

Section 162(a) expressly permits a deduction for "traveling expenses * * * while away from home in the pursuit of a trade or business". An individual's tax home under this provision generally is the individual's principal place of business, not the location of his personal residence. Mitchell v. Commissioner, 74 T.C. 578, 581 (1980). An e

Generally, the cost of a business wardrobe required as a condition of employment is considered a nondeductible personal expense within the meaning of section 262 if the purchased clothing is suitable for general or personal wear.

petitioners’ landlord required with respect to the house they rented in Virginia. As we view that matter, the security deposit required for petitioners’ rented residence is a personal living or family expense, the deduction of which is prohibited by section 262. Respondent’s disallowance of this deduction is sustained. 1999 Schedule C Deductions Petitioners’ 1999 Federal income tax return includes a Schedule C for Morgan Farms, the business of which is identified as “training/breeding leader dog

A taxpayer’s expenses for his or her own meals and lodging are personal because they would have been incurred whether or not the taxpayer had engaged in any business activity. Christey v. United States, 841 F.2d 809, 814 (8th Cir. 1988); Moss v. Commissioner, 80 T.C. 1073, 1078 (1983), affd. 758 F.2d 211 (7th Cir. 1985). In order for pers

A taxpayer’s expenses for his or her own meals and lodging are personal because they would have been incurred whether or not the taxpayer had engaged in any business activity. Christey v. United States, 841 F.2d 809, 814 (8th Cir. 1988); Moss v. Commissioner, 80 T.C. 1073, 1078 (1983), affd. 758 F.2d 211 (7th Cir. 1985). In order for pers

A taxpayer’s expenses for his or her own meals and lodging are personal because they would have been incurred whether or not the taxpayer - 29 - had engaged in any business activity. Christey v. United States, 841 F.2d 809, 814 (8th Cir. 1988); Moss v. Commissioner, 80 T.C. 1073, 1078 (1983), affd. 758 F.2d 211 (7th Cir. 1985). In order

A taxpayer’s expenses for his or her own meals and lodging are personal because they would have been incurred whether or not the taxpayer had engaged in any business activity. Christey v. United States, 841 F.2d 809, 814 (8th Cir. 1988); Moss v. Commissioner, 80 T.C. 1073, 1078 (1983), affd. 758 F.2d 211 (7th Cir. 1985). In order for pers

As a result, under section 262, its loss is not deductible.

A taxpayer’s expenses for his or her own meals and lodging are personal because they would have been incurred whether or not the taxpayer had engaged in any business activity. Christey v. United States, 841 F.2d 809, 814 (8th Cir. 1988); Moss v. Commissioner, 80 T.C. 1073, 1078 (1983), affd. 758 F.2d 211 (7th Cir. 1985). In order for pers

The Court holds, therefore, that the expenses at issue were personal expenses under section 262 that are not deductible under section 162(a)(2).

In this case, petitioner’s agreement with his stepdaughter was in furtherance of the personal desires of both parents and daughter that Jennifer should prepare herself for a career as a ballerina. Petitioners have not shown that payments for one’s own daughter’s training and education conditioned upon the commitment of her future earnings

Section 261 sets forth the general rule for the disallowance of deductions by stating that “In computing taxable income no deduction shall in any case be allowed in respect of the items specified in this part.”2 Section 262 sets forth another general rule, namely, that “no deduction shall be allowed for personal, living, or family expenses.” It has long been held that the cost of commuting to and from a taxpayer’s place of business is a nondeductible, personal expense.

However, traveling expenses, including meals and lodging, incurred by a taxpayer during the taxable year while traveling away from home in the pursuit of a trade or business are deductible. See sec. 162(a)(2). To qualify for deduction under section 162(a)(2), the traveling expense must be: (1) Reasonable and necessary; (2) incurred while

oration's returns for 1991, 1992, and 1993 in the respective amounts of $46,060, $26,476, and $30,204. Petitioner was unable to substantiate some of the expenses. Some of the expenses were personal living expenses that are not deductible pursuant to section 262. The primary items in dispute are (1) payments in lieu of wages, (2) vehicle expenses and depreciation, (3) annual meeting expenses, (4) travel and entertainment expenses, (5) insurance, condominium fees, utilities, and property taxes pai

Commissioner, T.C. Memo. 1987-335; Fenstermaker v. Commissioner, T.C. Memo. 1978-210; sec. 1.262- 1(a) and (b)(5), Income Tax Regs. Only those meal expenditures that satisfy the requirements for deductibility under section 162(a) may be deducted as business expenses. Holland America has failed to prove that its reimbursement of

contractually liable for some of the payments, such as those on the mortgage. Such an event, however, would have transformed the portion of the payments made "on behalf of" Betty into nondeductible personal expenses of petitioner alone, pursuant to section 262. Thus, their status as alimony payments under section 71(b)(1) would have terminated with Betty’s death. See Israel v. Commissioner, T.C. Memo. 1995-500; cf. Cologne v. Commissioner, T.C. Memo. - 22 - 1999-102. We therefore conclude that

Section 262, however, denies a taxpayer a deduction for personal, living, or family expenses. Rental Clothing Deductions Petitioner contends that she rented formal clothing on various occasions while lecturing. Petitioner always inquired about the occasion beforehand in order to be appropriately dressed. Petitioner claimed deductions in the amount

d, thus, such expenses are deductible as ordinary and necessary business expenses under section 162(a). Respondent argues, on the other hand, that the disallowed legal expenses were personal expenses of petitioner that are not deductible pursuant to section 262. Expenses incurred by an employee in the course of employment that are not reimbursed by the employer may be deductible under section 162(a), which allows a deduction for all ordinary and necessary expenses paid or incurred during the tax

17,500. Petitioner contends that he is entitled to deductions for these expenses because they constitute business expenses paid by him during 1994. To the extent that the disputed expenses are personal in nature, they are not deductible pursuant to section 262. To the extent that the disputed expenses are Tracstar's business expenses, they are not deductible by petitioner because he has failed to establish that his unreimbursed payment of Tracstar's business expenses qualifies as an ordinary and

- 9 - Bad Debt Petitioner claimed a deduction for a bad debt in the amount of $183.33 on her return as her share of an uncollected fee for one of the band's performances. In August of 1992, the band entered into a contract with the Spectrum Club to perform two nights for $1,100. The band contracted with side men (independent musicians) t

Section 262 prohibits the deduction of personal, living, or family expenses. Prior to 1986, section 164(a)(4) allowed a deduction for State and local sales taxes paid during the taxable year. Section 164(a)(4) was repealed by section 134(a)(1) of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2116. Petitioner testified that the taxes, for wh

262; Commissioner v. Flowers, 326 U.S. 465 (1946); Green v. Commissioner, 59 T.C. 456, 458 (1972), secs. 1.262-1(b)(5), 1.162-2(e), Income Tax Regs. However, expenses 8 Our qualms about the credibility of petitioner’s testimony may be illustrated by his statements about the number of days he worked. When confronted with his diary, he testified

Section 262 provides that no deduction shall be allowed for personal expenses. First, petitioners contend that they are entitled to a deduction for 1990 of a $10,370.80 legal fee paid to an attorney in 1989 for representing Mrs. Oliver in a criminal case which arose out of her bookkeeping business. Respondent does not question that the legal fee is

Section 262 provides as follows: - 7 - SEC. 262. PERSONAL, LIVING, AND FAMILY EXPENSES. (a) General Rule.--Except as otherwise expressly provided in this chapter, no deduction shall be allowed for personal, living, or family expenses. (b) Treatment of Certain Phone Expenses.--For purposes of subsection (a), in the case of an individual, any charge

Section 262 specifically precludes deductions for personal, living, or family expenses. Section 1.262-1(b), Income Tax Regs., lists examples of disallowed expenses, including the types claimed by petitioner. To the extent that petitioner also claims that the home is "an alternative office", she has not satisfied any of the requirements of section 2

expenses (including transportation, meals, and lodging) incurred for traveling between his residence in Oxford and his principal place of business in Jackson. In general, these expenses are considered nondeductible, personal commuting expenses under section 262. See Fausner v. Commissioner, 413 U.S. 838 (1973); Commissioner v. Flowers, 326 U.S. 465 (1946). However, the transportation costs that petitioner incurred in traveling from Jackson where he served as a Mississippi Supreme Court Justice t

er testified that Mrs. Whalley drove back and forth from home to class, rather than from work to class. Mrs. Whalley did not testify; consequently, we conclude that such expenses are personal commuting expenses and therefore are not deductible under section 262. B. Travel Expenses While Away From Home For 1991 and 1992, petitioners deducted $146 and $664, respectively, for the cost of meals and lodging incurred by Mrs. Whalley while away from home at business conferences. Petitioners also deduct

262; see Lenihan v. Commissioner, T.C. Memo. 1977-379. Petitioner also contends that he is entitled to deduct his tuition payments as amounts expended for the production of income pursuant to section 212. For the reasons stated, supra, we reject petitioner's argument and hold that the tuition payments were nondeductible personal education expe

ts is not deductible. Secs. 71(c), 215(b). The portion of this claimed deduction that relates to the litigation costs concerning child support payments is not deductible since it is a personal, living, or family expense which is not deductible under section 262. United States v. Gilmore, 372 U.S. 39 (1963). Furthermore, petitioner has failed to prove that the amounts he claimed as deductions were expenditures he actually made in 1991. We hold that petitioner is not entitled to deduct the amount

Commuting expenses, which are transportation expenses incurred between an individual's residence and regular place of employment, are considered personal expenses, the deduction of which is prohibited by section 262.5 Commissioner v.

Unless expressly provided for, section 262 prohibits deductions for personal, living, or family expenses.

$1,881 $9,078 $4,828 - 10 - Per exam 1,184 2,246 1,953 Adjustment 697 6,832 2,875 A $697 claimed deduction for 1988, which respondent disallowed, was for halogen lighting in petitioner's apartment. The $697 was an unallowable personal expense under section 262. In 1989, petitioner purchased shelving, file cabinets, and a drop-leaf desk from Performance Audio for use in his apartment. These purchases represent personal items that are nondeductible under section 262. In the same year, petitioner b

hus, based on the record we find that petitioner's expenditures were for education that led to her qualification in a new trade or business. Sec. 1.162-5(b)(3)(i), Income Tax Regs. Therefore, these expenses are nondeductible personal expenses under section 262. Alternatively, even if the education did not lead to qualification in a new trade or business as a music therapist, the educational expenditures are nondeductible because they were incurred to enable petitioner to meet the minimum educati

in excess of a reasonable amount, and, accordingly, allow $15 per day for such expenses on each of these four trips. We next consider whether any of the expenses claimed by petitioner constitute nondeductible personal or living expenses pursuant to section 262. Petitioner claimed $161.60 as a deduction for expenses incurred for gratuities and taxes relating to the purchase of a 4-day spa plan while on the 11-day Fort Lauderdale/Miami Beach, Florida, trip (paragraph 10 of the stipulation of fact

e business expenses because the accident giving rise to the possible personal injury claim occurred while petitioner was engaged in business activities. Respondent asserts that the legal expenses are personal in nature and not deductible pursuant to section 262. We agree with respondent. This case is indistinguishable from our decision in Murphy v. Commissioner, 48 T.C. 569, 570 (1967), in which we said: Congress has seen fit to regard an individual as having two personalities: one as a seeker o

Section 67(a) provides that miscellaneous itemized deductions are allowed only to the extent that the total amount of such deductions exceeds 2% of adjusted gross income.

