§280 — Repealed. Pub. L. 99–514, title VIII, § 803(b)(2)(A), Oct. 22, 1986, 100 Stat. 2355]

(CCH) 1533 (1981), superseded by statute, § 280E, where we allowed a cocaine dealer to deduct the ordinary and necessary expenses of his illicit trade.

485, 492-493 (2017), supplementing and overruling in part 147 T.C.

485, 492-493 (2017), supplementing and overruling in part 147 T.C.

Held, further, P has provided no compelling argument to overrule our precedent holding that I.R.C.

he taxpayer for the administrative or management activities ofany trade or business ofthe taxpayer ifthere is no other fixed location ofsuch trade or business where the taxpayer conducts substantial administrative or management activities ofsuch trade or business." Congress added this definition to overrule the rigid standard established in Soliman." Section 280A(c)(2) allows a deduction for space allocated in the residence and used on a regular basis as a storage unit for inventory or product s

90-23, supra, was superseded by- Rev.

Respondent's objections, based on the difference between the original Schedule C and the-reduced claim ;are .not well founded, and they are overruled .

The notice of determination that she issued was, however, quite unlike the first two that we analyze in the reviewed opinion that we issue today. There are blatant mistakes in it, as she incorrectly stated that Mission’s attorney had asked for an installment agreement, and not just an OIC or currently-not-collectible status. But it’s the reasoning used that separates this notice from the others. She first determined that Mission could not challenge its tax liability for 2021 because section 280E

Home Office Deduction Generally, section 280A disallows deductions related to a dwelling used by taxpayers as a residence. The section 280A disallowance applies in the case of a taxpayer who is an individual or an S corporation. § 280A(a). Because petitioner is a C corporation, section 280A is inapplicable.

These assets, however, are distinguishable from the FMC airplane because FMC’s specifically assigned function for its airplane was to allow Dr.

Therefore, SJW concludes, the statutory predicate is not satisfied and section 280E does not apply.

Therefore, SJW concludes, the statutory predicate is not satisfied and section 280E does not apply.

Therefore, SJW concludes, the statutory predicate is not satisfied and section 280E does not apply.

Section 280F(d)(4) defines the term "listed property" to include, among other things, passenger automobiles and "any other property used as a means oftransportation". Sec. 280F(d)(4)(A)(i) and (ii). By its terms, however, section 274(d) does not apply to any "qualified nonpersonal use vehicle", which section 274(i) defines to "mean[] any vehicle which, by reason of its nature, is not likely to be used more than a de minimis amount for personal -35- [*35] purposes." The regulations list as examp

We have ruled that section 280A does not apply to the Idaho property, and we have allowed deductions for some expenses but not others that will affect the size oflosses carried forward to 2012 pursuant to section 469.

280F(d)(4)(B). A home office qualifies as a regular business establishment "if(and only if) the requirements ofsection 280A(c)(1) are met" with respect to that space. R Since petitioners have not shown that they meet the requirements ofsec. 280A(c)(1) for the deduction ofhome office expenses, the exception set forth in sec. 280F(d)(4)(B) is inapplicable here.

As an initial matter we note that section 280A, which allows a deduction for home office expenses, is inapplicable to C corporations such as petitioner.

Section 280A(a) generally prohibits deductions for otherwise allowable expenses with respect to the use ofan individual taxpayer's home. This prohibition, however, does not apply to space allocable within a "dwelling unit which is used on a regular basis as a storage unit for the inventory or product samples ofthe taxpayerheld for use in the taxpayer's trade or business ofselling products at retail or wholesale, but only ifthe dwelling unit is the sole fixed location ofsuch

Print 1976) ("[T]he provisions of* * * [section 280A] apply to individuals, trusts, estates, partnerships, and electing small business corporations. This provision does not apply to a corporation (other than an electing small business corporation).").

Print 1976) ("[T]he provisions of* * * [section 280A] apply to individuals, trusts, estates, partnerships, and electing small business corporations. This provision does not apply to a corporation (other than an electing small business corporation).").

280A(f)(1)(B) does not apply for these days on which petitioner was at the Indiana propertybecause the property was not being used exclusively as an inn.

280A(d). Thus, they may deduct expenses to offset only the reported rental income and may deduct any additional mortgage interest or real estate taxes allocable to their personal use. S_e_e sec. 280A(b). Petitioners' briefsimply ignores section 280A. Petitioner claims to be a real estate professional and asserted at trial that section 280A does not apply to him.

280A(d). Thus, they may deduct expenses to offset only the reported rental income and may deduct any additional mortgage interest or real estate taxes allocable to their personal use. S_e_e sec. 280A(b). Petitioners' briefsimply ignores section 280A. Petitioner claims to be a real estate professional and asserted at trial that section 280A does not apply to him.

Finally, he has not provided a basis to distinguish reimbursed expenses from unreimbursed expenses. IV. Business Use ofHome Petitioner claimed and respondent disallowed deductions of$7,535 and $7,686 for business use ofhis home for 2008 and 2009, respectively. Section 280A(a) generally provides that no deduction shall be allowed for a home office, but subsection (c)(1)(A) allows an exception for the portion ofa dwelling unit exclusively used on a regularly basis as the principal place of busines

Petitioners took deductions contrary to the plain language ofthe statute, and they have not alleged a misunderstanding ofsection 280A.5 See sec. 1.6664-4(b)(1), Income Tax Regs. (stating that "an honest misunderstanding offact or law" may 5Both at trial and in a pretrial memorandum, petitioners' counsel insisted that sec. 280A does not apply to motor homes, which suggests a misunderstanding ofourprior caselaw on that very subject.

Home Office Expenses Generally, section 280A(a) prohibits individuals from deducting expenses for the use ofa dwelling unit that is the taxpayer's residence. But the prohibition on deductions does not apply to an item ofexpense allocable to a portion ofthe dwelling that is used "exclusively" and "on a regular basis" as the principal place ofbusiness ofthe taxpayer's trade or business.

In short, section 280A is simply inapposite given the actual use ofthe Solitude Way property.

With regard to deductions for their motor home, we do not reach the question ofwhether they are adequately substantiated becLuse even ifthey were, they are still disallowed under section 280A,? discussed above. Section 280A does not apply to the other two vehicles, so we address substantiation for them.

Unlike some other components ofthe general business credit, there is nothing in section 45A which makes the determination ofthe amount ofthe credit permissive." Thus, contrary to Uniband's assertions, the determination ofthe credit amount under section 45A--and consequently, the deduction limitation under section 280C-- occurs independently ofwhether the general business credit is currently fully allowed under section 38(a) or instead is limited by section 38(c)(1).

Section 280A provides that, generally, no deduction is allowed with respect to the personal residence ofa taxpayer. Sam Goldberger, Inc. v. Commissioner, 88 T.C. 1532, 1556 (1987). However, under section 280A(c)(1)(A), this prohibition does not apply to expenses allocable to a portion ofthe taxpayer's - 45 - [*45] residence that is used exclusively and on a regular basis as the principal place ofbusiness for any trade or business ofthe taxpayer.

274(d)(4), 280F(d)(4)(A)(v).4 To deduct cell phone expenses a taxpayer must substantiate the amount ofbusiness use and the total use for the cell phone. See Trupp v. Commissioner, T.C. Memo. 2012-108, slip op. at 14; 26 C.F.R. sec. 274-5T(b)(6)(i)(B) (2010). The expenses ofinternet service are not subject to strict substantiation requirements. See Bogue v. Commissioner, T.C. Memo. 2011-164, slip op. at 41 (strict substantiation does not apply to utility expenses, such as home internet service).

280A(f)(3) (where section 280A(a) applies with respect to the use ofa dwelling unit for any year, section 183 generally does not apply to that unit for that year); sec.

We disagree that section 280E is that narrow and does not apply here.

280A imposes additional rules on individuals and S corporations with respect to home office deductions. Petitioner and Vanini are both C corporations; therefore sec. 280A is inapplicable in the cases at hand.

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.

Loss From Business,-is not limited by section 280F(a) . See supra note 4 . But the "catch all" provision-of sectio n 280F(d) (4) (A) (ii) (relating to any. other- property used as a means of transportation) nevertheless applies ; and because-the ti exception in section 280F(d)(4)(C)6 does not apply, the Ford F- 250 is listed property .

Tax Year 1999 Section 280A, Disallowance of Certain Expenses in Connection With Business Use of Home, Rental of Vacation Homes, etc., limits otherwise allowable deductions by individuals with respect to a dwelling unit that is used by the taxpayer during the year as a "residence". The provision does not apply to deductions for amounts allowable without regard to the taxpayer's income producing activity, such as interest and taxes.

- 9 - Section 280A(c) provides exceptions to the general rule of section 280A(a). Thus, as relevant herein, section 280A(a) does not apply to any item to the extent that such item is allocable to a portion of the dwelling unit that is exclusively used on a regular basis as the principal place of business for any trade or business of the taxpayer.

Section 280A generally prohibits deduction of otherwise allowable expenses with respect to the use of an individual taxpayer's home. As an exception, this restriction does not apply to any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis as the principal place of business for any trade or business of the taxpayer.

Section 280A generally prohibits deductions of otherwise allowable expenses with respect to the use of an individual taxpayer’s home. This prohibition, however, does not apply to space allocable within a “dwelling unit which is used on a regular basis as a storage unit for the inventory or product samples of the taxpayer held for use in the taxpayer’s trade or - 18 - business of selling products at retail or wholesale, but only if the dwelling unit is the sole fixed loc

Business Use of Home Section 280A generally prohibits deduction of otherwise allowable expenses with respect to the use of an individual taxpayer’s home. This prohibition, however, does not apply to any item that is allocable to a portion of the home that is exclusively used on a regular basis as the principal place of business for the taxpayer’s trade or business or to space that is used on a regular basis for storage of the taxpayer’s inventory held for use in the taxpayer’s trade or busi

3 In view of the dispute the parties have presented to us and our disposition, we express no view on any further interactions between section 199A and section 280E.

The Court need not decide which of Mrs.

We are not convinced that petitioner's dining room was exclusively used on a regular basis as the principal place ofbusiness for Landscape Consortium.

7We need not decide who bears the burden ofproving the applicability of sec.

We need not decide whether Rehman's taxi expenses should be classified as listed property expenses rather than travel expenses because the same substantiation requirements apply in either case.

"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.

'It is unclear whether the Form 1099-MISC issued to petitioner included all of the rental income from the property or only petitioner's portion of the income .

We question whether Mr.

We are not convinced that petitioner had a trade or business within the meaning of section 162(a).

Alternatively, a taxpayer may avoid these requirements by electing to reduce the amount of its research credit pursuant to section 280C(c)(3).

We hold that he is entitled to deduct the four-year total of $56,380 that is set out above.

3 [*3] PMACC had $13,150,618 of ordinary and necessary business expenses that would be deductible for tax year 2016 under section 162 without applying section 280E.

Conclusion Considering all the facts and circumstances and weighing the factors analyzed above, we hold that petitioner did not conduct his Ovium activity in a businesslike manner and he did not engage in that activity with the requisite profit objective during the years at issue.

Petitioners, in turn, would exclude their corresponding rental income pursuant to section 280A(g).

Siragusa reported the rent as income on Schedule E of their personal returns and excluded it from their gross income pursuant to section 280A(g), which provides that rental income from the rental of a taxpayer’s residence is not included in gross income if the residence is rented for no more than 14 days in a taxable year.