§ 1.262-1. Mission likewise argues that its own corporate ordinary and necessary expenses are likewise nondeductible, and it asks the good question of how the Commissioner can construe “income” to mean only “taxable income” when computing a taxpayer’s RCP. This is a strong argument. Mission also points to the regulations, and its

Taxpayers must keep sufficient records to substantiate the amount and business purpose of each expense and provide the records to the IRS so that it can determine the correct tax liability. See § 6001; Higbee v. Commissioner, 116 T.C. 438, 440 (2001); Treas. Reg. § 1.6001- 1(a). When a taxpayer presents some credible evidence that provides a

Phone Expenses Section 162(a) generally allows a deduction for the ordinary and necessary expenses of carrying on a business while section 262 prohibits a deduction for personal expenses.

See § 262; Henry, 36 T.C. at 884. We sustain the disallowance of the deductions claimed for each year at issue relating to depreciation of such property. To determine the annual wear and tear of tangible property, the Code generally requires taxpayers to use the modified accelerated cost recovery system outlined in section 168. Under section 168(k)(1)(

grocery stores for expenses categorized as personal and business (office supplies, entertainment, travel, etc.), making it impossible for this Court to differentiate between legitimate business expenses under section 162 and personal expenses under section 262. 7 [*7] adequate substantiation of the items on [the taxpayer’s] returns”), petitioner’s documents, bank statements, and canceled checks clearly substantiate certain business expenses petitioner’s accounting practice incurred during the 20

When a taxpayer, such as petitioner, establishes that she paid a deductible expense but fails to establish the amount of the deduction, the Court normally may estimate the amount allowable as a deduction. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930). However, the expenses at issue are specified in section 274 and are subject

757, 767 (1958); see also Deihl v.

§ 262; Treas. Reg. §§ 1.162-2(a), 1.262-1(b)(5). The taxpayer bears the burden of proving that expenses were of a business nature rather than personal and that they were ordinary and necessary. Rule 142(a); Welch v. Helvering, 290 U.S. at 115. In order to deduct employee business expenses, a taxpayer must not have received reimbursement, and

Section 262 takes precedence over section 162. Commissioner v. Idaho Power Co., 418 U.S. 1, 17 (1974); Sharon v. Commissioner, 66 T.C. 515, 522–23 (1976), aff’d per curiam, 591 F.2d 1273 (9th Cir. 1978). Consequently, if the origin of petitioner’s claimed deductions is personal as defined under section 262, we need not consider whether they are ord

ommissioner v. Flowers, 326 U.S. at 470–74. Petitioner’s hotel ex- penses in Santa Monica were essentially a substitute for the expense of daily commuting from Irvine. Therefore, they were “personal, living, or family expense[s]” nondeductible under section 262. See Daly v. Com- missioner, 72 T.C. 190, 196–98 (1979) (denying deduction for overnight lodging expenses in Philadelphia where sales manager commuted weekly to Philadelphia from his home in Virginia), aff’d, 662 F.2d 253 (4th Cir. 1981).

Respondent disallowed business expense deductions for Sherwin of $26,500. After concessions, respondent challenges $5,888.80 of the disallowed business expenses (excluding the tuition discussed below); on brief, Sherwin conceded $2,056.54 of the disputed $5,888.80. The unresolved expenses relate to office equipment and supplies and promotion

ate that the Paradise Acres venture was an active trade or business for purposes of section 162(a). 2Respondent alternatively contends in his opening brief that: (1) petitioners’ reported Schedule C expenses are nondeductible personal expenses under sec. 262; (2) petitioners’ reported Schedule C expenses are nondeductible capital expenditures under sec. 263; (3) petitioners’ reported Schedule C startup costs must be capitalized under sec. 195; and (4) petitioners’ reported Schedule C expenses ha

To the extent the transportation expenses did not constitute section 162(a)(2) travel expenses,6 he similarly failed to establish how those items were ordinary and necessary business expenses under section 162(a) (as opposed to nondeductible personal expenses under section 262 or commuter expenses under section 1.162-2(e), Income Tax Regs.).

band’s Syntek business during the year at issue; however, petitioners failed to carry their burden of proving that the charges and withdrawals represented “ordinary and necessary” business expenses as opposed to nondeductible personal expenses.3 See sec. 262. Accordingly, we sustain respondent’s adjustments. 3The only evidence that establishes a business expense are credit card statements from 2015. These statements show charges for purchases from Syntek that petitioners labeled “advertising”. N

Under section 262, however, items bought for personal, living, or family use generally cannot be deducted. Items bought for a business section of a residence cannot be deducted if that area is not exclusively used for the business (i.e., the area is for both personal and business use). See Sam Goldberger, Inc. v. Commissioner, 88 T.C. 1532, 1557 (1987).

262; Commissioner v. Flowers, 326 U.S. at 474. Employment is considered temporary if the engagement is expected to last for only a short period. Norwood v. Commissioner, 66 T.C. 467, 469 (1976). Temporary employment may become indefinite, however, if it is expected to last - 19 - for a substantial, indefinite, or indeterminate duration or bec

262; Commissioner v. Flowers, 326 U.S. at 474. Employment is considered temporary if the engagement is expected to last for only a short period. Norwood v. Commissioner, 66 T.C. 467, 469 (1976). Temporary employment may become indefinite, however, if it is expected to last - 19 - for a substantial, indefinite, or indeterminate duration or bec

An ordinary expense is one ofcommon or frequent occurrence in the type of business involved. See Boser v. Commissioner, 77 T.C. 1124, 1132 (1981), © per order (9th Cir. Dec. 22, 1983). A necessary expense is appropriate and helpful in carrying on the trade or business. Heineman v. Commissioner, 82 T.C. 538, 543 (1984). "Necessary" has bee

However, under section 262 no portion ofthe cost of operating an automobile that is attributable to personal use is deductible.

262; Hamacher v. Commissioner, 94 T.C. 348, 359 (1990). Therefore, other - 50 - [*50] than those deductions the Commissioner has conceded, we find that Ms. Sham is not entitled to deduct Schedule A unreimbursed employee expenses for 2010. D. Schedule A itemized deductions 1. Medical expenses a. Medical expenses generally Medical expenses whic

274(n), and points to section 262 to disallow the other expenses as personal.

274(n), and points to section 262 to disallow the other expenses as personal.

Where an expense exhibits both personal and business characteristics, the "test * * * requires a weighing and balancing of all the facts * * * bearing in mind the precedence ofsection 262, which denies deductions for personal expenses, over section 162, which allows deductions for business expenses." Sharon v.

- 20 - [*20] The taxpayerbears the burden ofestablishing entitlement to claimed deductions. INDOPCO, Inc. v. Commissioner, 503 U.S. at 84; Welch v. Helvering, 290 U.S. at 115; see Rule 142(a). Taxpayers are required to maintain sufficient books and records to substantiate their claimed deductions. Sec. 6001; sec. 1.6001-1(a), Income Tax

For an expenditure to be an ordinary and necessary business expense, generally the taxpayermust show a bona fide business purpose for the expenditure and a proximate relationship between the expenditure and the business ofthe taxpayer. S_e_e Challenge Mfg. Co. v. Commissioner, 37 T.C. 650, 660-661 (1962); see also sec. 1.162-1(a), Income

Petitioners deducted $2,473 for disability insurance premiums for 2012 and produced Quickbooks records and invoices to substantiate this payment. Although petitioners have substantiated their disability insurance payment for 2012, they have made no credible attempt to articulate its deductibility under a provision in the Code. There is no

For an expenditure to be an ordinary and necessary business expense, generally the taxpayermust show a bona fide business purpose for the expenditure and a proximate relationship between the expenditure and the business ofthe taxpayer. S_e_e Challenge Mfg. Co. v. Commissioner, 37 T.C. 650, 660-661 (1962); see also sec. 1.162-1(a), Income

Deductions for travel expenses are also subject to the strict substantiation requirements ofsec. 274(d), which requires that a taxpayer substantiate by adequate records (or sufficient evidence to corroborate the taxpayer's own statement) the amount, time, place, and business purpose ofan expense. - 15 - [*15] required by section 274(d) a

The taxpayerbears the burden ofestablishing entitlement to claimed deductions. INDOPCO, Inc. v. Commissioner, 503 U.S. at 84; Welch v. Helvering, 290 U.S. at 115; see Rule 142(a). Taxpayers are required to maintain sufficient books and records to substantiate their claimed deductions. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. In certa

Deductions for travel expenses are also subject to the strict substantiation requirements ofsec. 274(d), which requires that a taxpayer substantiate by adequate records (or sufficient evidence to corroborate the taxpayer's own statement) the amount, time, place, and business purpose ofan expense. - 15 - [*15] required by section 274(d) a

Petitioners deducted $2,473 for disability insurance premiums for 2012 and produced Quickbooks records and invoices to substantiate this payment. Although petitioners have substantiated their disability insurance payment for 2012, they have made no credible attempt to articulate its deductibility under a provision in the Code. There is no

Petitioners deducted $2,473 for disability insurance premiums for 2012 and produced Quickbooks records and invoices to substantiate this payment. Although petitioners have substantiated their disability insurance payment for 2012, they have made no credible attempt to articulate its deductibility under a provision in the Code. There is no

Hagos reported other expenses of$21,160, repairs and maintenance of $5,345, and car and truck expenses of$44,729 on Schedule C ofhis 2014 income tax return. The notice ofdeficiency disallowed deductions for these expenses because Mr. Hagos failed to demonstrate that he had incurred them. Mr. Hagos could not clearly explain how the car

Deductions are a matter oflegislative grace. Taxpayers must prove their entitlement to deductions allowed by the Code and substantiate the amounts ofany deductions claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a), Income Tax Regs. They also must produce records sufficient to enable the IRS to d

hing she asserted her employer required her to wear to the trade shows and to company events. Generally, the cost ofa business wardrobe, even ifrequired as a condition ofemployment, is considered a nondeductible personal expense within the meaning ofsection 262. See, e.g., Hynes v. Commissioner, 74 T.C. 1266, 1290 (1980). Those costs are not deductible even when it has been shown that the particular clothes would not have been purchased but for the employment. Id. Clothing costs are deductible a

uctions under section 212 ifsection 162 does not apply. Respondent contends that petitioner cannot claim deductions for the legal and professional fees under either section 162(a) or section 212 because they are nondeductible personal expenses under section 262. For the following reasons, we sustain respondent's determination. Section 162(a) governs the deductibility oflitigation costs as a business expense. Section 162(a) allows an individual to deduct all ofthe ordinary and necessary expenses

262; Tokarski, 87 T.C. at 77. (cid:16)04P2roperty Tax and Mortgage Interest: As purported substantiation for Schedule C expenses in 2007 and 2009, petitioners' spreadsheet listed real prop- erty taxes and home mortgage interest that they had separately claimed as itemized deductions on Schedule A. The IRS allowed all ofthe itemized deductions

Respondent argues that none ofthe expenditures is deductible under section 162 either because the expenditures are personal under section 262, or because the expenditures must be capitalized under section 263.

262; Tokarski, 87 T.C. at 77. (cid:16)04P2roperty Tax and Mortgage Interest: As purported substantiation for Schedule C expenses in 2007 and 2009, petitioners' spreadsheet listed real prop- erty taxes and home mortgage interest that they had separately claimed as itemized deductions on Schedule A. The IRS allowed all ofthe itemized deductions

1.162-2(a), 1.262-1(b)(5), Income Tax Regs. However, a deduction is allowed for ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business, including traveling expenses "while away from home in the pursuit ofa trade or business". Sec. 162(a)(2). Traveling expenses, including amounts e

However, ifthe nature ofan employee's work requires him to be away from his tax home substantially longer than an ordinary day's work and during the released time the employee needs to sleep or rest to meet the demands ofhisjob, he may deduct the costs oflodging. The standard applied to an employee whose demands ofhisjob require him to ob

ns. Without evidence ofthe specific services performed for petitioner by lawyers and law firms, it is not possible to separate out fees that are paid for petitioner's son or otherwise for personal, living, or family expenses not deductible because ofsection 262. Deductibility oflegal fees depends on the origin and character ofthe claim and not on its potential consequences to the taxpayer. United States v. Gilmore, 372 U.S. 39, 49-52 (1963). Ifthe origin ofthe claim is a marital relationship, th

262; Tokarski, 87 T.C. at 77. (cid:16)04P2roperty Tax and Mortgage Interest: As purported substantiation for Schedule C expenses in 2007 and 2009, petitioners' spreadsheet listed real prop- erty taxes and home mortgage interest that they had separately claimed as itemized deductions on Schedule A. The IRS allowed all ofthe itemized deductions

Section 262 expressly denies a deduction for "personal, living, or family expenses." On the other hand, under section 162, a taxpayer may deduct unreimbursed employee business expenses as an ordinary and necessary business expense. Lucas v. Commissioner, 79 T.C. 1, 6 (1982); Primuth v. Commissioner, 54 T.C. 374, 377 (1970). Whether an expense is de

purpose. In effect, it asks the question whether in a particular case it is reasonable to expect the taxpayerto maintain a residence near his trade or business and thereby incur only one set ofliving expenses, which are ofcourse nondeductible under section 262. * * * On balance, because petitioner performed substantial services for AIPAC in Las Vegas, traveled to DC only to complete the production process, was required to be in DC only a few weeks at a time, and had other income-producing activ

oner claimed deductions for unreimbursed employee business expenses, including vehicle expenses for his daily round trips to MSC's and FWI's worksites. Respondent maintains that petitioner's vehicle expenses are nondeductible personal expenses under section 262. As a general rule, a taxpayer's costs ofcommuting between his or her residence and place ofbusiness or employment are nondeductible personal expenses. See Fausner v. Commissioner, 413 U.S. 838, 839 (1973); Commissionerv. Flowers, 326 U.S

262 (generally disallowing a deduction for personal, living, or family expenses). We sustain respondent's disallowance ofthe deductions for these expenses for all subject years. VIII. Rental Expenses Respondent disallowed a deduction for $8,610 ofrental expenses that petitioners claimed on a Schedule E for 2003 on the grounds that petitioners

with respondent that the charges at Pet Smart, Petco, Duarte Animal Hospital, and Whittier Narrows Pet and Feed are too unspecific for us to say definitively that they were spent for business purposes, instead ofpersonal canine-related purposes, cf sec. 262, we accept that at least the charges at The Feather Farms and Bird Hill Products could plausibly be related to the classroom animals, since petitioners did not own any birds as pets. However, we ultimately concur with respondent that petitio

4Petitioners do not assert and the record does not establish that the requirements have been met to shift the burden ofproofpursuant to sec. 7491(a). - 6 - [*6] The taxpayerbears the burden ofsubstantiating expenses underlying claimed deductions by keeping and producing records sufficient to enable the Commissioner to determine the corre

availability ofa * * * [section] 23(a)(1) deduction is that the expense item involved must be one that has a business origin" and is not an expressly nondeductible personal, living, or family expense under 1939 Code sesc. 24(a)(1) (the predecessor ofsection 262). R at 45. The Court concluded that section 24(a)(1) "must impose the same limitation upon the reach of* * * [section] 23(a)(2)--in other words * * * the only kind of expenses deductible under * * * [section] 23(a)(2) are those that relat

purpose. In effect, it asks the question whether in a particular case it is reasonable to expect the taxpayerto maintain a residence near his trade or business and thereby incur only one set ofliving expenses, which are ofcourse nondeductible under section 262. * * * On balance, because petitioner performed substantial services for AIPAC in Las Vegas, traveled to DC only to complete the production process, was required to be in DC only a few weeks at a time, and had other income-producing activ

262 (generally disallowing a deduction for personal, living, or family expenses). We sustain respondent's disallowance ofthe deductions for these expenses for all subject years. VIII. Rental Expenses Respondent disallowed a deduction for $8,610 ofrental expenses that petitioners claimed on a Schedule E for 2003 on the grounds that petitioners

Section 280A strictly limits a taxpayer's deduction for business expenses arising from the use ofa home office. A taxpayermay deduct home office expenses only when the taxpayeruses the home office exclusively as his or her regular principal place ofbusiness. Sec. 280A(c)(1)(A). Taxpayers with qualifying home office expenses may take a ded

7(...continued) deficiency, this Court has not declared a notice ofdeficiency void as a sanction for such conduct. See Riland v. Commissioner, 79 T.C. 185, 207 (1982); Jackson v. Commissioner, 73 T.C. 394, 401 (1979); Greenberg's Express, Inc. v. Commissioner, 62 T.C. at 328; Human Eng'g Inst. v. Commissioner, 61 T.C. 61, 66 (1973); Suare

4Petitioners do not assert and the record does not establish that the requirements have been met to shift the burden ofproofpursuant to sec. 7491(a). - 6 - [*6] The taxpayerbears the burden ofsubstantiating expenses underlying claimed deductions by keeping and producing records sufficient to enable the Commissioner to determine the corre

2Certain computational adjustments that follow from these determinations are not in controversy, and we do not address them. - 4 - [*4] Deductions are a matter oflegislative grace; the taxpayerbears the burden ofsubstantiating expenses underlying his claimed deductions by keeping and producing records sufficient to enable the Commissione

Commissioner, T.C. Memo. 1982-436, 44 T.C.M. (CCH) 640, 643 (1982). However, a payment made to minor children by a parent for services rendered in connection with the parent's trade or business might very well qualify as a business expense deduction. See Denman v. Commissioner, 48 T.C. at 448-451. In addition to the general busin

Commissioner, T.C. Memo. 1982-436, 44 T.C.M. (CCH) 640, 643 (1982). However, a payment made to minor children by a parent for services rendered in connection with the parent's trade or business might very well qualify as a business expense deduction. See Denman v. Commissioner, 48 T.C. at 448-451. In addition to the general busin

Commissioner, T.C. Memo. 1982-436. On the other hand, payments made to minor children by a related party for services rendered in connection with the payor's trade or business might very well qualify for deduction. See Denman v. Commissioner, 48 T.C. at 448-451. As with many issues we see, all ofthe facts and circumstances surrou

ailed to maintain adequate substantiating records for many ofthe expenses underlying the deductions claimed on his 2010 return. To the extent that petitioner did maintain substantiating records, the records show that the expenses were personal, see sec. 262, or related to his employment with Perficient and that he was, or could have been, reimbursed for them. Petitioner's failure to keep adequate records, and his treatment ofreimbursed or reimbursable Perficient- related employee business expens

Section 262, in contrast, generally precludes deduction of"personal, living, or family expenses." The breadth ofsection 162(a) is limited by the requirement that any amount reported as a business expense must be substantiated, and taxpayers are required to maintain records sufficient therefor. Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 89-90

In certain circumstances, ifa taxpayer establishes entitlement to a deduction, but not the amount thereof, the Court may estimate the amount allowable, Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930), ifthe taxpayerprovides some rational basis on which an estimate may be made, Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985

Where an expense exhibits both personal and business characteristics, the "test * * * requires a weighing and balancing of all the facts * * * bearing in mind the precedence ofsection 262, which denies deductions for personal expenses, over section 162, which allows deductions for - 38 - [*38] business expenses." Sharon v.

Where an expense exhibits both personal and business characteristics, the "test[] requires a weighing and balancing ofall the facts * * * bearing in mind the precedence of section 262, which denies deductions for personal expenses, over section 162, which allows deductions for business expenses." Sharon v.

yee. Primuth v. Commissioner, 54 T.C. 374, 377- 378 (1970). Expenses for transportationbetween a taxpayer's residence and his or her place ofbusiness or employment are generally considered personal expenses, the deduction ofwhich is prohibited under section 262. See Fausner v. Commissioner, 413 U.S. 838 (1973); Commissionerv. Flowers, 326 U.S. 465 (1946); secs. 1.162-2(e), 1.262-1(b)(5), Income Tax Regs. The costs ofgoing from one business location to another, however, are generally deductible u

Petitioners provided no credible evidence ofany business expenses paid or incurred during 2007 in excess ofthe amounts respondent conceded and allowed. In an attempt to substantiate their expenses, petitioners submitted a disorganized assortment ofinvoices, receipts, and bank records to respondent. Some ofthese documents relate to persona

On the other hand, section 162 allows as a deduction "all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business". For an expenditure to be an ordinary and necessary business expense, generally the taxpayer must show a bona fide business purpose for the expenditure, and there must

Deductions are a matter oflegislative grace, and the taxpayerbears the bur- den ofproving that claimed expenses are ordinary and necessary. Rule 142(a). The taxpayer also bears the burden ofsubstantiating her claimed deductions by keeping and producing records sufficientto enable the Commissionerto determine the correct tax liability. Sec

On the other hand, section 162 allows as a deduction "all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business". For an expenditure to be an ordinary and necessary business expense, generally the taxpayer must show a bona fide business purpose for the expenditure, and there must

Taxpayers are required to maintain sufficient records to establish the amount and purpose ofany deduction. Sec. 6001; Higbee v. Commissioner, 116 T.C. 438, 440 (2001); sec. 1.6001-1(a), (e), Income Tax Regs. They also have the burden ofproving their entitlement to deductions claimed. Rule 142(a); see N w Colonial Ice Co. v. Helvering, 292

Where an expense exhibits both personal and business characteristics, the "test[] requires a weighing and balancing ofall the facts * * * bearing in mind the precedence of section 262, which denies deductions for personal expenses, over section 162, which allows deductions for business expenses." Sharon v.

IL Section 162(a)--Trade or Business Expenses Section 262 generally disallows deductions for personal, living, or.family expenses.

Such expenditures are not business expenses, nor are they deductible as medical expenses because there is no evidence that they were a prescribed drug. See sec. 213(b). To the extent any ofthe ti leaves or other plants were given as gifts to clients, a deduction for those expenditures would need to be substantiated pursuant to the strict

Petitioners provided no credible evidence ofany business expenses paid or incurred during 2007 in excess ofthe amounts respondent conceded and allowed. In an attempt to substantiate their expenses, petitioners submitted a disorganized assortment ofinvoices, receipts, and bank records to respondent. Some ofthese documents relate to persona

Section 213(a) generally allows a deduction for expenses paid during a taxable year, not compensated for by insurance or otherwise, for medical care ofa taxpayer, a taxpayer's spouse, and a taxpayer's dependents, to the extentthat such expenses exceed 7.5% ofadjusted gross income. We find that petitioner is entitled to deduct the medical

The taxpayermust show that any deducted business expenses were incurred primarily for business rather than personal, living, or family reasons. See Rule 142(a); Walliserv. Commissioner, 72 T.C. 433, 437 (1979). To show that the expense was not personal, the taxpayermust showthat the expense was incurred primarilyto benefit his business an

If the expenses are primarily motivated by personal considerations, section 262 prohibits the taxpayer from deducting them.