Alternatively, a taxpayer may avoid these requirements by electing to reduce the amount of its research credit pursuant to section 280C(c)(3).

Consequently, we hold that the disputed portion of the dwelling unit was not used exclusively for Getify.

We hold accordingly that petitioner may not deduct car and truck expenses in an amount greater than respondent allowed.

Respondent determined that, pursuant to section 280F(b), petitioner was entitled to straight-line depreciation deductions of $2,200 and $5,500 in connection with the 2002 Nissan and the 2003 Hummer, respectively, for 2004 because petitioner did not use the vehicles predominantly in a qualified business use.

Accordingly, we hold that petitioner is not entitled to an unreimbursed employee business expense deduction for cell phone and internet service expenses for tax year 2015.

On the basis ofRichmond's original tax returns respondent issued a notice ofdeficiency on January 17, 2018, which made adjustments to COGS and disallowed business expense deductions pursuant to section 280E as follows:3 3Richmond reported other income of$17,675 as its sec.

Deciding this in petitioner's favor would not change the result here because, as we hold below, petitioners' real estate loss deductions are disallowed by section 469.

On the basis ofrespondent's concession, we hold that petitioners substantiated rent/lease expenses of$3,372.

Consequently, to be considered a qualified residence within the meaning ofsection 163(h)(4)(A)(i)(II), the Hermosa Beach property was required to be used by petitioner during 2015 "as a residence (within the meaning ofsection 280A(d)(1))." Pursuant to section 280A(d)(1) a dwelling unit is used as a residence ifthe taxpayeruses it for "personal purposes" for more than the greater of 14 days or 10% ofthe number of days during the taxable year that the unit is rented at a fair rental value.

On the basis ofrespondent's concession, we hold that petitioners substantiated rent/lease expenses of$3,372.

On the basis ofrespondent's concession, we hold that petitioners substantiated rent/lease expenses of$3,372.

Instead we hold that these deficiency cases could not have been raised in the same case, and did not arise from the same transactional nucleus offact.

11 55,825 11,165 2012 72,110 14,422 After concessions the remaining issues for our consideration are (1) whether deductions for wages not attributable to costs ofgoods sold (COGS) paid to petitioners by Palisades Health Care IN (Palisades) for tax years 2010-12 (years in issue) should be disallowed pursuant to section 280E and (2) whether petitioners are entitled to reliefunder the Revenue Act of 1978, Pub.

Under the circumstances, we hold that selling non-marijuana merchandise was not separate from the business ofselling marijuana merchandise.

Instead we hold that these deficiency cases could not have been raised in the same case, and did not arise from the same transactional nucleus offact.

a taxpayer uses a dwelling unit during the taxable year as a residence ifthe taxpayeruses the unit or a portion thereoffor personal purposes for the greater of(1) 14 days during the taxable year or (2) "10 percent ofthe number ofdays during such year for which such unit is rented at a fair rental." Pursuant to section 280A(d)(2)(A) and (C), a taxpayer is deemed to have used a dwelling unit for personal purposes for any day or part ofthat day on which the dwelling unit is used (1) for personal pu

Instead we hold that these deficiency cases could not have been raised in the same case, and did not arise from the same transactional nucleus offact.

After concessions the issues for consideration are whether petitioners have substantiated that they should be allowed costs ofgoods sold (COGS) greater than those allowed in respondent's examination report for THC and whether respondent properly disallowed business expense deductions pursuant to section 280E.

CKC Flowthrough Income Petitioners contend that their reported CKC flowthrough income was overstated because CKC had greater costs ofgoods sold and business expenses than were determined, after applying section 280E, in respondent's audit ofCKC.

After concessions the issues for consideration are whether petitioners have substantiated that they should be allowed costs ofgoods sold (COGS) greater than those allowed in respondent's examination report for THC and whether respondent properly disallowed business expense deductions pursuant to section 280E.

Therefore, we hold that petitioner is not entitled to the claimed Schedule E expense deductions for 9103 Brehm Road for the taxable years 2007 and 2008.

We hold that he is not entitled to a business-expense deduction in any amount for this expense.

Pursuant to section 280F, his camcorder and wireless router, however, were listed property because we are convinced that his camcorder was not used exclusively in connection with his primary business and that both items were not used exclusively at his regular business establishment.

Accordingly, we hold that she is not entitled to a deduction for supplies expenses for Barnes & Barnes Financial Services for 2009 in excess ofthe $3,752 the IRS already conceded in the stipulation offacts.

As explained below, we hold that none ofthe unreimbursed employee business expenses in dispute are deductible.

Respondent disallowed all ofCrossroads Wellness' reported expense deductions, pursuant to section 280E: No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business ifsuch trade or business (or the activities which comprise such trade or business) consists oftrafficking in controlled substances (within the meaning ofschedule I

The issue for decision is whether respondent properly SERVED Oct 22 2015 - 2 - [*2] disallowed deductions for petitioner's operating expenses pursuant to section 280E.¹ FINDINGS OF FACT Some ofthe facts have been stipulated and are so found.

Accordingly, we hold thatpetitioner is not entitled to deductions for newspaper expenses for the years in issue.

Accordingly, we hold thatpetitioner is not entitled to deductions for newspaper expenses for the years in issue.

Respondent concedes that petitioner is entitled to deduct $1,082 ofthese expenses but argues that she is not entitled to deduct the remaining banking fees because she used the bank accounts for both business and personal reasons.9 We hold that petitioner has failed to establish that she is entitled to a greater deduction for banking charges than respondent has conceded.

According to the limited record in this case, we cannot find that petitioner is entitled to home office deductions pursuant to section 280A(c)(1) for the years at issue.1° 3.

ccordingly, petitioner is not entitled to deduct home office expenses pursuant to section 280A(c)(1) on his 2007 and 2008 Federal income tax returns.

On the record before us, we hold that petitioner is not entitled to any deduction for his computer purchase because he failed to meet the requirements set forth in section 274(d).

Accordingly, we hold that $656.12 ofthese expenditures is deductible as a business expense and that the $57.25 expense is a nondeductible personal expenditure.

As a result, expenses with respect to the Gardiner house are not deductible unless an exception pursuant to section 280A(c) applies.

Accordingly, we hold that - 21 - [*21] petitioner is not entitled to an additional deduction for the rent or lease of vehicles, machinery, and equipment beyond the amount respondent already allowed.

Therefore, we hold that petitioners are not entitled to the claimed $8,600 "lost rent" deduction for 2005 and sustain respondent's determination.

At most, petitioners substantiated $2,445.37 in mileage expenses and $837.22 in travel expenses.7 For the reasons set forth below, we hold the issue ofwhether 6Sec.

For each taxable year 1999 to 2002, pursuant to section 280C(c)(3), HP elected to reduce its section 41 credit by the amount equal to the maximum rate of tax under section 11(b)(1) multiplied by the section 41 credit, rather than reduce its section 174 expense deduction.

- 8 - incurred in carrying on a trade or business engaged in for profit pursuant to section 183; (2) the timeshare units were dwelling units used.by petitioners or other owners as residences pursuant to section 280A; or (3) the timeshare activity losses were passive losses pursuant to section 469.

8, cars and trucks and cellular telephones are "listed property" pursuant to section 280F(d) (4) (A) (i) and (v), respectively.

of section 121) of the taxpayer" and "1 other residence of the taxpayer which is selected by the taxpayer for purposes of this subsection for the taxable year and which is used by the.taxpayer as a residence (within the meaning of section 280A(d) (1))." For a dwelling unit to qualify as a residence pursuant to section 280A(d) (1) the taxpayer must use it for the greater of 14 days or 10 percent of the number of days during the taxable year for which the unit is rented at a fair rental price.

We hold that section 280A does not affect the deductibility of Van Dusen's expenses.

Bennett ' s share in the property, we hold that she has not carried her burden to prove that .

Therefore, we hold that section 280A(a) disallows the deductions petitioner claimed for his personal residence, except as to those deductions respondent conceded .

Accordingly, we hold that - 1 6 petitioner is not entitled to a deduction for utilities expenses beyond.

Pursuant to section 280F(d) (4) (A) (i) and (ii), passenger automobiles and any other property used as a means of transportation are "listed property" subject to the strict substantiation require ents of section 274(d).

Petitioner deducted additional expenses pursuant to section 280A(c)(1) for his "home office", including the cost of one-quarter of his rent, half his electric bill, and his phone and Internet .

Pursuant to section 280A(c)(5), she is entitled to deduct expenses from the business use of her home only to the extent the income from her musician business exceeds allowable deductions .

As respondent has already allowed petitioner the maximum deduction for each year, we hold for respondent on this issue .

Petitioner' s truck is a passenger automobile , which is listed property pursuant to section 280F (d)(4)(A)(i) and (5)(A) .

Based on the foregoing, we hold that petitioner's use of his garage for scheduling and faxing does not fulfill the business use exception of section 280A(c)(1), and petitioner is therefore not entitled to a deduction for business use of his home .

2007) .2 We hold that those deductions are precluded.

1211 does not apply for purposes (continued...) - 13 - Therefore, we hold that the capital loss limitations of sections 1211 and 1212 apply in calculating a taxpayer’s AMTI.

Pursuant to section 280F(d)(4), a computer is listed property.

We hold that petitioner may.

Because we find that petitioner was not in a trade or business during the year in issue, we hold he is not allowed to deduct any of the Schedule C expenses he claimed in 1997.

Pursuant to section 280A(d)(2)(A), the taxpayer shall be deemed to have used a dwelling unit for personal purposes if the unit is used for personal purposes by the taxpayer or by any member of the taxpayer’s family, specifically including the taxpayer’s children and parents.

Section 280A generally prohibits the deduction of otherwise allowable expenses with respect to the use of an individual taxpayer’s home. Section 280A(c)(1) provides a narrow exception to the disallowance of home office deductions where a taxpayer can establish that a portion of the home is used exclusively on a regular basis as: (1) The taxpayer’s

18 [*18] Section 274(d)(4) provides that no deduction shall be allowed “with respect to any listed property (as defined in section 280F(d)(4))” unless the taxpayer substantiates “by adequate records or by sufficient evidence corroborating the taxpayer’s own statement.” Listed property includes, among other things, any passenger automobile or any other property used as a means of transportation. § 280F(d)(4)(A)(i) and (ii). The flush text of section 274(d), however, excludes from the strict subst

Unlike the taxpayers’ vehicles in Baker and Howard, which were used in commercial trucking and therefore less likely to be used for personal purposes, petitioner’s vehicles were SUVs or passenger trucks. Petitioner did not introduce evidence that he had a separate vehicle for personal use. He did not keep track of how the drivers used his vehicles, did not have a contract with those drivers restricting their use of his vehicles, and stored vehicles at his personal residence. Therefore, petitione

In disallowing the rental expense deduction, respondent relies on section 280A(a), which sets forth the general rule that a taxpayer may not claim a deduction "with respect to the use ofa dwelling unit which is used by the taxpayer during the taxable year as a residence." Respondent's reliance on section 280A(a) in this case is misplaced.