1.162-2(e), Income Tax Regs.; see also Steinhort v. - 5 - [*5] Commissioner, 335 F.2d 496, 503 (5th Cir. 1964), aff'g and remanding T.C. Memo. 1962-233; secs. 1.212-1(f), 1.262-1(b)(5), Income Tax Regs. Section 274(d) prescribes stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpense

The taxpayer must show that any claimedbusiness expenses were paid primarily for business rather than personal, living, or family reasons. See Rule 142(a); Walliser v. Commissioner, 72 T.C. 433, 437 (1979). To show that an expense was not personal, the taxpayer must show that the expense was paid primarilyto benefit his business, and ther

The 2An employee's performance ofservices is a trade or business. Ea, Primuth v. Commissioner, 54 T.C. 374, 377-378 (1970). - 7 - taxpayermust show that any expenses for which business expenses are claimed were incurred primarily for business rather than personal, living, or family reasons. See Rule 142(a); See Walliser v. Commissioner,

Deductions are a matter oflegislative grace, and the taxpayerbears the bur- den ofproving that claimed expenses are¡ordinary and necessary. Rule 142(a). The taxpayer also bears the burden ofsubstantiating his claimed deductions by keeping and producing records sufficient to enable the Commissionerto determine - 8 - [*8] the correct tax l

Section 1.213-1(e)(1)(ii), Income Tax Regs., provides that medical care deductions will be confined strictly to expenses incurred primarily for the prevention or alleviation ofa physical or mental defect or illness.

8-*19. - 27 - [*27] places ofemployment at the APC locations. We have found that these trips were either for commuting (a nondeductible expense under 26 C.F.R. section 1.2,62-1(b)(5)) or for personal transportation and errands (nondeductible under section 262). Because ofthe lack ofcredible substantiating evidence, we sustain the disallowance ofthe deduction ofthe vehicle expenses as Schedule A unreimbursed employee expenses. V. APC's gross receipts Mrs. Robinson prepared APC's Forms 1120S for 2

The taxpayermust show that any claimed business expenses were paid primarily for business rather than personal, living, or family reasons. Se.e - 10 - Rule 142(a); Walliser v. Commissioner, 72 T.C. 433, 437 (1979). To showthat the expense was not for personal reasons, the taxpayer must show that the expense was paid primarily to benefit

It was evident at the start thatpetitioner's approachto the trial ofthis case presented an issue ofwhether her proofwould be relevantto the adjustments determined in the notice ofdeficiency and ofwhether she should be permitted to contradictrespondent's transcript ofher 2011 return, a document included in the stipulation offacts. h Rule 9

1.162-2(e), Income Tax Regs.; s_ee also secs. 1.212-1(f), 1.262-1(b)(5), Income Tax Regs. Whether an expenditure satisfies the requirements for deductibility under section 162 is a question offact. See Commissioner v. Heininger, 320 U.S. 467, 475 (1943). Section 274(d) prescribes more stringent substantiation requirements to be met b

total ofthe expenses shown on the summary schedule, however, is not consistentwith the amount ofmedical expenses shown on the -7- Schedule A. After a careful review ofthe summary schedule, which lists some personal, nondeductible expenditures, see sec. 262, duplicates other items, and contains other mistakes,5 we find that petitioners are entitled to a medical expense deduction totaling $1,126.50 more than now allowed by respondent. B. Charitable Contributions Generally, section 170(a) allows a

Under section 262, however, no portion ofthe cost ofoperating an automobile that is attributable to personal use is - 14 - deductible. Michaels v. Commissioner, 53 T.C. 269, 275 (1969). Similarly, ordinary commuting expenses are not deductible. Commissioner v. Flowers, 326 U.S. at 472-473; Neal v. Commissioner, 681 F.2d 1157 (9th Cir. 1982), aff'a T.C.

2d 786, 788-789 (9th Cir. 1967)). Respondent argues that petitioners failed to prove that the expenses paid to James Guy were reasonable and also that petitioners failed to prove that any amounts paid to James Guy related to Dr. Guy's business.4 See sec. 262 ("Except 4In a footnote in his posttrial briefrespondent for the first time argues that even ifpetitioners are entitled to a deduction for any ofthe disputed legal fees, those fees must be capitalized and deducted over the 15-year life ofthe

Petitioner must show that any claimed expenses were incurred primarily for business or for investment rather than personal reasons. See Rule 142(a); Walliser v. Commissioner, 72 T.C. 433, 437 (1979); sec. 1.212-1(d) and (e), Income Tax Regs. To show that the expense was not personal, petitioner must show that the expense was incurred prim

In general, the cost ofdaily commuting to and from work is a personal expense and therefore not deductible. See - 5 - [*5] Commissioner v. Flowers, 326 U.S. 465, 473-474 (1946); sec. 1.162-2(e), Income Tax Regs.; see also secs. 1.212-1(f), 1.262-1(b)(5), Income Tax Regs. Petitioners argue that petitioner's commute is atypical in regard t

She is not entitled to any deduction for attorney's fees beyond the stipulated amount paid to recover mcome. Section 6651(a) Additions to Tax Section 6651(a)(1) provides for an addition to tax in the event a taxpayer fails to file a timely return (determined with regard to any extension oftime for filing) unless the taxpayer shows that su

e were different from or in excess ofwhat he or she would have spent for personal purposes. Sutter v. Commissioner, 21 T.C. 170, 173 (1953). The expenses of daily commuting are generally not deductible because they constitute personal expenses under section 262. Fausner v. Commissioner, 413 U.S. 838 (1973); sec. 1.262-1(b)(5), Income Tax Regs. However, the costs ofgoing betweenjobs orjob locations is generally deductible under section 162(a). See Fausner v. Commissioner, 55 T.C. 620 (1971); see

Neither the IRS nor the Court can reasonably be expected to comb through disorganized records and guess which relate to the deductions claimed on petitioner's tax return. See Patterson v. Commissioner, T.C. Memo. 1979-362, 39 T.C.M. (CCH) 82, 84 (1979) (disapprovingthe "shoebox method" of recordkeeping). A taxpayermay deduct unreimbursed

Commissioner, T.C. Memo. 2007-151. A taxpayer may deduct the expenses he or she incurred while away from home. Sec. 162(a)(2). The word "home" for purposes ofsection 162(a)(2) refers to the area ofa taxpayer's principal place ofemployment, not the taxpayer's personal residence. Daly v. Commissioner, 72 T.C. 190, 195 (1979), aff'

Section 262, in contrast, precludes deduction of"personal, living, or family expenses." The breadth ofsection 162(a) is tempered by the requirement that any amount claimed as a business expense must be substantiated, and taxpayers are required to maintain records sufficient therefor. Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975), af

For purposes ofsection 165(c)(2), a taxpayer is considered as entering a transaction for profit if: (1) the transaction has economic substance; and (2) the taxpayer was "motivated by profit to participate in the transaction." Illes v. Commissioner, 982 F.2d 163, 165 (6th Cir. 1992), affff'g T.C. Memo. 1991-449; see also Jefferson v. Commi

In contrast, section 262 precludes deductions of"personal, living, or family expenses." For the years at issue, respondent disallowed the following payments by the corporations to Sai1 Dee Cristo and Mt.

The taxpayer must show that any claimed business expenses were incurred primarily for business rather than personal reasons. See Rule 142(a); Walliser v. Commissioner, 72 T.C. 433, 437 (1979). To show that the expense was not personal, the taxpayer must show that the expense was incurred primarily to benefit his or her business, and there

Unreimbursed employee business expenses are deductible, subject-to threshold limitations, as itemized deductions. Sec. 67. The business expenses ofan independent contractor, however, may be deducible from gross income, whereas employee business expenses are deductible from adjusted gross income subject to certain limitations. Li. Certain

The performan e ofservices as an employee is considered a trade or business for sectio 162 purposes. Primuth v. Commissioner, 54 T.C. 374, 377 (1970). In order to deduct unreimbursed e ployee business expenses, a taxpayer must not have received reimbursement a d must not have had the right to obtain reimbursement from his employer. Orvis

Long-Term Health Care Insurance Section 213(a) carves out an exception to section 262, allowing for a deduction for personal medical care expenses to the extent that such expenses exceed 7.5% ofthe taxpayer's adjusted gross income.

However, section 262 disallows any ded ction with respect to personal, living, or family expenses.

262 (personal expenses generally not deductible). We accordingly hold that petitioners are not entitled to the $16,550 automobile expense deduction claimed on their 2008 joint Federal income tax return. To reflect the foregoing, Decision will be entered for respondent.

Long-Term Health Care Insurance Section 213(a) carves out an exception to section 262, allowing for a deduction for personal medical care expenses to the extent that such expenses exceed 7.5% ofthe taxpayer's adjusted gross income.

Section 262 specifically disallows deductions for personal, living, and family expenses. Respondent disallowed the following deductions related to the Valdemossa home, the yacht, and the Key Biscayne home: Deduction 2003 2004 2005 Repair and maintenance expenses $123,242 $50,0.00 $9,623 Depreciation 104,650 85,610 84,089 Respondent argues that thes

The performan e ofservices as an employee is considered a trade or business for sectio 162 purposes. Primuth v. Commissioner, 54 T.C. 374, 377 (1970). In order to deduct unreimbursed e ployee business expenses, a taxpayer must not have received reimbursement a d must not have had the right to obtain reimbursement from his employer. Orvis

Finally, in connection with expenditures for travel, meals, and entertainment, there is a more stringent standard ofsubstantiation. See sec. 274(d). Respondent did not question whether petitioner was engaged in a business activity or whether he was entitled to a loss. We therefore limit our inquiry to whether petitioner has shown entitleme

. Memo. 1959-34. Messrs. Kern and Redinger concluded that clients' expenses for weapons, ammunition, protective gear, cell . phone, and clothing were deductible. They did not analyze whether those . expenses were nondeductible personal expenses, see sec. 262, or whether they were ordinary and necessary expenses related to deputy petitioners' trade or business as OCSD employees, see sec. 162(a). We conclude that these methods connote negligence but are not clear and convincing evidence offraud. D

However, section 262 disallows any ded ction with respect to personal, living, or family expenses.

Section 262, by contrast, generally disallows a deduction for personal, living, or family expenses. Section 274(d) imposes strict substantiation requirements for expenses related to listed property, including, but not limited to, passenger automobiles. See sec. 280F(d)(4)(A)(i). For expenses relating to automobiles, a taxpayer must substantiate wit

Despite the fact that his real estate activity consistently generated losses ($9,236 in 2004, $5,623 in 2006, and $13,552 in 2007), petitioner insists he intended to realize a profit. There is, however, no objective evidence to support his testimony. His real estate activity never generated revenue. The record in this case does not, in an

Any other rule "carr[ies] us too far" and allows taxpayers to subvert section 262 by running their expenses through corporate forms.

Some expenses can be estimated ifa taxpayer fails to properly substantiate the entire amount ofthe expense. Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930). In order for the Court to estimate the amount ofan expense, the Court must have some basis upon which an estimate may be made. Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).

Section 262 specifically disallows deductions for personal, living, and family expenses. Respondent disallowed the following deductions related to the Valdemossa home, the yacht, and the Key Biscayne home: Deduction 2003 2004 2005 Repair and maintenance expenses $123,242 $50,0.00 $9,623 Depreciation 104,650 85,610 84,089 Respondent argues that thes

. Memo. 1959-34. Messrs. Kern and Redinger concluded that clients' expenses for weapons, ammunition, protective gear, cell . phone, and clothing were deductible. They did not analyze whether those . expenses were nondeductible personal expenses, see sec. 262, or whether they were ordinary and necessary expenses related to deputy petitioners' trade or business as OCSD employees, see sec. 162(a). We conclude that these methods connote negligence but are not clear and convincing evidence offraud. D

Furthermore, e under section 262 personal living, aor family a expenses are not déductible .

Taxpayers must maintain adequate records to substantiate their claimed deductions. Sec. 6001; Shea v. Commissioner, 112 T.C. 183, 186 (1999); sec. 1.6001-1(a), Income Tax Regs. When a taxpayer establishes that he or she has incurred a deductible expense but is unable to substantiate the exact amount, we may estimate the deductible amount

The ,taxpayer must show that any deducted business expenses were incurred primaril for business rather than personal reasons. See Ru e 142(a); Walliser 'v. Commissioner, 72 T.C: 433, 437 (1979). To show hat the expense was not personal, the taxpayer must show that th expense was incurred primarily to benefit his or her business, nd there

262; Fausner v. Commissioner, 413 U.S. 838 (1973); secs. 1.162-2(e), 1.262- 1 (b) (5) , Income Tax Regs . Transportation expenses , however, may be deducted under section 162(a) (2) if they are: (1) Ordinary and necessary; (2) incurred while "away from home"; and (3) incurred in pursuit of a trade or business. Commissioner v. Flowers, 326 U. S

262; Fausner v. Commissioner, 413 U.S. 838 (1973); secs. 1.162-2(e), 1.262- 1 (b) (5) , Income Tax Regs . Transportation expenses , however, may be deducted under section 162(a) (2) if they are: (1) Ordinary and necessary; (2) incurred while "away from home"; and (3) incurred in pursuit of a trade or business. Commissioner v. Flowers, 326 U. S

Charitable Contribution Deduction The following charitable contributions remain at issue: Description Amount Underage $1,613 Percentage of home used for charity 6,000 Partial interest in the Caribbean residence 1,356 Charitable use of the Caribbean residence 11,500 NDSS expenses 32,635 Bug Runners 500 Rockland Occupational Therapy fo

Dental expenses and hair color expenses are :inherently personal. See Irwin v. Commissioner, T.C. Memo. 1996-490, affd. without published opinion 131 F.3d 146 (9th Cir. 1997). .Thus, we find that petitioner's dental, hair color, and personal grooming expenses are not ordinary and necessary trade or business expenses. Moreover, petitioner

262 (a) ; »Fausner . Commissioner, 413 U. S. 838 (1973) ; Commissioner v. Flowers, 326 U.S. 465 (1946); Feistman v. Commissioner, 63 T.C. 129, 134 (1974) . As the Supreme Court explained in Commissioner v. Flowers, såpra at 473, Éh core reason commuting expenses are not - deductible is that the taxpayer makes a personal choice about where to l

(1979), affd. 662 F.2d 253 (4th Cir. 1981); Kroll v. Comáissioner, 49 T.C. 557, 561-562 (1968). Under this definition, commuting expenses are not deductible and are considered personal expenses. Anderson v. Commissioner, 60.T.C. 834, 835 (1973); see sec. 262. On the other hand, if a taxpayer accegts temporary employment outside of the vicinity of his p incipal place of residence, his travel expenses are generally deductible because it would be unreasonable for him to move his residence for tempo

Petitioner acknowledges that the original deeds showing the transfer of the Cleveland property to HOME in 2004 have not been recorded and, for reasons not fully explained, are no longer available. ,According to the deeds, the C,leveland property, together with the relocated house, was conveyed to HOME on May 17, 2004. At trial she produce

If a taxpayer establishes a deductible expense but is unable to substantiate the precise amount, the Court may approximate the deductible amount, but only if the taxpayer presents sufficient evidence to establish a rational basis for making the estimate. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930). The record provides no cr

Living and Medical Expenses of Zhang's Mother Section 262 generally denies a deduction for "personal, living, or family expenses".

Accordingly, petitioner is not entitled to a deduction for telephone expenses. vii. Postage Petitioner claimed a $1,761 deduction for postage expenses. Petitioner's tax summary report appears to indicate that her postage expenses were personal.: For example, petitioner claimed postage expenses for Victoria's' Secret, Coldwater Creek, Horc

1979), affd. 662 F.2d 253 (4th Cir. 1981); Kroll v. Commissioner, 49 T.C. 557, 561-562 (1968). Under this definition, commuting expenses are not deductible and are considered personal expenses. Anderson v. Commissioner, 60 T.C. 834, 835 (1973); see sec. 262. On the other hand, if a taxpayer accepts temporary employment outside the vicinity of his principal place of residence, his travel expenses are generally deductible because it would be unreasonable for him to move his residence for temporary

Under section 262, however, no portion of the cost tof operating an - 10 - automobile that is attributa le to personal use is deductible. Michaels v. Commissioner, 53 T.C. 269, 275 (1969) . , Similarly, ordinar commuting expenses are not deductible. Commissioner v. Flowers supra at 472-473; Neal v. Commissioner, 681 F.2d 1157 (9th Cir. 1982), affg. T.C.

ess Expenses i Section 162 generally allows a ideduction for ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business. Generally, no deduction is allowed for personal, living, or family;expenses See sec. 262.e The tixpayer must therefore show that any claimed business expenses were incurred primarily for business rather than personal reasons. See Rule 142(a); Walliser v. Commissioner, 72 T . C. 433, '4137 (1979) sTo show that Ethe: expense was n

The taxpayer must show that any claimed business expenses were incurred primarily for business rather than personal reasons. See Rule 142(a); Walliser v. Commissioner, 72 T.C. 433, 437 (1979). To show that the expense was not for :personal reasons, the taxpayer must show that the expense was incurred primarily to benefit his or her busine

Section 262, in contrast, precludes deduction of "personal, living, or family expenses." y here the expense in question relates to property that ,is occupied by the taxpayer as a residence, section 280A(a) lays down he following general rule: "in. -the case of a taxpayer wl o is an indi\ridual or an S corporation, no deduction otherwise allowable u

The taxpayer must show that.any claimed business expenses were incurred primarily for business rather than personal reasons. See Rule 142(a); Walliser v. Commissioner, 72 T.C. 433, 437 (1979). To show that the exp nse was not personal, the taxpayer must show that the expense was incurred primarily to benefit his business, and there must h

1.162-2(a), 1.262-1(b) (5), Income Tax Regs. -Section 162(a) (2), however, allows a taxpayer to deduct ordinary and necessary. travel expenses, including meals and lodging, paid or incurred, while away from home in pursuit of a trade -or,business. Commissioner v. Flowers, 326 U.S. 465, 470 (1946). The, reference to "home" in section

Noting that the medical expense deduction essentially carves a limited exception out of the general rule of section 262 that "personal, living, or family expenses" are not deductible, the Court observed that a taxpayer seeking a deduction under section 213 must show : (1) "the - 27 - present existence or imminent probability of a disease, defect o r .illness--mental or physical" and (2) a payment "for goods or services directly or proximately related to

1.162-2(a), 1.262-1(b) (5), Income Tax Regs. Section 162(a) (2), however, allows a taxpayer to deduct ordinary and necessary travel expenses, including meals and lodging, paid or incurred while away from home in pursuit of a trade or business. Commissioner v. Flowers, 326 U.S. 465, 470 (1946). The reference to "home" in section 162(

The taxpayer must show that any claimed business expenses,were incurred primarily for business rather than personal reasons. See Rule 142(a). To show that an expense was not personal, the taxpayer must show that the expense was incurred primarily to benefit his business, and there must have been a proximate relationship between the claime

However, section 162(a) (2) allows a taxpayer to deduct traveling expenses (including amounts expendedefor meals and lodging) that are paid or incurred while "away from home" in the pursuit of a trade or business. Commissioner v. Flowers, 326 U.S. 465 (1946); Brandl v. Commissioner, 513 F.2d 697 (6th Cir. 1975), affg. T.C. Memo. 1974-160;

" We have characterized section 213 as carving Put "a-limite d exception" to the general rule .in section 262 that prohibits the deduction of personal, living, or family expenses .

1.162-2 (a) , 1. 262-1 (b) (5) , Income Tax Regs . Section 162 (a) (2) , however, allows, a taxpayer to deduct ordinary and ecessary travel expenses, including meals and lodging, paid or ncurred while away from home in pursuit of a trade- or. business. ommissioner v. Flowers, 326 U.S. 465, 470 (1946) . The reference to "home" in se

The taxpayer-must therefore-show that any claimed business expenses were incurred primarilysfor business.rather than personal reasons. See Rule 142(a); Walliser -v. Commissioner, 72 T.C. 433, 437 (1979). To show that the expense -was not.personal; the taxpayer must show that the expense was incurred primarily to benefit «his business, and

Noting that the medical expense deduction essentially carves a limited exception out of the general rule of section 262 that “personal, living, or family expenses” are not deductible, the Court observed that a taxpayer seeking a deduction under section 213 must show: (1) “the present existence or imminent probability of a disease, defect or illness — mental or physical” and (2) a payment “for goods or services directly or proximately related to the diagn

deductible only if the trip is related primarily to the taxpayer's trade or business . Sec . 1 .162-2(b)(1), Income Tax Regs . If the trip is primarily personal, the traveling expenses to and~from the destination are not deductible . Id. ; see also sec. 262 . In addition to satisfying the criteria for deductibility under section 162, certain categories of expenses also must satisfy the strict substantiation requirements of section 274(d) in order for a 'deduction to be allowed . The expenses to

Section 262, however, provides that no deduction is allowed for personal, living, or family expenses .

However, under section 262 no-portion of the cost of operating an automobile that is attributable to personal use is deductible .

Secondly, if the contributions are an expense, then they are a nondeductible section 262 payment for personal, living, or family expenses .

is residence to more than 100 points of assignment and from one assignment to another), affd . 283 F .2d 865 (5th Cir . 1960) . The distance a taxpayer commutes to work, no matter how far, still 7 - represents nondeductible commuting expehses under section 262 . Commissioner v . Flowers , supra at-473 . Although the subjective intent of the taxpayer is a factor to be considered in determining tax home-for purposes o f 162(a)(2), this Court and others have consistently focused on more objective c

However, section 262 disallows any deduction for personal, living, or family expenses, including meals and travel expenses .

Section 262, in contrast, precludes deduction of "personal, living, or family expenses . " Section 162(a) is tempered by the requirement that any amount claimed as a business expense must be substantiated, and taxpayers are required to maintain records sufficient to substantiate the expenses claimed . Sec . 6001 ; Hradesky v. Commissioner , 65 T .C

instances where section 162(a)i,trade or business expense s overlap with section 262 ( a) personal expenses , section 262 takes precedence .

Section 262(a ) and (b ) provides that any charge for basic local telephone service with respect to the first telephone line provided to any residence of the taxpayer shall be treated as a nondeductible personal expense .

Section 262 denies a deduction for personal, living, or family expenses . Section 274(d) requires taxpayers to maintain substantiating evidence with regard to travel, meal, and entertainment expenses . Beale v . Commissioner , T .C. Memo . 2000- 158 . Petitioner has failed to substantiate that any of the claime d expenses still in dispute qualify a

1999-163, the Court stated that, television sets are "inherently personal items under section 262 ." The Court has also held that the expense incurred in repairing a television is inherently personal .

Section 262 prohibits deductions for personal expenses, which include meals workers buy during a workday . Sec. 262(a) ; .Commissioner v . Flowers , supra at 473-474 ; sec . 1 .162- 2(e), Income Tax Regs . Therefore, the key is determining under what circumstances taxpayers who travel away from home on business for shorter than overnight may noneth

ome . " Petitioner's argument is unavailing . Except for tax advice, which is not at issue here, fees paid in connection with the planning of a taxpayer's personal or family affairs have long been considered nondeductible personal expenditures under section 262 . See Epp v. Commissioner , 78 T .C . 801, 805-806 (1982) ; 'The $751 in disputed deductions for Schedule E legal and professional fees relates entirely to 4329 Rilea . 9He paid the attorney, Randall C . Thompson, $675, half of which he a

Vehicle Expenses Section 262 disallows any deduction for personal, living, or family expenses .