While petitioners acknowledge that marijuana is a controlled substance, they claim that section 280E does not preclude dispensaries operating legally under State law from deducting expenses related to the sale ofmedical marijuana. Petitioners assert that section 280E should not apply because Alternative's activities did not "consist of" drug trafficking. Petitioners first argue that, under a plain reading of the statute, "Alternative's varied commercial activities place it squarely outside the r

While petitioners acknowledge that marijuana is a controlled substance, they claim that section 280E does not preclude dispensaries operating legally under State law from deducting expenses related to the sale ofmedical marijuana. Petitioners assert that section 280E should not apply because Alternative's activities did not "consist of" drug trafficking. Petitioners first argue that, under a plain reading of the statute, "Alternative's varied commercial activities place it squarely outside the r

While petitioners acknowledge that marijuana is a controlled substance, they claim that section 280E does not preclude dispensaries operating legally under State law from deducting expenses related to the sale ofmedical marijuana. Petitioners assert that section 280E should not apply because Alternative's activities did not "consist of" drug trafficking. Petitioners first argue that, under a plain reading of the statute, "Alternative's varied commercial activities place it squarely outside the r

While petitioners acknowledge that marijuana is a controlled substance, they claim that section 280E does not preclude dispensaries operating legally under State law from deducting expenses related to the sale ofmedical marijuana. Petitioners assert that section 280E should not apply because Alternative's activities did not "consist of" drug trafficking. Petitioners first argue that, under a plain reading of the statute, "Alternative's varied commercial activities place it squarely outside the r

While petitioners acknowledge that marijuana is a controlled substance, they claim that section 280E does not preclude dispensaries operating legally under State law from deducting expenses related to the sale ofmedical marijuana. Petitioners assert that section 280E should not apply because Alternative's activities did not "consist of" drug trafficking. Petitioners first argue that, under a plain reading of the statute, "Alternative's varied commercial activities place it squarely outside the r

While petitioners acknowledge that marijuana is a controlled substance, they claim that section 280E does not preclude dispensaries operating legally under State law from deducting expenses related to the sale ofmedical marijuana. Petitioners assert that section 280E should not apply because Alternative's activities did not "consist of" drug trafficking. Petitioners first argue that, under a plain reading of the statute, "Alternative's varied commercial activities place it squarely outside the r

SERVED Dec 20 2018 - 2 - [*2] that section 280E2 required the disallowance ofdeductions for Harborside Health Center's (Harborside) ordinary and necessary business expenses and that section 263A(a)(2) precluded Harborside's capitalizing those expenses.

280A(a). A dwelling unit is used as a residence ifthe taxpayer, or a family member, uses it for personal purposes for more than the greater of 14 days a year or 10% ofthe number ofdays it is rented at fair rental that year. See sec. 280A(d)(1) and (2)(A). Respondent contends that petitioners' deductions relating to the Woodland Hills house are limited because their daughter resided there.2 See sec. 280A(a), (c)(5). Petitioners, however, contend that they are real estate developers and rented the

Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, and listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (1) the amount ofthe expense or item; (2) the time and place ofthe travel, entertainment, or expense; (3) the business purpose ofthe entertainment or expense; and (4) the taxpayer's relationship to the perso

- 24 - [*24] The IRS also argues that section 280A limits any deductions associated with the Eureka house. Section 280A generally allows deductions related to a dwelling unit, except that "no deduction otherwise allowable under this chapter shall be allowed with respect to the use ofa dwelling unit which is used by the taxpayer during the taxable year as a residence." Under section 280A(d), a taxpayer is treated as using a dwelling unit during the taxable year as a residence ifthe taxpayer rents

280A imposes additional rules on individuals and S corporations with respect to home office deductions. Petitioner and Vanini are both C corporations; therefore sec. 280A is inapplicable in the cases at hand. - 48 - [*48] VII. Other Deductions Respondent disEllowed the following other deductions from petitioner's Federal income tax returns: O

For certain kinds of expenses otherwise deductible under section 162(a), such as business expenses relating to “listed property”, as defined in section 280F(d)(4), a taxpayer must satisfy substantiation requirements set forth in section 274(d) before such expenses will be allowed as deductions.

Pursuant td section 280A (c)(1), however, petitioners may deduct expenses allocable to a portion of the residence if that portion 4as exclusively used on a regular basis (1) as a principal place of business, (2j as the ..place for meeting with customers, clients, or patients in the normal course i of business, or (3) in the case of aLnattached separate structu

280A(d)(1). Petitioners admit that they used their dwelling unit, at least in part, as a personal residence. Unless an exception applies, therefore, petitioners may not deduct expenses of their residence. Respondent argues, and we agree, that petitioners failed to substantiate and hence meet their burden to prove that they operated a portion of their residence as a business. Deducting the business portion of a dwelling unit is restricted. For example, if personal use of the business portion of a

Section 274(d) provides that no deduction shall be allowed for, among other things, traveling expenses, entertainment expenses, gifts, and expenses with respect to listed property (as defined in section 280F(d)(4) and including passenger automobiles, computer equipment, and cellular telephones) “unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s - 24 - own statement”: (1) The amount of the expenditure or use; (2) the time and place of the

limitation on déductions under^ sectfo'n.2.80A(c).(5) 4.Rather, O3 F : án:-i on bn iue a petitioners contëñd that section 280A does.not,apply to renters of business property and that, therefore, the limitation on :coat e 1n.1 o dod$a ±w Lia r.u : a deductions under,section 280A(c) (5) does not apply to their case.

Home Office Expenses Section 280A(a) generally provides that no deduction otherwise allowable shall be allowed with respect to the business use of a taxpayer’s residence.

Specifically, we pass for the first time on the - 8 - question of whether the calculation of AMTI includes the .wage-expense-limitation of section 280C(a). Respondent asserts it does. Respondent focuses primarily on section 280C(a) and argues that a literal reading of that section always precludes a taxpayer from deducting wages to the extent of a TJC. Respondent acknowledges that a taxpayer cannot apply a TJC to reduce the taxpayer's AMT liability but argues that the wage-expense- limitation s

Allen, docket No. 1290-00; Charles C. Allen, Jr., docket No. 1291-00; Warren L. Allen, docket No. 1292-00; Warren L. Allen, Jr., docket No. 1293-00; and Amantha S. Allen, docket No. 1618-00. SERVED dAN- 4 2002 - 2 - amount of the TJCs, pursuant to sec. 280C(a), I.R.C., and reported to Ps their proportionate shares of its resulting net income (F's resulting net income). Ps computed their regular tax liability by including F's resulting net income in their taxable income. Ps were not subject to t

Allen 36,197 20,582 Following concessions in docket numbers 1291-00 and 1292-00, we must decide whether the wage-expense-limitation of section 280C(a) enters into the calculation of alternative minimum taxable income (AMTI).

Allen 36,197 20,582 Following concessions in docket numbers 1291-00 and 1292-00, we must decide whether the wage-expense-limitation of section 280C(a) enters into the calculation of alternative minimum taxable income (AMTI).

Allen, docket No. 1290-00; Charles C. Allen, Jr., docket No. 1291-00; Warren L. Allen, docket No. 1292-00; Warren L. Allen, Jr., docket No. 1293-00; and Amantha S. Allen, docket No. 1618-00. SERVED ,JAN-.4 2N2 - 2 - amount of the TJCs, pursuant to sec. 280C(a), I.R.C., and reported to Ps their proportionate shares of its resulting net income (F's resulting net income). Ps computed their regular tax liability by including F's resulting net income in their taxable income. Ps were not subject to t

Section 280A(a) states the general rule disallowing deductions “with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence.” A taxpayer’s primary residence in which he lives year round falls within this definition. Sec. 280A(d). If Congress had intended for section 280A to apply only to the rental of vacation homes, they were capable of creating such result. Moreover, the legislative history of section 280A establishes that Congress wanted to

This general rule does not apply, however, where the taxpayer uses a portion of the residence regularly and exclusively as either: (1) The taxpayer’s principal place of business, or (2) a place of business which is used by clients or customers in meeting or dealing with the taxpayer in the normal course of the taxpayer’s business. See

280F(d)(4)(iv). To obtain a deduction for a listed property, travel, or meal expense, a taxpayer must substantiate by adequate records or sufficient evidence to corroborate the taxpayer’s own testimony the amount of the expense, the time and place where it was incurred, and the business purpose of the expense. See sec. 274(d); sec. 1.274-5T(b)

This general rule does not apply, however, where the taxpayer uses a portion of the residence regularly and exclusively as the taxpayer's principal place of business. Sec. 280A(c)(1)(A). Mr. Beck asserts that, because his residence address is the address used by Beck's Liquors for purposes of State licensing and registration, that his

280F(d)(4)(A)(i) and (ii). A passenger automobile is any 4-wheeled vehicle (including vans) which is manufactured primarily for use on public streets, roads, and highways and is rated at 6,000 pounds gross vehicle weight or less. See sec. 280F(d)(5)(A). Petitioners have not shown that the van has a gross weight of 6,000 pounds or more. Thus, t

dmoor Gardens for profit in 1990 and 1991. 2. Whether, as respondent contends, depreciation of the addition to petitioner's residence built in 1988 and 1989, which includes a conservatory used for Broadmoor Gardens, is subject to the restrictions of section 280A. We hold that it is. 1 For purposes of sec. 183, two or more "undertakings" may be one "activity". Sec. 1.183-1(d)(1), Income Tax Regs. We refer to the display gardens and farm as "undertakings" because one of the issues in dispute is wh

Home Office Expenses Section 280A generally prohibits deduction of otherwise allowable expenses with respect to the use of an individual 6 taxpayer's home.

Respondent failed, however, to assert the applicability of section 274(d)(4), which imposes strict substantiation requirements with respect to certain listed property, defined in section 280F(d)(4)(A) to include passenger automobiles.

n the Schedule E as rental income, and deducted $12,000 in business expenses and depreciation for the farm's use of his house. In 1993, petitioner reported the $12,000 as rental income, but then excluded the entire amount as de minimis income under section 280A(g)(2). - 5 - Respondent disallowed deduction of any expenses or depreciation on the grounds that section 280A(c)(6) denies deduction when an employee rents a residence to his employer for business purposes, and respondent disallowed exclu

Section 280A generally prohibits deduction of otherwise allowable expenses with respect to the use of an individual taxpayer's home. As an exception, this restriction does not apply to: any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis-- (A) [as] the principal place of busin

a deficiency in petitioner's 1991 Federal income tax in the amount of $3,181. The issue for decision is whether the deductions petitioner claimed on a Schedule E filed with his 1991 Federal income tax return are subject to the limitation imposed by section 280A(c)(5). Background Some of the facts have been stipulated, and they are so found. At the time that the petition was filed in this case, petitioner resided in Beijing, China. In 1987 petitioner purchased and began to use as his principal re

The Court must decide whether section 280A and the overall limitation set forth in section 280A(c)(5) are applicable to business expense deductions claimed by petitioner in connection with her art/fine art business located in the building where petitioner resided.

incurred with respect to listed property, i.e., a passenger automobile, computer or peripheral equipment, and cellular telephones, are deductible only if the taxpayer meets the stringent substantiation requirements of section 274. See sec. 274(d); sec. 280F(d)(4); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. 412 F.2d 201 (2d Cir. 1969); sec. 1.280F- 6T(b), Temporary Income Tax Regs., 49 Fed. Reg. 42713 (Oct. 24, 2 We need not decide whether the burden of proof shifts to respondent un

1996 because they have failed to establish (1) that the expenses in question were incurred or, if incurred, that those expenses were incurred with respect to the Doon Way residence and (2) that those rental expense deductions are not disallowed by section 280A. Petition- ers introduced no evidence supporting their entitlement to those deductions. On the instant record, we find that petitioners have failed to carry their burden of proving that they are entitled to deduct the rental expenses clai

Section 280A(a) provides generally that "no deduction * * * shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence." - 8 - Section 280A(c)(1), however, provides a limited exception if "a portion of the dwelling unit * * * is exclusively used on a regular basis" as "the princ

Under section 280A, however, deductions - 10 - associated with a home office are generally disallowed unless the home office was used exclusively and regularly as the principal place of business for the taxpayer. Where a taxpayer’s business is conducted in part in the taxpayer’s residence and in part at another location, the following two primary factor

contention that “no disallowed deduction is subject to the substantiation requirements of section 274(d)”. In fact, in 1995 and 1996, petitioners claimed depreciation deductions for computer equipment. Computer equipment is a “listed property” under section 280F(d)(4). Here, however, Mr. Sowards does not present a scintilla of evidence that the claimed expenses were in fact incurred. On this record, we sustain respondent’s disallowance of all deductions claimed as stated in the notices of defici

contention that “no disallowed deduction is subject to the substantiation requirements of section 274(d)”. In fact, in 1995 and 1996, petitioners claimed depreciation deductions for computer equipment. Computer equipment is a “listed property” under section 280F(d)(4). Here, however, Mr. Sowards does not present a scintilla of evidence that the claimed expenses were in fact incurred. On this record, we sustain respondent’s disallowance of all deductions claimed as stated in the notices of defici

- 6 - ground that petitioners failed to establish that such expenses constitute ordinary and necessary business expenses. OPINION Respondent's determinations, having been made in a notice of deficiency, are presumptively correct, and petitioners bear the burden of proving that such determinations are erroneous. Rule 142(a); Welch v.