Such expenses are regarded as personal commuting expenses and under section 262 are not deductible .

Personal expenses are nondeductible under section 262, and ca ital expenditures are nondeductible under section 263 .

262; Commissioner v. Flowers, supra at 474. The requirement that the travel expense be incurred in the pursuit of a trade or business means that the “exigencies of business rather than the personal conveniences and necessities of the traveler must be the motivating factors.” Commissioner v. Flowers, supra at 474. Thus, the taxpayer must have s

Consequently, according to respondent, the legal costs are personal items which under section 262 are not deductible .

However, section 162(a)(2) allows a deduction for traveling expenses, including amounts expended for meals and lodging, if the expenses are : (1) Ordinary and necessary, (2) incurred while "away from home", and (3) incurred in pursuit of a trade or business . See Bochner v . Commissioner, 67 T .C . 824, 827 (1977) . Respondent contends t

Section 262, intcontrast, precludes deduction of "personal , living, or family expenses . " The breadth of section 162(a ) is tempered by the requirement that any amount claimed as a business expense must be substantiated, and taxpayers are required to maintain records sufficient therefor . Sec . 6001 ; Hradesky v . Commissioner, 65 T.C. at 89-90;

sallows deductions for personal, living, or family expenses . A normal supposition when payments are made to dependent children or when items are purchased for them is that the money or items are in the nature of support and thus nondeductible under section 262 . Holtz v . Commissioner , T .C . Memo. 1982-436. In deciding whether payments to a child are deductible, we examine all the facts and circumstances . Eller v . Commissioner, supra . Facts that militate against the deductibility of such p

To show that an - 22 - expense was not personal, the taxpayer must show that the expense was incurred primarily to benefit his business and that there was a proximate relationship between the claimed expense and the business. Walliser v. Commissioner, 72 T.C. 433, 437 (1979). Dr. Rinker testified as to the business purpose of some of the

The taxpayer must show that any claimed business expenses were incurred primarily for business rather than social reasons. See Rule 142(a); Walliser v. Commissioner, 72 T.C. 433, 437 (1979). To show that the expense was not for personal reasons, the - 11 - taxpayer must show that the expense was incurred primarily to benefit his business

Respondent argues that, since the primary reason petitioner traveled to the Chapman Law School Library was to visit his family, the mileage associated with this travel is not deductible under section 262 as a personal expense.

The taxpayer must show that any claimed business expenses were incurred primarily for business rather than personal reasons. See Rule 142(a). To show that an expense was not personal, the taxpayer must show that the expense was incurred primarily to benefit his business, and there must have been a proximate relationship between the claime

nected expenses are deductible, personal, living, and family expenses are not. Compare sec. 162(a) (allowing as a deduction “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business”) with sec. 262 (disallowing, generally, a deduction for “personal, living, or family expenses”). While some of the documents are annotated, e.g., dollar amounts circled or a name appearing next to a country club charge for a restaurant lunch, there is insu

Section 262, in contrast, precludes deduction of “personal, living, or family expenses.” The breadth of section 162(a) is tempered by the requirement that any amount claimed as a business expense must be substantiated, and taxpayers are required to maintain records sufficient therefor. Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975),

Section 262, in contrast, precludes deduction of “personal, living, or family expenses.” The breadth of section 162(a) is tempered by the requirement that any amount claimed as a business expense must be substantiated, and taxpayers are required to maintain records sufficient therefor. Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975),

Additionally, some of the other documentation presented appeared to be for personal expenses, which are not deductible under section 262.5 Petitioners, therefore, have not established their entitlement to a deduction for supplies in excess of the amounts conceded by respondent.

262; Commissioner v. Flowers, supra at 474. In the event that a taxpayer does not have a fixed personal residence, the taxpayer is considered an “itinerant”, and the taxpayer’s tax home follows the taxpayer to each place of employment. See Michel v. Commissioner, 629 F.2d 1071, 1073-1074 (5th Cir. 1980), affg. T.C. Memo. 1977-345. A. Temporary

The taxpayer must show, Rule 142(a), that any claimed business expenses were incurred primarily for business rather than social reasons, see Walliser v. Commissioner, 72 T.C. 433, 437 (1979). To show that the expense was not for personal reasons, the taxpayer must show that the expense was incurred primarily to benefit his business, and t

Section 262, in contrast, precludes deduction of “personal, living, or family expenses.” The breadth of section 162(a) is tempered by the requirement that any amount claimed as a business expense must be substantiated, and taxpayers are required to maintain records sufficient therefor. Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975),

Substantiation Requirement A taxpayer must substantiate amounts claimed as deductions by maintaining the records necessary to establish that he or she 6Sec. 7491 is effective with respect to court proceedings arising in connection with examinations by the Commissioner commencing after July 22, 1998, the date of enactment of the Internal R

838, 839 (1973) ("We cannot read section 262 of the Internal Revenue Code as excluding such expense from 'personal' expenses"); Commissioner v.

- 7 - Section 213 carves out of the rule of section 262 a limited exception for medical expenses, providing as follows in relevant part: SEC.

- 12 - The Court sustains respondent's determination to the extent that petitioners may not deduct expenses allocable to their rental and personal use of the Truckee property. Reviewed and adopted as the report of the Small Tax Case Division. Decision will be entered under Rule 155.

$8,652, and $5,035, respectively, for 1999, 2000, and 2001. In the notice of deficiency, respondent disallowed all the claimed deductions on the ground that the expenses were commuting expenses and, therefore, were personal and not deductible under section 262. Respondent has not questioned or challenged the substantiation of the amounts petitioner claimed. In addition to his work as a boilermaker, petitioner was also a professional bodybuilder. In this activity, petitioner lifted weights, pose

Section 262 for personal living and family expenses, this is for businesses and corporations. * * * * * * * Anyway, I mean we’ve read the Supreme Court decisions and clearly it says that in order to have taxable income you have to receive undeniable net income, accession to wealth. That’s net income, it’s not gross income. It has to be clearly real

The primary motive of acquiring a family residence brings the purchase within the ambit of section 262, which provides that “no deduction shall be allowed for personal, living, or family expenses.” The regulations under section 165 provide: “A loss sustained on the sale of residential property purchased or constructed by the taxpayer for use as his personal residence and so used by him up to the time of the sale is not deductible under s

For instance, petitioner admitted that he did not use an attorney in the day-to-day operations of the bed and breakfast. Petitioner claimed that there were a “lot of other issues that came up where my ex-wife was attacking my use of the property as a bed and breakfast.” As stated, petitioner had purchased his former wife’s interest in the

Section 274(n)(1) limits a deduction for meals and entertainment to 50 percent of the expenses incurred. The percentage limitation may be increased in special circumstances. Sec. 274(n)(3). Petitioner did not take into account the section 274(n) limitation with respect to his claimed meals expense deduction of $10,255. Petitioner incurred

262; see Baker v. Commissioner, 51 T.C. 243, 248 (1968). The regulations, however, provide that the expenses are deductible if the education “Meets the express requirements of the individual’s employer, or the requirements of applicable law or regulations, imposed as a condition to the retention by the individual of an established employment r

nses incurred in any amounts greater than the amounts allowed by respondent in the notices of deficiency, with one exception discussed below. Some of the evidence presented appeared to be for personal expenses, - 12 - which are not deductible under section 262. As to the documentation that represented business expenses, petitioner failed to establish that the receipts that related to deductible expenses were not already allowed in the notices of deficiency by respondent. Consequently, for the ye

262; see Baker v. Commissioner, 51 T.C. 243, 248 (1968). The regulations, however, provide that the expenses are deductible if the education “Meets the express requirements of the individual’s employer, or the requirements of applicable law or regulations, imposed as a condition to the retention by the individual of an established employment r

838, 839 (1973) ("We cannot read section 262 of the Internal Revenue Code as excluding such expenses from 'personal' - 13 - expenses"); Commissioner v.

262; Commissioner v. Flowers, 326 U.S. 465 (1946). Petitioners presented no argument and cited no authority to the contrary. Petitioners contended at trial that they had incurred expenses for tax preparation and for special clothing required by Mrs. Parrett in her employment. The Court holds that, to the extent any expenses of this nature were

at 333, we pointed out that “the roots of that section [936] are found in section 262 of the Revenue Act of 1921”, and we briefly summarized the purpose and history of the statute in accordance with our analyses in G.D.

Section 262 prohibits deductions for personal, living, or family expenses. a. Attendant care provider expense Mr. Emanuel was injured in 1989 while employed by Eastern Airlines and at the time of the trial was still unable to work. Because of the injuries, Mr. Emanuel was awarded worker’s compensation benefits. Mr. Emanuel is unable to walk a dista

Section 262 prohibits deductions for personal, living, or family expenses. a. Attendant care provider expense Mr. Emanuel was injured in 1989 while employed by Eastern Airlines and at the time of the trial was still unable to work. Because of the injuries, Mr. Emanuel was awarded worker’s compensation benefits. Mr. Emanuel is unable to walk a dista

The taxpayer must show that any claimed business expenses were incurred primarily for business rather than personal reasons. - 8 - See Rule 142(a).1 To show that an expense was not personal, the taxpayer must show that the expense was incurred primarily to benefit his business, and there must have been a proximate relationship between th

for charity were for contributions he made to his church, and the legal and professional expenses were incurred in connection with divorce and custody proceedings against his former wife. These are all personal expenses that are not deductible under section 262. The Court, however, is satisfied from the record that petitioner incurred expenses for union dues and uniforms. Pursuant to Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), the Court allows petitioner a deduction of $75 for each year f

Section 262 precludes deductions for personal living expenses. Petitioner testified at trial that during 1997 he rented the Hallwood residence for the entire year to a tenant for $300 per month. Petitioner contends that his personal use of the Hallwood residence was limited to his own bedroom. Yet he used the residence, except for the tenant’s room

Section 262, however, expressly provides that no deduction is allowable for personal, living, or family expenses.

pecified, this Court has held that expenses for clothing used by an employee at work that is suitable for ordinary wear, including expenses for the purchasing and laundering of such clothing, constitute personal expenses and are not deductible under section 262. Barone v. Commissioner, 85 T.C. 462, 469 (1985), affd. without published opinion 807 F.2d 177 (9th Cir. 1986). On the other hand, shoes or clothing worn by an employee that are not adaptable to personal use and are necessary for the empl

at 333, we pointed out that “the roots of that section [936] are found in section 262 of the Revenue Act of 1921”, and we briefly summarized the purpose and history of the statute in accordance with our analyses in G.D.

xpenses are deductible, if at all, under the “ordinary and necessary expenses” provision of section 162(a). Sanders v. Commissioner, supra. Generally, the expenses of daily commuting are not deductible because they constitute personal expenses under section 262. Fausner v. Commissioner, 413 U.S. 838 (1973); sec. 1.262-1(b)(5), Income Tax Regs. An exception exists for commuting expenses to some jobs that are temporary, as opposed to indefinite, in duration.2 See, e.g., Frederick v. United States,

To qualify under section 162(a)(2), the expenses must be (1) reasonable and necessary, (2) incurred while “away from home”, and (3) incurred in pursuit of a trade or business. Commissioner v. Flowers, 326 U.S. 465, 470 (1946). In the context of section 162(a)(2), the word “home” does not have its ordinary and usual meaning. Rather, the wo