Anderson seeks to deduct rent paid for the California apartment, he is also precluded from doing so by section 280A(a), which generally disallows any otherwise allowable deduction relating to the use of a taxpayer’s residence.

Even if he had, section 280A(a) generally provides that no deduction shall be allowed for a home office unless certain requirements are met; one of the requirements is that the home office be kept for the convenience of the employer.

Petitioner resided at the property from January 1 until February 16, 2017, exceeding the 14-day maximum for this reason alone. Petitioner is also considered to have used the Signal Mountain Property for personal purposes on the days it was rented to his daughter for less than fair market value. See § 280A(d)(2)(A), (C), (3)(A). The Signa

Section 280A prohibits business expense deductions related to the use of a dwelling unit which is used by the taxpayer during the taxable year as his or her residence, unless an exception applies. As relevant 10 On brief, it appears that respondent may concede in any event that petitioners are entitled a Schedule C deduction of this amount for 2017

Section 280A(c)(1)(A) provides an exception to the general rule to the extent that a taxpayer uses a portion of the dwelling unit, on a regular basis, exclusively as the principal place of business for any trade or business of the taxpayer. The term “dwelling unit” includes apartments. § 280A(f)(1)(A). In this case, Dr. Sherman offered n

Commissioner, 146 T.C. 100, 106 (2016); Mendes v. Commissioner, 121 T.C. 308, 312-313 (2003) (“If an argument is not pursued on brief, we may conclude that it has been abandoned.”). In its pretrial memorandum, Purple Heart stated that application of sec. 280E to all or part of its business expense deductions was a disputed issue but did not raise that issue in its posttrial briefs. We construe its silence as one of prudence: recognizing that we have rejected that argument repeatedly, and would d

ng loss (“NOL”) carried forward from its marijuana business activities in 2011 and 2012. R examined C’s returns for 2014 and 2015, allowed reductions of gross receipts for COGS, but disallowed deductions (including the NOLs from 2011 and 2012) under I.R.C. sec. 280E. R issued C a statutory notice of deficiency (“SNOD”) that determined deficiencies and accuracy-related penalties for C’s 2014 and 2015 tax years. C timely filed a petition to challenge the determinations in the SNOD. C argues that I

reported 25We note that virtually all ofthe other business expenses are related to Ms. Abdolrahim's use ofthe Grafton property as a home office. On the basis ofthe record before us, we find that petitioners have not met the requirements set forth in sec. 280A(c)(1) to claim a home office deduction with respect to any ofthese expenses. See Hamacher v. Commissioner, 94 T.C. 348, 353-354 (1990). - 34 - [*34] expenses were not reimbursed by the University ofMassachusetts. See Fountain v. Commissione

reported 25We note that virtually all ofthe other business expenses are related to Ms. Abdolrahim's use ofthe Grafton property as a home office. On the basis ofthe record before us, we find that petitioners have not met the requirements set forth in sec. 280A(c)(1) to claim a home office deduction with respect to any ofthese expenses. See Hamacher v. Commissioner, 94 T.C. 348, 353-354 (1990). - 34 - [*34] expenses were not reimbursed by the University ofMassachusetts. See Fountain v. Commissione

As relevant here, under section 280A(c)(1), a taxpayer is allowed a deduction for the business use ofhis or her home as an office ifthe taxpayer establishes that a portion ofhis or her dwelling unit is (1) exclusively used, (2) on a regular basis, (3) as the principal place ofbusiness for any trade or business that he or she has.

Section 274(d) disallows deductions for travel expenses, gifts, meals, and entertainment, as well as for listed property as defined by section 280F(d)(4), unless the taxpayer substantiates by adequate records or corroborates by sufficient evidence the taxpayer's own statements as to: (1) the amount ofthe expense, (2) the time and place ofthe travel or entertainment, or the date and description ofthe gift, (3) the business purpose ofthe expense, and (4) the business relationship of

280A(a), (c)(1). Treating each tax year separately also prevents deductions that were mistakenly allowed from becoming perennial windfalls to undeserving taxpayers. See Pekar, 113 T.C. at 166. 4 Neither party has argued that collateral estoppel applies to any issue in this case. - 16 - [*16] In her amended petition Ms. McMillan said that the

Section 280A(a) disallows deductions with respect to a taxpayer's residence with an exception for a home office. Sec. 280A(c)(1). Home office expenses are deductible ifa portion ofthe dwelling unit is used exclusively and regularly for business purposes. Hamacher v. Commissioner, 94 T.C. 348, 353-354 (1990). A taxpayer may deduct expenses allocable

Section 280A(a) disallows deductions with respect to a taxpayer's residence with an exception for a home office. Sec. 280A(c)(1). Home office expenses are deductible ifa portion ofthe dwelling unit is used exclusively and regularly for business purposes. Hamacher v. Commissioner, 94 T.C. 348, 353-354 (1990). A taxpayer may deduct expenses allocable

mount ofrent or other terms. There is no evidence ofthe actual amount oftime spent at the Arizona residences by petitioner and R. Sholes. Deductions related to occupancy ofthe Arizona residences by petitioner and her family members are disallowed by section 280A(a). See sec. 280A(a), (d). Petitioner claims that, according to her accountant: Michigan had an unusual law that only allowed a ceiling of $100,000.00 per year in legal fees unless they related to rental or business property. Thus, Petit

Section 280A(a) disallows deductions with respect to a taxpayer's residence with an exception for a home office. Sec. 280A(c)(1). Home office expenses are deductible ifa portion ofthe dwelling unit is used exclusively and regularly for business purposes. Hamacher v. Commissioner, 94 T.C. 348, 353-354 (1990). A taxpayer may deduct expenses allocable

Section 280A(a) disallows deductions with respect to a taxpayer's residence with an exception for a home office. Sec. 280A(c)(1). Home office expenses are deductible ifa portion ofthe dwelling unit is used exclusively and regularly for business purposes. Hamacher v. Commissioner, 94 T.C. 348, 353-354 (1990). A taxpayer may deduct expenses allocable

A taxpayermay deduct expenses allocable to a portion ofthe dwelling unit which is exclusively used on a regular basis as the principal place ofbusiness for any trade or business ofthe taxpayer or a place ofbusiness which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course ofthe trade

Except as allowable in section 280A, no deduction is allowed for expenses incurred by an individual in connection with the individual's use ofa dwelling unit as a residence during the taxable year.

Section 274(d)(4) provides that no deduction shall be allowed "withrespect to any listed property (as defined in section 280F(d)(4))" unless the taxpayermeets the heightened substantiation requirements.

case. 4We find on the basis ofthe preponderance ofthe evidence that petitioner used these dwellings for more than 14 days in both 2006 and 2007 for personal purposes, which results in each having been "used * * * as a residence" within the meaning ofsec. 280A. See sec. 280A(d). For example, petitioner admits in her briefthat each dwelling had "personal use areas". - 5 - [*5] Business use ofvehicles Petitioner claimed Schedule C deductions for car and truck expenses of $14,246 and $23,117 for 200

280A(a), (d); Osborne v. Commissioner, T.C. Memo. 1987-553. Pursuantto section 280A(d)(1), a dwelling is used as a personal residence ifthe taxpayer resides in the dwelling for the greater of 14 days or 10% ofthe number ofdays the dwelling is rented at fair rental value. Further, a dwelling is treated as a personal residence for each day that

Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use of listed property as defined in section 280F(d)(4)(A).

- 6 - [*6] Section 274(d)(4) provides that no deduction shall be allowed "with respect to any listed property (as defined in section 280F(d)(4))" unless the taxpayermeets the heightened substantiation requirements.

280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827-828 (1968), aff'd per curiam, 412 F.2d 201 (2d Cir. 1969). - 8 - II. Home Office Deduction A. Eligibility Generally, a deduction for an expense relating to property occupied by a taxpayer as a residence is disallowed. Sec. 280A(a). An exception to the general rule is found in section 28

, Income Tax Regs. If, however, a lbart ofthe home is used as a place ofbusiness, a corresponding portion ofthe eupenses--as is properly attributable to such place of business--may be deductible as a l(cid:0)541usinesesxpense, subject to the rules ofsection 280A. Id. A taxpayer must provide the Court with a basis to determine what - 10 - [*10] portion ofthe expenses was allocable to his or her business. DeLima v. , Commissioner, T.C. Memo. 2012-291, at *21; cf. Adler v. Commissioner, T.C. Memo.

280F(d)(4)(A)(I) and (ii). Generally, no deduction is allowed for listed property unless the taxpayer maintains adequate records or other sufficient corroborating evidence to establish certain elements ofan expenditure, including: the amount ofeach expenditure; the amount ofbusiness usage using an appropriate measurement such as mileage; the d

280A(a) and (b). A dwelling unit is used as a residence ifthe taxpayeruses it for "personal purposes" for more than the greater of 14 days or 10% ofthe number ofdays during the taxable yearthat the unit is rented at a fair rental value. Sec. 280A(d)(1)(A) and (B). Ifa family member, as defined in section 267(c)(4), uses the dwelling unit as a

Schedule E Deduction Respondent argues that section 280A precludes petitioners' Schedule E deduction ofa real estate loss relating to the Oceanside house.

As a general rule, section 280A(a) denies deductions with respect to the use ofa dwelling unit that the taxpayer uses as a residence during the taxable year.

As we have already found the airplane was not used in TPM's tax management business or otherwise held for the production ofincome, we likewise find TPM has failed to meet the requirements to deduct airplane depreciation expenses. C. Other Expenses 1. Automobile Expenses Passenger automobiles and any other property used as a means of transportation are generally "listed property" as defined by section 280F(d)(4). Secs. 274(d)(4), 280F(d)(4)(A)(i) and (ii). Accordingly, with certain exceptions (no

- 7 - [*7] Section 280A generally provides that no deduction otherwise allowable shall be allowed with respect to the business use ofa taxpayer's residence.

In addition to the requirements discussed above, section 280A(a) provides the general rule that deductions with respect to a dwelling unit which is used as the taxpayer's residence are not allowable unless an exception applies.5 The exceptions are found in section 280A(c), which provides in relevant part:6 5For a dwelling unit to qualify as a residence the taxpayer must use it for the greater of

When a home office, however, qualifies as the taxpayer's principal place of business under section 280A(c) (1) (A), then the taxpayer' s personal residence is considered his tax home and expenses paid or incurred traveling between that residence and another workplace may be deductible.

Specifically, and as fertinent herein, - section 274(d) provides that no deduction isiallowable for traveling expenses (including meals and lodging while away from home) or with respect to listed property as defined in section 280F(d) (4), unless the deduction is substantiated in accordance with the strict substantiation requirements of section 274(d) and the regulations promulgated thereunder.

When a home office, however, qualifies as the taxpayer's principal place of business under section 280A(c) (1) (A), then the taxpayer' s personal residence is considered his tax home and expenses paid or incurred traveling between that residence and another workplace may be deductible.

An exception to the general rule is found in section 280A(c) (1) (A), which provides that an expense that is allocable to a'pobtion of the taxpayer's dwelling that is used exclusively on a regular basis as the taxpayer's principal-place 4Although not in the pleadings, the parties stipulated that the home office deduction was at issue,

he mobile home . The amount is not deductible for either year . First, the Wolfgrams cannot deduct a portion of the mobile home .rent because the Wolfgrams were not engaged in a trade or business . See sec .. 280A(c) (1) (A) .9 Second, even if this 9Sec. 280A provides, in relevant part : SEC . 280A(a) . (a) General Rule .--Except as otherwise provided in this section, in the case of a taxpayer who is an individual or an S corporation, no deduction otherwise allowable under this chapter shall be

The rental losses were disallowed under section 280A because the property was used for personal use, as her father lived in the rental property rent free .?

Discussion Under section 280A(c) (4) (A), a taxpayer may be allowed business expense deductions relating to use of a residence to conduct child day care services.

280F(d) (4) (A); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969). Under section 7491(a) (1), the burden of proof shifts from the taxpayer to the Commissioner if the taxpayer produces credible evidence with respect to any factual issue relevant to ascertaining the taxpayer's tax liability and the t

Unfortunately for petitioners, any deductions related to the business use of the Wyoming workshop are limited by the provisions of section 280A(c)(5) .

Home Office Expenses Section 280A(a) provides that no deduction otherwise allowable shall be allowed with respect to the business use of a taxpayer’s residence.

With respect to the claimed home office expenses in dispute, section 280A generally prohibits deductions relating to a taxpayer's personal residence .

boat as a second home for the second home mortgage interest deduction . If a second home is rented or held out to rent to others, a taxpayer must meet special requirements before interest is deductible . Those special requirements are set forth in section 280A(d) . Where the home (boat) is rented, as petitioners claimed in this case, a taxpayer must use that home for more than 14 days or more tha n 10 percent of the number of days during the year that the home is rented at a fair rent, whicheve

- 30 - Section 280A(a) provides as a general rule that no deduction otherwise allowable to an individual “shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence.” As relevant herein, section 280A(c)(1) provides that the general rule of section 280A(a) is not applicable to any item t

ANDERSON, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No..13228-04. Filed February 27, 2006. Held: Because petitioners use a portion of their bed and breakfast inn as their personal residence, the general disallowance rule of sec. 280A(a), I.R.C., and the exclusive-use limitation of sec. 280A(f)(1)(B), I.R.C., are applicable, and expenses relating to the portion of the inn that is used for both business and personal purposes (i.e., dual-use portion) are not allowable. Mar

A taxpayer may be excepted from this general rule if a portion of the dwelling unit is exclusively used on a regular basis “as the principal place of business for any trade or business of the taxpayer”. Sec. 280A(c)(1)(A). Even assuming that petitioner’s Renaissance activities were those of a trade or business and that petitioner’s ba

280A(a) and (b). Also allowable as deductions are certain expenses related to income- producing rental or business activities. Sec. 280A(c). For such expenses to be deductible, the related use of the residence must fit into one of several categories specified in section 280A(c). The only category that is arguably applicable to the case at hand

Under section 280A, however, deductions associated with a home office are generally disallowed unless the home office is used exclusively and regularly as the principal place of business of the taxpayer. Petitioner contends his home was his principal place of business because he was required to perform his services at three different locations. He allege

Thus, pursuant to section 280F(a), the automobile would have been fully depreciated well before petitioners filed their 1994 return, on which they deducted the $1,475.

To meet the strict substantiation requirements, the taxpayer must substantiate the amount, time, place, and business purpose of the expenses. Sec. 274(d); sec. 1.274-5T, Temporary Income Tax Regs., 50 Fed. Reg. 46006 (Nov. 6, 1985). In order to substantiate the amount of expenses for listed property, a taxpayer must establish the a

Under section 280A(c), no deduction is allowed for expenses relating to a dwelling unit used as a residence, unless a portion of the residence is “exclusively used on a regular basis” as either the “principal place of business * * * of the taxpayer” or “as a place of business which is used by patients, clients, or customers in meeting or dealing with the

amounts claimed for charitable contributions; (4) whether, pursuant to section 212, petitioners are entitled to a deduction in the amount claimed for expenses attributable to real property held for the production of income; (5) whether, pursuant to section 280A(c)(1), petitioners are entitled to deductions for expenses attributable to an office in the home; and (6) whether, pursuant to section 6662(a), petitioners are liable for penalties due to negligence or disregard of rules or regulations.

Claimed Car and Truck Expenses Section 274(d) imposes stringent substantiation requirements for the deduction of travel expenses and expenses of certain listed property defined under section 280F(d)(4), such as an automobile.

n issue. He further testified that petitioners reported their "rents received" on their tax returns as $7,200 per year ($600 per month), on the advice of one of respondent's revenue agents, in order to satisfy - 4 - the "fair rental requirement" of section 280A. Respondent's counsel stated at trial that the "rents received" determined in the statutory notice of deficiency were based on bank records and statements from the Charitys. The record does not include any such evidence, and respondent's

Section 280A, in general, disallows deductions with respect to the use of a dwelling unit that is used by the taxpayer during the taxable year as a residence. However, section 280A(c)(1)(A) permits the deduction of expenses allocable to a portion of the dwelling unit which is exclusively used on a regular basis as "the principal place of business f

Expenses attributable to a home office are excepted from this general rule, however, if the expenses are allocable to a portion of the dwelling unit which is exclusively used on a regular basis as the principal place of business for the taxpayer's trade or business. See sec. 280A(c)(1). During 1993, no portion of petitioner's apartment w

Home Office Deduction Section 280A narrows the general deductibility rule of section 162 when deductions are claimed for the expenses of a home office.

- 7 - Congress enacted section 280A as part of the Tax Reform Act of 1976, Pub.

Section 280E provides that no deduction or credit shall be allowed for any expenditure paid or incurred in carrying on a trade or business which consists of trafficking in controlled substances. See sec. 280E; S. Rept. 97-494, at 309 (1982). Marijuana is a controlled substance as defined in section 280E. See Browning v. - 19 - Commissioner, T.C. M

Cook (petitioner) in a trade or business activity are allowable as deductions under section 280A(c)(1), and (2) if such expenses are not allowable, whether petitioners are liable for the accuracy-related penalties under section 6662(a).

The claimed deductions relating to computers are subject to the more rigorous requirements of section 274(d) because they are "listed property" as described in section 274(d)(4) and listed in section 280F(d)(4)(A)(iv).

Section 280A provides in pertinent part as follows: (a) General Rule.--Except as otherwise provided in this section, in the case of a taxpayer who is an individual or an S corporation, no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year

In general, section 280A denies a deduction with respect to a home office used by persons such as petitioner unless the home office is exclusively used on a regular basis either (1) as the principal place of business for any trade or business of such a person, (2) as a place of business which is used by patients, clients, or customers in meeting or dealing wit

Section 280A(a) provides that, except as otherwise provided in that section, no deduction otherwise allowable under chapter 1 of the Internal Revenue Code is allowable "with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence." A taxpayer uses a dwelling during the taxable year as a residence i

(3) Whether pursuant to section 280A, petitioner is entitled to deduct home office expenses for the taxable years in issue.

- 3 - storage space is subject to the provisions of section 280A; and (4) whether petitioners are liable for the accuracy-related penalties under section 6662(a) for negligence or disregard of rules or regulations for the 3 years at issue.

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 exceeds the greater of 14 days or 10 percent of the number of days during such year for which the unit is ren

has been defined to mean "most important, consequential, or influential." Id. at 174 (quoting Webster’s Third New International Dictionary 1802 (1971) and defining "principal place of business" for purposes of the home office deduction pursuant to section 280A(c)(1)). In the instant case, the "maintenance" of investments, which is equated in section 1.864-4(c)(3)(i), Income Tax Regs., to the "management" of investments, constitutes the "most important, consequential, or influential" activity of

has been defined to mean "most important, consequential, or influential." Id. at 174 (quoting Webster’s Third New International Dictionary 1802 (1971) and defining "principal place of business" for purposes of the home office deduction pursuant to section 280A(c)(1)). In the instant case, the "maintenance" of investments, which is equated in section 1.864-4(c)(3)(i), Income Tax Regs., to the "management" of investments, constitutes the "most important, consequential, or influential" activity of

- 3 - storage space is subject to the provisions of section 280A; and (4) whether petitioners are liable for the accuracy-related penalties under section 6662(a) for negligence or disregard of rules or regulations for the 3 years at issue.

, affd. 213 F.2d 102 (10th Cir. 1954); Vasta v. Commissioner, T.C. Memo. 1989-531; Mack v. Commissioner, T.C. Memo. 1989-490; Farris v. - 8 - Commissioner, T.C. Memo. 1985-346, affd. without published opinion 823 F.2d 1552 (9th Cir. 1987); see also sec. 280E (under which no deduction is allowed for any amount paid or incurred in the business of drug trafficking); secs. 1.162-1(a), and 1.212- 1(p), Income Tax Regs. The fact that petitioner settled the matter before a final order of forfeiture was

Martin used his office until September 20, 1989, both for his consulting business and as an employee, thus violating the exclusive-use requirement of section 280A(c)(1) because his use of a home office as an employee was not for the convenience of his employer.4 4 Mr.

Adjustment to Income (Supplemental Schedule) in the notice of deficiency are correct if the Court should find that the Tahoe rental activity was not for profit under sec. 183, I.R.C., and if the activity was for profit, then the loss limitations of sec. 280A(e), I.R.C., would apply; (3) they are not entitled to an interest deduction for $7,153 of points claimed for 1987; (4) $2,625 of interest claimed for 1987 with respect to the Tahoe property is not allowable; (5) $1,385 of the investment int

Furthermore, section 280A narrows the general deductibility rule of section 162 when deductions are claimed for the expenses of an office in the home.

Furthermore, section 280A narrows the general deductibility rule of section 162 when deductions are claimed for the expenses of an office in the home.