1995 in connection with petitioner’s divorce. Legal fees incurred in connection with petitioner’s divorce generally would not be deductible. United States v. Patrick, 372 U.S. 53 (1963); - 35 - United States v. Gilmore, 372 U.S. 39 (1963); see also sec. 262 (disallowing deductions for personal, living, and family expenses). Because petitioner’s divorce was concluded before 1992, we infer that this $65,685.34 was owing in 1992 as well and deny petitioner a deduction for this amount. Except for th

at 333, we pointed out that “the roots of that section [936] are found in section 262 of the Revenue Act of 1921”, and we briefly summarized the purpose and history of the statute in accordance with our analyses in G.D.

a business called Conversation With Connection. It will be when I retire from the school district.” Petitioner is not retired from the school district. Petitioner deducted on her Schedule C expenses which were personal expenses not deductible under section 262. She deducted moneys paid to a handyman to paint her house. She deducted moneys paid for a carpet delivered to her house. She deducted a gift (a membership in the Screen Actor’s Guild) to a friend’s daughter. She deducted payments to a pe

or improves the skills required by the individual in the individual’s trade or business, because those expenditures “are personal expenditures or constitute an inseparable aggregate of personal and capital expenditures”. Sec. 1.162-5(b)(1); see also sec. 262. Petitioner points to the stipulation that during 1995 he was self-employed as a golf instructor. According to petitioner, the course of study he pursued at the academy did not lead to qualifying him in a new trade or business, but it did ma

Petitioner stated that he looked for jobs in Jackson and Gulfport, Mississippi, and that the expenses he claimed were for mileage. - 6 - He also visited his father on these trips. Petitioner provided no record of his mileage and failed to meet the strict substantiation requirements of section 274(d). Accordingly, we find that petitioner

Unless expressly provided for, section 262 prohibits deductions for personal, living, or family expenses.

Even if this activity were a trade or business, the history of losses belies any notion that it was operated for profit. While a person may start out with a bona fide expectation of profit, even if it is unreasonable, there is a time when, in light of the recurring losses, the bona fides of that expectation must cease. See Filios v. Commi

* * * As to Congress’ intent for section 936, the roots of that section are found in section 262 of the Revenue Act of 1921, ch.

The car expense deduction is allowable only if petitioner maintained substantiating records. See secs. 274(d), 280F. Assuming, without finding, that petitioner’s records otherwise satisfy the requirements of section 274(d) and the regulations promulgated thereunder, we reject them as unreliable. Petitioner’s records indicate that he drove

Many of the items in dispute are inherently personal, and we cannot conclude that they should be deductible on the basis of testimony that is neither corroborated nor credible. Vague and Unpersuasive Testimony The testimony that petitioner and his witnesses offered in support of the disputed deductions was fatally vague and unpersuasive.

Section 162(a), however, allows a taxpayer to deduct traveling expenses incurred while away from home. A taxpayer may deduct a traveling expense under section 162(a)(2) if the following three conditions are satisfied: (1) The expense must be reasonable (e.g., lodging, transportation, fares, and food); (2) it must be incurred while away fr

Consequently, where an expenditure is primarily associated with business purposes, and where personal benefit is distinctly secondary and incidental, the expenditure may be deducted under section 162. See International Artists, Ltd. v. Commissioner, 55 T.C. 94, 104 (1970). Conversely, if an expenditure is primarily motivated by personal c

have any books or records. She did not have a diary, a log, or trip sheets relating to her travel. At trial, petitioner had little evidence to support many of her claimed deductions. Many expenses appeared to be personal expenses nondeductible under section 262. Petitioner provided some substantiation for business expense deductions and respondent conceded that she was entitled to most of those deductions. Petitioner was asked whether she could provide for MBS: “Any kind of books or records that

he apple and timber farm as an "activity" is generous. At the most, petitioner has an investment. We also note that petitioner deducted personal expenses for telephone, painting, and cleaning services on the Schedule F. These are nondeductible under section 262. When taken in conjunction, all of these factors we have reviewed establish that petitioner does not have a profit objective for the apple and timber activity. Petitioner did not - 16 - operate the farm with an intent to make a profit. Ac

However, section 162(a) allows a deduction for the ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business. Specifically, section 162(a) allows a deduction for traveling expenses, including amounts for meals and lodging, if the expenses are: (1) Ordinary and necessary; (2) incurred while

The origin and character of the claim in litigation is determinative of whether litigation expenses are personal or deductible. United States v. Gilmore, 372 U.S. 39 (1963). In particular we look to whether the claim arose in connection with a profit-seeking activity. Id. at 48. - 5 - Petitioners claimed $39,274 of legal, professional, a

Thus, 2 Unless otherwise indicated, section references are to the Internal Revenue Code in effect for the year in issue. - 5 - if an expenditure is motivated primarily by personal considerations, no deduction generally will be allowed. See Henry v. Commissioner, 36 T.C. 879, 884 (1961). An individual may engage in the trade or business o

Under section 262, personal living expenses are generally nondeductible. A taxpayer may deduct travel expenses, including amounts for meals and lodging, incurred “while away from home in the pursuit of a trade or business”. Sec. 162(a)(2); see Commissioner v. Flowers, supra at 470. For purposes of section 162(a)(2), a taxpayer is not “away from home” unl

mpensation to United’s employees. Although not in effect for the years in issue, sec. 1.62 — 2(j), Example (2), Income Tax Begs., confirms this as the proper treatment. In his dissenting opinion, see infra p. 29 note 3, Judge Swift erroneously cites sec. 262 and United States v. Correll, supra, to support his belief that United’s allowance for its employees’ day trip meal expenses is nondeductible because such payments were for personal living expenses of United’s employees. However, sec. 262 on

Respondent concludes from this that section 262 prohibits deductions for petitioner’s Payments.

Nor does section 162 allow a taxpayer to deduct travel expenses absent either compliance with the substantiation requirements of section - 12 - 274(d) or the fulfillment of criteria set forth by the Commissioner as to expenditures less than a stated amount (de minimis expenses). See sec. 274(d); see also sec. 1.274-5T(j), Temporary Incom

A taxpayer is required to maintain records sufficient to establish the amount of his income and deductions. See sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs. In the event that a taxpayer establishes that a deductible expense has been paid but is unable to substantiate the precise amount, we generally may estimate the amount of the de

Section 262, however, provides that no deduction is allowed for personal, living, or family expenses. In general, the cost of daily commuting to and from work is a nondeductible personal expense. See Commissioner v. Flowers, 326 U.S. 465, 473-474 (1946); sec. 1.162-2(e), Income Tax Regs. Respondent’s position in the case at hand is consistent with

The taxpayer must show that any claimed business expenses were incurred primarily for business rather than social reasons. See Rule 142(a). To show that an expense was not personal, the taxpayer must show that the expense was incurred primarily to benefit his business, and there must have been a proximate relationship between the claimed

Section 262, however, precludes deductions for personal, living, or family expenses not otherwise expressly allowed. For example, commuting expenses between a taxpayer’s home and place of business are personal expenses and thus not deductible. See Commissioner v. Flowers, 326 U.S. 465, 469-470 (1946); Sanders v. Commissioner, 439 F.2d 296, 297 (9th

Commissioner, 413 U.S. 838 (1973); Commissioner v. Flowers, 326 U.S. 465 (1946); - 15 - Feistman v. Commissioner, 63 T.C. 129 (1974); Sullivan v. Commissioner, 1 B.T.A. 93 (1924). This Court has previously held that a taxpayer's cost of transportation between his residence and local job sites may be deductible if his residence

262; Fausner v. Commissioner, 413 U.S. 838, 839 (1973); Commissioner v. Flowers, 326 U.S. 465, 473 (1946). A taxpayer whose primary business activity is not located at his or her residence may not deduct expenses of traveling between the residence and the business merely because the taxpayer conducts a secondary business at home. See Mazzotta

he lawsuits stemming from his legal practice. Ordinary and necessary expenses paid or incurred during the year in carrying on a trade or business are deductible under section 162(a). However, personal, living, or family expenses are disallowed under section 262. Whether an expense is a deductible trade or business expense, or a nondeductible personal, living, or family expense, depends on the origin of the claims giving rise to the fees. See United States v. Gilmore, 372 U.S. 39 (1963). 13(...co

262; Donnelly v. Commissioner, 28 T.C. 1278, 1280 (1957), affd. 262 F.2d 411 (2d Cir. 1959). Also included on petitioner’s summary of his advertising expenses were the following items, which were paid by check: Date Payee Amount 03/01/94 CFLL $50.00 03/18/94 CFLL 14.00 04/10/94 Jewish Federation 50.00 05/09/94 Or Co Register 32.09 06/08/94 Jew

Nor does section 162 allow a taxpayer to deduct travel expenses absent either compliance with the substantiation requirements of section 274(d) or the fulfillment of criteria set forth by the Commissioner as to expenditures less than a stated amount (de minimis expenses). See sec. 274(d); see also sec. 1.274-5T(j), Temporary Income Tax Re

Commissioner, 413 U.S. 838 (1973); Commissioner v. Flowers, 326 U.S. 465 (1946); Feistman v. Commissioner, 63 T.C. 129 (1974); Sullivan v. Commissioner, 1 B.T.A. 93 (1924). This Court has previously held that "a taxpayer's cost of transportation between his residence and local job sites may be deductible if his residence serves

Taxpayers are required to maintain adequate records sufficient to enable the Commissioner to determine the taxpayer's correct tax liability. See sec. 6001; see also Meneguzzo v. Commissioner, 43 T.C. 824, 831-832 (1965); sec. 1.6001-1(a), Income Tax Regs. 5 Generally, if a claimed business expense is deductible, but the taxpayer is unabl

In addition, section 262 denies a deduction for any personal, living, or family expenses.

Petitioner deducted approximately $15,529 for his legal education expenses on his Schedules C for tax years 1994 and 1995. Included in this amount is the cost of travel to California for the taking of law school examinations, examination fees, tuition, books, lodging, and meals. Petitioner combined some of these expenses with other expens

The cost of acquisition and maintenance of uniforms is deductible generally if (1) the clothing is of a type specifically required as a condition of employment, (2) it is not adaptable to general usage, and (3) it is not so worn. See Yeomans v. Commissioner, 30 T.C. 757, 767 (1958). While we do not doubt that nurse's uniforms and shoes ma

A taxpayer must substantiate any deductions claimed and bear the burden of substantiation. See Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976). Taxpayers are required to maintain adequate records sufficient to enable the Commissioner to determine the taxpayer's correct tax liability. See M

A taxpayer may deduct an expense, however, to the extent that it is: (1) A reasonable traveling expense (e.g., lodging, transportation, fares, and food), (2) incurred while away from home, and (3) an ordinary and necessary expense incurred in pursuit of a trade or business. See sec. 162(a)(2); Commissioner v. Flowers, 326 U.S. 465, 470 (1

Whether an ordinary and necessary litigation expense is deductible under section 162(a) or section 212 depends on the origin and character of the claim for which the expense was incurred and whether the claim bears a sufficient nexus to the taxpayer's business or income-producing activities. See Woodward v. Commissioner, 397 U.S. 572 (197

262; Fausner v. Commissioner, 413 U.S. 838 (1973); Commissioner v. Flowers, 326 U.S. 465 (1946); Feistman v. Commissioner, 63 T.C. 129 (1974); Sullivan v. Commissioner, 1 B.T.A. 93 (1924). This Court has previously held that “a taxpayer’s cost of transportation between his residence and local job sites may be deductible if his residence serves

Petitioner's educational expenses were for various legal seminars and training courses. This is the type of education designed to maintain or improve petitioner's skills as a public defender. Petitioner, therefore, is entitled to deduct his educational expenditures to the extent he could not have been reimbursed--$166.75. The county also

Commissioner, 35 T.C. 221 (1960), affd. 298 F.2d 583 (2d Cir. 1962); Doerries v. Commissioner, T.C. Memo. 1991-396; sec. 1.262- 1(b)(4), Income Tax Regs. 5Sec. 2040 of the Internal Revenue Code of 1954 provided: SEC. 2040. JOINT INTERESTS. The value of the gross estate shall include the value of all property (except real propert

Medical care is a personal - 9 - expense, and section 213 is an exception to the general rule of section 262 that personal, living, and family expenses are not deductible.