Section 280A establishes the general rule that no deduction is allowed with respect to business use of a taxpayer's personal residence. Section 280A(c)(1)(A), however, provides that section 280A shall not apply if a portion of the taxpayer's personal residence is exclusively used on a regular basis as the principal place of business for any trade o

ditions to tax. Held: For purposes of sec. 183, I.R.C., P was not engaged in an activity for profit. Held, further, P's deductions in connection with the rental of a dwelling unit are limited to the amount of gross rental income received pursuant to sec. 280A, I.R.C. Held, further, P is liable for additions to tax under sec. 6653(a)(1), I.R.C., for 1985, and sec. 6653(a)(1)(A), I.R.C., for 1986. Carlton V. Phillips, Jr., for petitioner. T. Elizabeth Stetson, for respondent. SERVED MAR 301994 11

2504, 2560 (removing cell phones from the definition of section 280F(d)(4) listed property, and thus from the scope of section 274(d), for taxable years beginning after December 31, 2009).

invoke the Cohan doctrine to estimate the amount of a deductible expense subject to the strict substantiation requirements in section 274(d). Such expenses include those relating to travel, meals and entertainment, gifts, and “listed property” under section 280F(d)(4). I.R.C. § 274(d). No deduction is allowed for such expenses “unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement” (A) the amount of the expense, (B) the time an

(a) (flush language). Certain expenses otherwise deductible under section 162(a) are subject to heightened substantiation requirements under section 274(d); these include expenses for traveling and expenses with respect to any listed property under section 280F(d)(4). See § 274(d)(1), (3). With these general principles in mind, we will address Ms. Mennemeyer’s disputed business expenses for Olive Tree: (1) COGS; (2) motor vehicle purchase; and (3) car and truck expenses. We will take each of the

14 [*14] 2. Analysis On petitioner’s Forms 1040, Schedules C, he deducted vehicle expenses and depreciation for the years in issue. Because respondent disallowed these deductions in the Amendment to Answer, respondent bears the burden of proof as to this determination. See Rule 142(a)(1). Respondent contends that the vehicle ex

No deduction is allowed for such expenses “unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement:” (1) the amount of the expense, (2) the time and place of the travel or the use of the property, (3) the business purpose of the expense, and (4) the business rel

As in effect during 2019, section 274(d) made these strict requirements applicable for “any traveling expense (including meals and lodging while away from home)” and “any listed property.” “Listed property” was defined to include “any passenger au- tomobile.” § 280F(d)(4)(A)(i); Treas.

t to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity,” “any expense for gifts,” and “any listed property (as defined in section 280F(d)(4)).” “Listed property” was defined to include “any 2 If a taxpayer can establish that she once had adequate records but lost the records because of circumstances beyond her control, such as a fire or other casualty, the Court will pe

As in effect during 2019, section 274(d) made these strict requirements applicable for “any listed property (as defined in section 280F(d)(4)).” “Listed Prop- erty” was defined to include “any passenger automobile.” § 280F(d)(4)(A)(i).

Sec- tion 280A(c)(1)(A) provides an exception for “any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis . . . as the principal place of business for any trade or business of the taxpayer.” See Hamacher v. Commissioner, 94 T.C. 348, 357 (1990) (stating that “exclusive

11 [*11] 274(d) taxpayers must meet strict substantiation requirements to deduct certain expenses under section 162, including expenses for the use of “listed property” as defined in section 280F(d)(4), such as passenger automobiles.

No deductions under section 162 shall be allowed for “any traveling expense (including meals and lodging while away from home),” or “listed property,” as defined in section 280F(d)(4), “unless the taxpayer substantiates [them] by adequate records or by sufficient evidence corroborating the taxpayer’s own statement.” § 274(d)(1), (3).

Vehicle Expenses Under section 274(d), taxpayers must meet strict substantiation requirements to deduct certain expenses under section 162, including expenses for the use of “listed property” as defined in section 280F(d)(4), such as passenger automobiles.

However, section 280A(c)(1)(A) provides an exception to section 280A(a) for “any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis . . . as the principal place of business for any trade or business of the taxpayer.” During the various years for which Ms. Stegman claim

See § 280F(d)(4)(B); see also, e.g., Howard v. Commissioner, T.C. Memo. 2015-38, at *11–12 (holding that a taxpayer’s expenses incurred with respect to a truck used in long- distance trucking were not subject to heightened substantiation requirements of section 274(d)(3)); Baker v. Commissioner, T.C. Memo. 2014-122, at *6 (holding that a taxpayer’s exp

Section 280F(a) limited the bonus depreciation deduction for automobiles with less than 6,000 pounds of “unloaded gross vehicle weight,” but no such limitation applies to automobiles with an “unloaded gross vehicle weight” of more than 6,000 pounds. § 280F(d)(5)(A). For 2010 businesses could either elect to expense the cost of a qualifying new vehi

Deductions for expenses attributable to travel and the use of “listed property” (as defined in section 280F(d)(4) and including passenger automobiles), if otherwise allowable, are subject to strict rules of substantiation.

As in effect 22 [*22] during 2015, section 274(d) made these strict requirements applicable for “any traveling expense (including meals and lodging while away from home),” “any item with respect to an activity which is of a type generally considered to constitute entertainment,” “any expense for gifts,” and “any listed property (as defined in section 280F(d)(4)).” “Listed property” was defined to include “any passenger automobile.” § 280F(d)(4)(A)(i); Treas.

Section 274(d) imposes heightened substantiation requirements that override the Cohan rule for certain types of business expenses including automobiles and entertainment expenses.9 See § 280F(d)(4)(A)(i), (iii); Sanford v.

§ 280F(d)(4)(A)(i), (iii); Sanford v. Commissioner, 50 T.C. 823, 827–28 (1968), aff’d per curiam, 412 F.2d 201 (2d Cir. 1969); Treas. Reg. § 1.280F-6(b)(1)(i), (iii). Under section 274(d), taxpayers must substantiate certain expenses, including meal and entertainment, with adequate records of the amount, time and place, and business purpose of each

Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories of expenses, including expenses with respect to listed property as defined by section 280F(d)(4), which includes passenger automobiles.

Section 163(h)(1), however, provides that in the case of a taxpayer other than a corporation (i.e., an individual) no deduction is allowed for personal interest paid or accrued during the taxable year.

Deductions for expenses attributable to travel (“including meals and lodging while away from home”), entertainment, gifts, and the use of “listed property” (as defined in section 280F(d)(4) and including passenger automobiles), if otherwise allowable, are subject to strict rules of substantiation.

lated a fixed base percentage of 3.02% and average annual gross receipts of $23,782,532. Using those calculations, Alliantgroup again concluded in the study that CPI was entitled to a research credit of $771,586, calculated without an election under section 280C. V. CPI Employees In the study, Alliantgroup determined that 19 CPI employees performed qualified services. We provide brief job descriptions for each of those employees. A. Mr. Betz In 2014 petitioner Mark Betz was the vice president of

See § 280F(d)(4)(A)(i); Sanford v. Commissioner, 50 T.C. 823, 827–28 (1968), aff’d per curiam, 412 F.2d 201 (2d Cir. 1969); Treas. Reg. § 1.274- 5(c)(2)(iii); Temp. Treas. Reg. § 1.274-5T(a). 4 To satisfy section 274(d), a taxpayer generally must maintain adequate records or produce sufficient evidence corroborating his own statement, which, in combin

5 of “listed property” (as defined in section 280F(d)(4) and including passenger automobiles), if otherwise allowable, are subject to strict rules of substantiation.

5 Neither party has asserted that section 280A is applicable to the Beavercreek property, and the record does not support applying it.

Under section 274(d), taxpayers must meet stricter substantiation requirements to deduct certain expenses under section 162, including expenses for the use of listed property as defined in section 280F(d)(4), such as passenger automobiles.

Travel expenses Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories of expenses, including travel expenses, meals and lodging while away from home, and expenses with respect to listed property as defined in section 280F(d)(4), which includes passenger automobiles.

Section 163(h)(1), however, provides that in the case of a taxpayer other than a corporation (i.e., an individual) no deduction is allowed for personal interest paid or accrued during the taxable year.

Section 63(e)(1) provides that, “[u]nless an individual makes an election under this subsection for the taxable year, no itemized deduction shall be allowed for the taxable year.” Section 63(e)(2), captioned “Time and Manner of Election,” provides that “[a]ny election under this subsection shall be made on the taxpayer’s return.

See § 280F(d)(4); Fernandez v. Commissioner, T.C. Memo. 2011-216, 2011 WL 3875061, at *3. A taxpayer may deduct vehicle expenses on the basis of actual cost or the standard mileage rate, provided he substantiates the amount of business mileage and the time and purpose of each use. See Treas. Reg. § 1.274-5(j)(2). If the taxpayer uses the standard milea

§ 1.6001-1(a); see also Treas.

See § 280F(d)(4) (defining “listed property”). Petitioners failed to substantiate the cost of the Ford Explorer, when it was placed in service, the business percentage use of the vehicle, and the previously allowed depreciation. Accordingly, we sustain the disallowance of a deduction for depreciation for both 2013 and 2014. II. Real Estate Losses For 2

After concessions, the sole issue for consideration is whether tax depreciation methods for inventory production assets can be used under either section 263A or section 471 when section 280E is applied.1 1 The parties have stipulated the amounts needed to compute a deduction pursuant to section 199.

Deductions for expenses attributable to travel (“including meals and lodging while away from home”), entertainment, gifts, and the use of “listed property” (as defined in section 280F(d)(4) and including passenger automobiles), if otherwise allowable, are subject to strict rules of substantiation.

However, section 163(h)(1) provides that in the case of a taxpayer other than a corporation, no deduction shall be allowed for “personal interest.” “Personal interest” does not include qualified interest paid on acquisition indebtedness or home equity indebtedness with respect to a qualified residence.

2018) (holding that denial of deductions under section 280E is not a penalty for purposes of the Eighth Amendment); Murillo v.

2504, 2560 (removing cell phones from the definition of section 280F(d)(4) listed property, and thus from the scope of section 274(d), for tax years beginning after December 31, 2009); Farran v.

Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories of expenses, including travel expenses, meals and lodging while away from home, and expenses with respect to listed property as defined in section 280F(d)(4), which includes passenger automobiles.10 See Sanford v.

Section 274(d)(4) sets forth heightened substantiation require- ments (and overrides the Cohan rule) with respect to “listed property.” As in effect during 2015–2016, “listed property” included “any passenger automobile.” § 280F(d)(4)(A)(i); Treas.

Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories of expenses, including entertainment, travel away from home (including meals and lodging), and “listed property,” defined in section 280F(d)(4) to include passenger automobiles.

A taxpayer must substantiate by adequate records or by sufficient evidence corroborating her own statement the amount, time, place, and business purpose of these expenditures. § 274(d); Temp. Treas. Reg. § 1.274-5T(c)(1). Substantiation by adequate records requires the taxpayer to maintain an account book, a diary, a log, a statement

claimed. See § 6001. Certain expenses otherwise deductible under section 162(a) are subject to heightened substantiation requirements under section 274(d); these include expenses for traveling and expenses with respect to any listed property under section 280F(d)(4). See § 274(d)(1), (4). No deduction is permitted for personal, living, or family expenses unless expressly permitted under the Code. See § 262(a). If a taxpayer is unable to substantiate the amount of a deduction, the Court may none

escribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories of expenses, including travel expenses, meals and lodging while away from home, and expenses with respect to listed property as defined in section 280F(d)(4). See Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff’d per curiam, 412 F.2d 201 (2d Cir. 1969). Consequently, even if such an expense would otherwise be deductible, section 274 may still preclude a deduction if the taxpayer do

claimed. See § 6001. Certain expenses otherwise deductible under section 162(a) are subject to heightened substantiation requirements under section 274(d); these include expenses for traveling and expenses with respect to any listed property under section 280F(d)(4). See § 274(d)(1), (4). No deduction is permitted for personal, living, or family expenses unless expressly permitted under the Code. See § 262(a). If a taxpayer is unable to substantiate the amount of a deduction, the Court may none

280A(a), (c)(1). - 18 - [*18] During 2008 petitioner worked as an emergency room doctor at Murray Medical Center. He testified that he had no office at Murray Medical Center and so exclusively used one room in, or 50% of, his condominium to do paperwork related to his emergency room duties. He does not contend that he met with patients in his

17, section 274(d) made these strict requirements applicable for “any traveling expense (including meals and lodging while away from home),” “any item with respect to an activity which is of a type generally considered to constitute entertainment,” “any expense for gifts,” and “any listed property (as defined in section 280F(d)(4)).” “Listed prop- erty” was defined to include “any passenger automobile.” § 280F(d)(4)(A)(i); Treas.

ain expenses otherwise deductible under section 162(a) are subject to heightened substantiation requirements under section 274(d); these include expenses for travel (including meals and lodging) and expenses with respect to any listed property under section 280F(d)(4). See § 274(d)(1), (4). No deduction is permitted for personal, living, or family expenses unless expressly permitted under the Code. See § 262(a). If a taxpayer is unable to substantiate the amount of a deduction, the Court may non

Travel Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories of expenses, including travel expenses, meals and lodging while away from home, and expenses with respect to listed property as defined in section 280F(d)(4).

Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, or listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (1) the amount of the expense or item, (2) the time and pla

280F(d)(4) (defining “listed property”). Petitioners failed to provide any showing of the cost of the truck, when it was placed in service, the business percentage use of the vehicle, and the previously allowed depreciation. Accordingly, the disallowance of a deduction for depreciation for 2015 is sustained. Section 6651(a)(1) Addition to Tax

igned to ensure that income is generally taxed on a net basis. See Interstate Transit Lines v. Commissioner, 319 U.S. 590, 593 (1943). Certain expenses are expressly allowed as deductions by statute, while others are expressly disallowed. See, e.g., sec. 280E (disallowing a deduction where the trade or business involves “trafficking in controlled substances”). 4Petitioner filed its return for 2011 on December 13, 2013, before the expi- ration of the deadline specified by sec. 1.882-4(a)(2) and (

Section 280A disallows deductions for the business use of a taxpayer’s home. There are exceptions, however, and one of them is for “[c]ertain business use” of a designated portion of the home so long as it is “exclusively used on a regular basis” (1) as the taxpayer’s principal place of business, (2) as a place of - 31 - [*31] business which is us

No deductions under section 162 shall be allowed for “listed property”, as defined in section 280F(d)(4), “unless the taxpayer substantiates [the expenses] by adequate records or by sufficient evidence corroborating the taxpayer’s own - 6 - [*6] statement”.

280F(d)(4) (defining “listed property”). Petitioners failed to provide any showing of the cost of the truck, when it was placed in service, the business percentage use of the vehicle, and the previously allowed depreciation. Accordingly, the disallowance of a deduction for depreciation for 2015 is sustained. Section 6651(a)(1) Addition to Tax

50 Fed. Reg. 46025 (Nov. 6, 1985). Section 274(d)(4) sets forth heightened substantiation requirements (and overrides the Cohan rule) with respect to “listed property.” As in effect during 2015, “listed property” included “any passenger automobile.” Sec. 280F(d)(4)(A)(i); sec. 1.280F-6(b)(1)(i), Income Tax Regs. No deduction is al- lowed for vehicle expenses unless the taxpayer substantiates, by adequate records or sufficient evidence corroborating her own statements, the amount, time and place,

For those expenses (e.g., expenses relating to travel, meals and entertainment, gifts, or other “listed property” as defined in section 280F(d)(4)), a taxpayer must meet the strict substantiation requirements set out in - 15 - [*15] section 274.

-11- Section 162(a)(2) expressly provides that expenses related to travel can be deducted if ordinary and necessary and incurred while the taxpayer is away from “home” in the pursuit of a trade or business.

274(d)(4) provides that no deduction shall be allowed without substantiation for “listed property (as defined in section 280F(d)(4))”.

280A(c)(1)(A) and (B); see also - 9 - Commissioner v. Soliman, 506 U.S. 168, 172-173 (1993). That being so, she is entitled to a deduction for the business use of her residence, but not in the amount claimed on the return. Petitioner claimed a home office expense deduction of $9,328, which is one-third of the total amount that petitioner clai

Section 274(d)(4) provides that no deduction shall be allowed with respect to any listed property defined in section 280F(d)(4), unless the taxpayer substantiates: the amount of the expense, the time and place of the use of the property, the business purpose of the expense, and the business relationship to the taxpayer of the pro

from home), (2) for any item with respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other ite

Section 274(d) prescribes strict substantiation requirements to be met before a taxpayer may deduct certain categories of expenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use of “listed property” as defined in section 280F(d)(4)(A).

Section 274(d) establishes higher substantiation requirements for expenses related to travel, meals, and lodging while away from home, entertainment, gifts, and “listed property”, defined in section 280F(d)(4) to include passenger automobiles and computers--i.e., many of the reported expenses at issue here.

Section 274(d) prescribes strict substantiation requirements to be met before a taxpayer may deduct certain categories of expenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use of “listed property” as defined in section 280F(d)(4)(A).

Deductions for expenses attributable to travel (“including meals and lodging while away from home”), entertainment, gifts, and the use of “listed property” (as defined in section 280F(d)(4) and including passenger automobiles), if otherwise - 9 - allowable, are subject to strict rules of substantiation.

Deductions for expenses attributable to travel (“including meals and lodging while away from home”), entertainment, gifts, and the use of “listed property” (as defined in section 280F(d)(4) and including passenger automobiles), if otherwise allowable, are subject to strict rules of substantiation.

Section 274(d) imposes stricter substantiation requirements to be met before a taxpayer may deduct certain categories of expenses, including, inter alia, - 21 - [*21] expenses with respect to listed property as defined in section 280F(d)(4).

, and any previously allowable depreciation. See Cluck v. Commissioner, 105 T.C. 324, 337 (1995). Petitioners claim that they are entitled to depreciation deductions of $23,204 and $37,091 for 2014 and 2015, respectively, related to the new kennel, 5Sec. 280A generally disallows deductions for expenses with respect to a dwelling unit used by the taxpayer during the taxable year as a residence. - 15 - rehabilitation of the old kennel, the block wall, the garage and carport, the duplex, the chain

No deduction is allowed for travel expenses, gifts, meals, and entertainment, or for listed property as defined by section 280F(d)(4), unless the taxpayers substantiate by adequate records or corroborate by sufficient evidence the taxpayers' own statements as to: (1) the amount ofthe expense, (2) the time and place the expense was incurred, (3) the business purpose ofthe expense, and (4) the recipient's business relationship for each expenditure.

274(d)(4) provides that no deduction shall be allowed without substantiation for "listed property (as defined in section 280F(d)(4))".

Expenses subject to section 274(d) include travel, meals, and lodging while away from home, entertainment, gifts, and "listed property", defined in section 280F(d)(4) to include passenger automobiles.

Deductions for expenses attributable to travel ("including meals and lodging while away from home"), entertainment, gifts, and the use of"listed property" (as defined in section 280F(d)(4) and including passenger automobiles), ifotherwise allowable, are subject to strict rules ofsubstantiation.

- [*28] deduction on their amended returns for 2009 and 2010 ofpart ofthe previously suspended losses for those years.) Respondent apparentlybases his disallowance ofthe loss deductions petitioners claimed from the rental ofthe Gearhart property on section 280A(a), which provides as a general rule that no deduction is allowed to individuals or specified corporations "with respect to the use ofa dwelling unit which is used by the taxpayer during the taxable year as a residence." (Respondent appea

Deductions for expenses attributable to travel ("including meals and lodging while away from home"), entertainment, gifts, and the use of"listed property" (as defined in section 280F(d)(4) and including passenger automobiles), ifotherwise allowable, are subject to strict rules ofsubstantiation.

; sec. 1.6001-1(a), (e), Income Tax Regs. Section 274(d) imposes relatively strict substantiation requirements for de- ductions claimed for (among other things) "listed property." As in effect during 2014, "listed property" included "any computer." Sec. 280F(d)(4)(A)(iv); sec. 1.280F-6(b)(1)(iv), Income Tax Regs. These heightened substantiation require- ments did not apply, however, ifthe computer was used exclusively at a regular business establishment. See sec. 280F(d)(4)(B); sec. 1.280F-6(b)(

Expenses Subject to Section 274 Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, or listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (1) the amount ofexpense or item, (2) the time and place ofthe travel, entertainment, or expense, (3) the business purpose ofthe entertainment or expense, and (4) the business relationship to the tax

Deductions for expenses attributable to travel ("including meals and lodging while away from home"), entertainment, gifts, and the use of"listed property" (as defined in section 280F(d)(4) and including passenger automobiles), ifotherwise allowable, are subject to strict rules ofsubstantiation.

Section 274(d) establishes higher substantiation requirements for expenses related to travel, meals, and lodging while away from home, entertainment, gifts, and "listed property", defined in section 280F(d)(4) to include passenger automobiles and computers--i.e., many ofthe reported expenses at issue here.

Section 280A(c)(1) provides that a taxpayer may deduct expenses with respect to the portion ofa dwelling unit which is exclusively used on a regular basis (A) as the principal place ofbusiness for any trade or business ofthe taxpayer; (B) as a place ofbusiness which is used by patients, clients, or customers in meeting or dealing

s available for inspection.22 Additionally, deductions for certain expenses are subject to strict substantiation rules under section 274(d).23 Such expenses include those relating to travel, meals and entertainment, gifts, and listed property under section 280F(d)(4).24 For the years in issue, listed property includes any passenger automobile, any other property used as a means of transportation, any property ofa type generally used for purposes ofentertainment, recreation, or amusement, compute

- 8 - With respect to the disallowed car and truck expense deduction, petitioner has failed to satisfy her burden ofproof. Petitioner's testimony was vague and lacked any specificity. Her meager records, including a one-page calendar, were likewise not helpful. Petitioner has failed to adequately substantiate the reported expenses

Deductions for expenses attributable to travel ("including meals and lodging while away from home"), entertainment, gifts, and the use of"listed property" (as defined in section 280F(d)(4) and including passenger automobiles), ifotherwise allowable, are subject to strict rules ofsubstantiation.

Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, or listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (1) the amount of expense or item, (2) the time and place o

- 23 - [*23] Furthermore, section 274(d) provides that no deduction is allowable under section 162 for any traveling expenses, including meals and lodging while away from home, or with respect to listed property, defined in section 280F(d)(4) to include computers but not cellular telephones,9 unless the taxpayer complies with strict substantiation rules.

No deductions under section 162 shall be allowed for "listed property", as defined in section 280F(d)(4), "unless the taxpayer substantiates [them] by adequate records or by sufficient evidence corroborating the taxpayer's own - 13 - [*13] statement".

Deductions for expenses attributable to travel ("including meals and lodging while away from home"), entertainment, gifts, and the use of"listed property" (as defined in section 280F(d)(4) and including passenger automobiles), ifotherwise allowable, are subject to strict rules ofsubstantiation.