Generally, legal fees associated with a divorce proceeding are nondeductible personal expenses. Melat v. Commissioner, T.C. Memo. 1993-247; sec. 1.262-1(b)(7), Income Tax Regs. 4 We note that petitioner reported 100 percent of his C.P.A. business income on the return. Petitioner did not raise this issue in his petition or at trial; theref

However, section 262 generally precludes deductions for personal expenses.

Section 274(d) imposes stringent substantiation requirements for the deduction of travel expenses (including meals and lodging while away from home), entertainment expenses, gift expenses, and expenses of certain listed property defined under section 280F(d)(4) such as an automobile. Taxpayers must substantiate by adequate records certain

- 6 - Taxpayers may deduct traveling expenses incurred while away from home. Sec. 162(a)(2). Traveling expenses include amounts spent for meals and lodging while away from home. Sec. 162(a)(2). A taxpayer may deduct traveling expenses under section 162(a)(2) if they satisfy the following three conditions: (1) The expenses must be reasona

This provision is an exception to the general rule under section 262 which states that personal, living, or family expenses are not deductible.

Commissioner, 35 T.C. 221 (1960), affd. 298 F.2d 583 (2d Cir. 1962); Doerries v. Commissioner, T.C. Memo. 1991-396; sec. 1.262 — 1(b)(4), Income Tax Regs. Sec. 2040 of the Internal Revenue Code of 1954 provided: SEC. 2040. JOINT INTERESTS. The value of the gross estate shall include the value of all property (except real propert

Section 262 specifically disallows the deduction of personal living expenses. However, section 162(a)(2) permits a deduction for traveling expenses (including meals and lodging) incurred while away from home in the pursuit of a trade or business. To qualify for this deduction, three conditions must be satisfied: (1) The expense must be a reasonable

Petitioner has not established through his testimony or by other evidence that the purchase and use of the comic books maintained or improved his skills required as a high school teacher. Nor is there any evidence that the expenses were incurred to meet the express requirements of the school. Thus, the costs of the comic books are not ded

mporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985). Here, that was not done. We are mindful that the individual petitioners concede that Mohan Roy occasionally used the Rolls Royce to commute to work, a nondeductible personal expense under section 262. See Fausner v. Commissioner, 413 U.S. 838 (1973); Commissioner v. Flowers, 326 U.S. 465 (1946). We are also mindful that the insurance policy renewal notice indicates that the Rolls Royce is for "pleasure use or under 30 miles weekly to a

Lear Jet Petitioners have not satisfied their burden of proving that the large expenses of operating the Lear jet qualify as ordinary and necessary business expenses of petitioners' timber farm, of petitioner’s consulting business, or of petitioner's computer and real estate rental businesses. The expenses of purchasing, maintaining, and

mporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985). Here, that was not done. We are mindful that the individual petitioners concede that Mohan Roy occasionally used the Rolls Royce to commute to work, a nondeductible personal expense under section 262. See Fausner v. Commissioner, 413 U.S. 838 (1973); Commissioner v. Flowers, 326 U.S. 465 (1946). We are also mindful that the insurance policy renewal notice indicates that the Rolls Royce is for "pleasure use or under 30 miles weekly to a

uctions claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Hradesky v. Commissioner, 65 T.C. 87 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976) In general, deductions for personal living expenses are disallowed under section 262. Section 162(a)(2) allows deductions for traveling expenses if the expenses are: (1) ordinary and necessary; (2) incurred while away from home; and (3) incurred in pursuit of a trade or business. Bochner v. Commissioner, 67 T.C. 824, 827 (

Respondent also argues that petitioners may not deduct attorney's fees related to the adversary proceeding because they involved a challenge to petitioner's discharge for alleged prepetition fraudulent conveyances. See In re Collins, 26 F.3d 116 (11th Cir. 1994). In Collins, the U.S. Court of Appeals for the Eleventh Circuit held that a d

Commissioner, 35 T.C. 221 (1960), affd. 298 - 6 - F.2d 583 (2d Cir. 1962); Doerries v. Commissioner, T.C. Memo. 1991- 396; sec. 1.262-1(b)(4), Income Tax Regs. The burden of proving that petitioner is entitled to deduct the loss rests with petitioner. See Welch v. Helvering, 290 U.S. 111 (1933). While we accept petitioner's tes

Section 262 disallows any deduction for personal, living, or family expenses. Examination of their Schedules C for both years shows that they were not entitled to claim any deductions "otherwise allowable" pursuant to section 183(b)(1). - 11 - Moreover, because there was no gross income in either 1992 or 1993, petitioners were not entitled to any

er must prove a proximate connection between the expenditure and the conduct of a profit- seeking activity. Larrabee v. Commissioner, 33 T.C. 838, 841 (1960). In general, an expenditure made primarily to secure a personal benefit is not deductible, sec. 262; whereas, a similar expenditure may be deductible if made primarily for a profit- - 8 - seeking purpose. See Interstate Drop Forge Co. v. Commissioner, 326 F.2d 743, 747 (7th Cir. 1964), affg. T.C. Memo. 1963-149. Respondent argues that many

Section 936 has its genesis in section 262 of the Revenue Act of 1921, ch.

With respect to petitioner's complaints that he was unfairly selected for examination, we note that the Commissioner, in an attempt to ascertain the correctness of a taxpayer's return, may - 5 - examine any books, papers, records, or other data which may be relevant to such an inquiry. Sec. 7602(a). Petitioner cites no specific authority

sona- ble allowance for the exhaustion, wear and tear of property used in a trade or business or for the production of income. No depreciation deduction is allowed for property that is used solely for pleasure. Sec. 1.167(a)-2, Income Tax Regs.; see sec. 262. Section 280A(a) generally disallows a deduction, otherwise allowable under the Code, with respect to the use of a dwelling unit, including a "mobile home * * * or similar property", if the taxpayer's personal use of the unit during the year

ont, 308 U.S. 488 (1940); J. Cordon Turnbull, Inc. v. Commissioner, 41 T.C. 358, 378 (1963), affd. 373 F.2d 87 (5th Cir. 1967); Royal Cotton Mill Co. v. Commissioner, 29 T.C. 761, 788 (1958), and may not deduct expenses which are personal in nature, sec. 262; Johnson v. Commissioner, 72 T.C. 340, 348 (1979). An exception is found where the taxpayer pays for legal services rendered to another person, in order to protect or promote the taxpayer’s business interests. Commissioner v. Tellier, 383 U.

Commissioner, 72 T.C. 340, 348 (1979). An expense must be directly connected with, or proximately result from, the business of the taxpayer. Kornhauser v. United States 276 U.S. 145, 153 (1928); see also Deputy v. du Pont, 308 U.S. 488, 494 (1940). Where expenses of litigation are involved, the origin of the claim which gave ri

Moreover, section 262 generally precludes a taxpayer from deducting personal, living, or family expenses.

Section 262 denies a deduction for any personal, living, or family expenses. The distinction between deductible trade or business expenses on the one hand, and nondeductible personal expenses on the other, is based on a weighing and balancing of the facts and circumstances of each case. R.R. Hensler, Inc. v. Commissioner, 73 T.C. 168, 176-177 (1979

and the expenses of Sale by Owner and Far Western. (a) Respondent contended that petitioner did not establish that prior year losses were based on deductible business expenses under section 162, rather than on nondeductible personal expenses under section 262. Moreover, petitioner's own accountant could not vouch for the accuracy of NII's extant books and records, and virtually no other testimony concerned their accuracy. The fact that respondent prevailed on this issue at trial confirms that h

Petitioner contends that $1,000 was incurred in connection with a suit concerning his Federal income taxes. Whether a legal expense is deductible under section 162 or 212 depends on the origin and nature of the expense. United States v. Gilmore, 372 U.S. 39, 42 (1963). It appears from an order of the Circuit Court of Tuscaloosa County, Al

participated in any activity related to Mr. Zeidler's trade or business. Petitioners failed to show any business purpose for Mrs. Zeidler on the Birmingham, Alabama, trip. The $909 expense is considered a personal expense and is not deductible under section 262. Respondent, therefore, is sustained on this issue. Petitioners' 1990 income tax return was signed on November 4, 1991, and was received by the IRS on November 8, 1991. Petitioners had obtained an automatic extension that extended the fil

Petitioners presented no evidence that respondent's calculation of the portion of the utilities attributable to personal use was incorrect. Therefore, respondent is sustained as to this adjustment. (2) Insurance According to petitioners' Federal income tax return, petitioner used a van 100 percent for business use and a vehicle 56 percent

Section 262 denies a deduction for any personal, living, or family expenses. With respect to deductions under section 162, the taxpayer bears the burden of proving that an expense was incurred for business, rather than personal reasons. Walliser v. Commissioner, 72 T.C. 433, 437 (1979). Specifically, the taxpayer must show that the expense was incu

Section 262 precludes a taxpayer from deducting personal, living, or family expenses that are not incurred in the conduct of a trade or business or for the production of income. Based upon the record in this case, we find that petitioner lacked the requisite profit objective in carrying on his business activities. Petitioner claims to have operated

Schedule C adjustments, which turned the reported business loss into a business profit, respondent determined that petitioner was liable for self-employment income tax. As a general rule, deductions for personal living expenses are disallowed under section 262. Commissioner v. Flowers, 326 U.S. 465, 470 (1946). Section 162(a), however, allows taxpayers to deduct "the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including * * * tr

- 6 - affection, respect, admiration, charity or like impulses'", or from a "'detached and disinterested generosity'," as a gift. Commissioner v. Duberstein, 363 U.S. 278, 285 (1960) (quoting Robertson v. United States, 343 U.S. 711, 714 (1952) and Commissioner v. Lo Bue, 351 U.S. 243, 246 (1956)); Osborne v. Commissioner, T.C. Memo. 199

nnings on the "Wheel of Fortune" game show.3 In respondent's view, the $1,820 in expenses that petitioner purportedly incurred in attending and participating in the game show are properly characterized either as nondeductible personal expenses under section 262 or as miscellaneous itemized deductions that may only be deducted subject to the 2-percent floor prescribed by section 67(b).4 2 It would appear that the expenses in issue include a charge of $58.71 for the cost of printing 200 postcards

Deductions are a matter of legislative grace, and taxpayers bear the burden of proving that they are entitled to any deductions claimed on their returns. Rule 142(a); Deputy v. DuPont, 308 U.S. 488, 493 (1940); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); Welch v. Helvering, 290 U.S. 111, 115 (1933). - 33 - Petitioners cl

A practice of claiming personal expenses as business expenses has been held to justify the imposition of the fraud addition to tax. See, e.g., Hicks Co. v. Commissioner, 56 T.C. 982, 1030 (1971), affd. 470 F.2d 87 (1st Cir. 1972); Ramsey v. Commissioner, T.C. Memo. 1984-251. By attempting to convert nondeductible personal expenses into de