Section 280A(c)(1) provides an exception for certain business uses ofa dwelling unit, provided the dwelling unit has a portion which is exclusively used on a regular basis: (A) as the principal place ofbusiness for any trade or business ofthe taxpayer, (B) as a place ofbusiness which is used by patients, clients, or customers in meeti

iation requirements for de- ductions claimed for (among other things) "listed property." Listed property in- - 7 - [*7] cludes (with exceptions not relevant here) "any passenger automobile" and "any other property used as a means oftransportation." Sec. 280F(d)(4)(A). No deduction is allowed under section 274(d) unless the taxpayer substantiates, by adequate records or by sufficient evidence corroborating his own statements, the amount, time and place, and business purpose for each expenditure.

- 16 - the cellular telephone expenses were ordinary and necessary for her business activity. The Court is satisfied that the remaining $1,164 in postage, services, and software expenses was ordinary and necessary for petitioner's business activity in the year indicated.6 B. Schedule C--Travel Expenses Petitioner traveled in 2014,

Petitioner's Form 1120 arguably contained an admission to this effect, because it included a fully completed Schedule H, Section 280H Limitations for a Personal Service Corporation (PSC).

No deduction is allowed for travel expenses, gifts, meals, and entertainment, or for listed property as defined by section 280F(d)(4), unless the taxpayer substantiates by adequate records or corroborates by sufficient evidence the taxpayer's own statements as to: (1) the amount ofthe expense, (2) the time and place the expense was incurred, (3) the business purpose ofthe expense, and (4) the recipient's business relationship for each expenditure.

So we'll treat this reference to "Advertising" as ifit read "Car and truck." - 15 - [*15] Section 280F(d)(4)(A)(I) makes cars and trucks "listed property," so Andersen had to meet the strict substantiation requirements ofsection 274(d).

Section 274(d) provides that no deduction or credit shall be allowed for, inter alia, any traveling expense or entertainment expense, or any expense related to listed property as defined in - 21 - [*21] section 280F(d)(4)," unless the taxpayer substantiates through adequate records or sufficient evidence corroborating his or her own statement the amount ofthe expense, the time and place ofthe expense, and the business purpose ofthe expense.

We accordingly sustain respondent's disallowance ofthe deductions for utilities expenses. b. Car and Truck Expenses For 2014 petitioners claimed a Schedule C2 deduction of$12,480 for car and truck expenses. To substantiate this deduction petitioners submitted no logs establishing Mr. McRae's business use ofany vehicle, but only two

280F(d)(4)(A)(i) - 25 - [*25] and (ii). Listed property also broadly includes any property ofa type generally used for entertainment, recreation, or amusement. Sec. 280F(d)(4)(A)(iii). To deduct expenses related to listed property taxpayers must support their own statements with additional substantiation that adequately establishes the amount

Santos is arguing that he should be entitled to a home office expense deduction under section 280A(c)(1)(A)--which allows a taxpayerto deduct certain expenses "to the extent such item is allocable to a portion ofthe dwelling unit which is exclusively used on a regular basis * * * as the principal place ofbusiness for any trade or business ofthe taxpayer"--to offset this income from SESP's payment of his rent.

Deductions for expenses attributable to travel ("including meals and lodging while away from home"), entertainment, gifts, and the use of"listed property" (as defined in section 280F(d)(4) and including passenger automobiles), ifotherwise allowable, are subject to strict rules ofsubstantiation.

Section 274(d) disallows deductions, including depreciation, for certain "listed property" as defined under section 280F(d)(4) unless the taxpayer satisfies the strict substantiation requirements ofthis section.

280F(d)(4)(A)(i) - 25 - [*25] and (ii). Listed property also broadly includes any property ofa type generally used for entertainment, recreation, or amusement. Sec. 280F(d)(4)(A)(iii). To deduct expenses related to listed property taxpayers must support their own statements with additional substantiation that adequately establishes the amount

- 11 - purpose ofthe use. See sec. 1.274-5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985). Substantiation by adequate records generally requires the taxpayerto "maintain an account book, diary, log, statement of expense, trip sheets, or similar record" prepared contemporaneouslywith the use ofthe passenger a

No deductions under section 162 shall be allowed for "listed property", as defined in section 280F(d)(4), "unless the taxpayer substantiates [them] by adequate records or by sufficient evidence corroborating the taxpayer's own - 13 - [*13] statement".

Section 274(d) provides that no deduction or credit shall be allowed for, inter alia, any traveling expense or entertainment expense, or any expense related to listed property as defined in section 280F(d)(4)," unless the taxpayer substantiates through adequate records or sufficient evidence corroborating his or her own statement the amount ofthe expense, the time and place ofthe expense, and the business purpose ofthe expense.

all Rule references are to the Tax Court Rules ofPractice and Procedure. 2At trial respondent conceded that petitioners did not use the yacht for personal purposes during the years in issue and that their claimed deductions are not prohibited under sec. 280A. In his opening briefrespondent conceded that petitioners are not liable for the sec. 6662(a) accuracy-related penalty for either year in issue. - 3 - [*3] several hundred million dollars ofrevenue. Petitioner husband acquired other compani

$9,500 section 179 deduction for the belly dump on their 2012 return. And the belly dump doesn't have to lurch over the section 274 hurdle for listed property--the Code doesn't consider such a specialized vehicle to be a "passenger automobile." See sec. 280F(d)(5)(B)(ii). That's not enough, however, - 23 - [*23] to sustain the deduction. For one thing, Baca's contract to buy the belly dump shows a price of$6,700, including a downpayment of$1,000--an amount nearly $3,000 less than the claimed ded

No deductions under section 162 shall be allowed for "listed property", as defined in section 280F(d)(4), "unless the taxpayer substantiates [them] by adequate records or by sufficient evidence corroborating the taxpayer's own - 13 - [*13] statement".

Section 280F(d)(4) defines the term "listed property" to include, among other things, passenger automobiles and computer or peripheral equipment. Sec. 280F(d)(4)(A)(i), (iv). - 17 - The regulations detail how a taxpayer can meet the "adequate records" requirement ofsection 274(d). See sec. 1.274-5T(c)(2), Temporary Income Tax Regs., 50 Fed. Reg. 4

- 11 - As far as substantiation goes, the above reasoning applies to all ofthe mileage included in the vehicle expense deductions here in dispute. Adequately substantiating the mileage driven for purposes ofsection 274, however, is only halfofthe story. Respondent's commuting argument must also be considered for the mileage driven

280A(c)(1); Hamacher v. Commissioner, 94 T.C. 348, 353-354 (1990). Taxpayers have the burden to prove regular and exclusive use oftheir residences for business purposes. Stricker v. Commissioner, T.C. Memo. 1995-530. Taxpayers must maintain records to establish the amounts and payment ofthe expenses. Sec. 6001. Petitioner deducted expenses all

xpayerwhose inexactitude is ofhis own mak- ing." Cohan, 39 F.2d at 544. Section 274(d) imposes strict substantiation requirements for deductions claimed for (among other things) "listed property." Listed property includes "any passenger automobile." Sec. 280F(d)(4)(A)(i). No such deduction is allowed un- less the taxpayer substantiates, by adequate records or by sufficient evidence cor- roborating his statements, the amount, time, place, and business purpose ofeach expenditure. Sec. 274(d); sec.

missioner, T.C. Memo. 2014-141, 108 T.C.M. (CCH) 39, 43. Section 274(d) imposes relatively strict substantiation requirements for de- ductions claimed for (among other things) "listed property." Listed property in- cludes any "passenger automobile." Sec. 280F(d)(4). No deduction is allowed - 6 - [*6] under section 274(d) unless the taxpayer substantiates, by adequate records or by sufficient evidence corroborating his own statements, the amount, time, place, and business purpose for each expendi

274(d); see also Oswandel v.

h Cir. 1957); Vanicek v. Commissioner, 85 T.C. 731, 742- 743 (1985). I. Rental Real Estate Expenses The Commissioner disallowed some ofpetitioners' claimed deductions attributable to their rental properties for lack ofsubstantiation and others under section 280A. A. Expenses Disallowed for Lack ofSubstantiation 1. Auto and Travel The Commissioner disallowed auto and travel expense deductions of $9,185, $30,807, and $41,627 for 2012, 2013, and 2014, respectively. Petitioners' auto and travel expe

280F(d)(4) (including passenger automobiles as "listed property"); Fernandez v. Commissioner, T.C. Memo. 2011-216. Petitioners produced a rental car receipt, which had no apparent connection to AMC's business, and a mileage log. The mileage log vaguely describes almost every trip as involving a "business presentation" or "meeting." These docum

on requirements ofsection 274(d) in order for a deduction to be allowed. Section 274 provides heightened substantiation requirements for travel expenses (including meals and lodging while away from home), entertainment, and any listed property under section 280F(d)(4). "Listed property" under section 280F(d)(4) includes any passenger automobile. Sec. 280F(d)(4)(i); see Colvin v. Commissioner, T.C. Memo. 2007-157, slip op. at 30 ("Automobile mileage deductions are subject to the strict substantia

Sec. 262(a). Section 274(d) imposes relatively strict substantiation requirements for de- ductions claimed for (among other things) "listed property." Listed property in- cludes "any passenger automobile" and "any computer or peripheral equipment." Sec. 280F(d)(4)(A)(i), (iv). No deduction is allowed under section 274(d) with respect to listed propertyunless the taxpayer substantiates, by adequate records or by sufficient evidence corroborating his own statements, the amount, time and place, an

h Cir. 1957); Vanicek v. Commissioner, 85 T.C. 731, 742- 743 (1985). I. Rental Real Estate Expenses The Commissioner disallowed some ofpetitioners' claimed deductions attributable to their rental properties for lack ofsubstantiation and others under section 280A. A. Expenses Disallowed for Lack ofSubstantiation 1. Auto and Travel The Commissioner disallowed auto and travel expense deductions of $9,185, $30,807, and $41,627 for 2012, 2013, and 2014, respectively. Petitioners' auto and travel expe

He presented no evidence that he was entitled to deduct expenses relating to the use ofhis home in compliance with section 280A(c)(1) or (2), which provides exceptions to the prohibition ofdeductions with respect to a taxpayer's residence.

74, 77 (1986)); see also Sparkman v.

missioner, T.C. Memo. 2014-141, 108 T.C.M. (CCH) 39, 43. Section 274(d) imposes relatively strict substantiation requirements for de- ductions claimed for (among other things) "listed property." Listed property in- cludes any "passenger automobile." Sec. 280F(d)(4). No deduction is allowed - 6 - under section 274(d) unless the taxpayer substantiates, by adequate records or by sufficient evidence corroborating his own statements, the amount, time and place, and business purpose for each expenditu

Section 170(a) further provides that a deduction will be allowed for a charitable contribution "only ifverified under regulations prescribed by the Secretary." Total TYE 5/31/12 Claimed Client Expense Deductions We consider now whether RJC is entitled to deduct under section 162(a) for its TYE 5/31/12 the total TYE 5/31/12 claimed cli

He presented no evidence that he was entitled to deduct expenses relating to the use ofhis home in compliance with section 280A(c)(1) or (2), which provides exceptions to the prohibition ofdeductions with respect to a taxpayer's residence.

Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, or listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (1) the amount of expense or item; (2) the time and place o

Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use of listed property as defined in section 280F(d)(4)(A).

No deductions under section 162 shall be allowed for "listed property" as defined in section 280F(d)(4), "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement".

ee Welch v. Helvering, 290 U.S. at 113. Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including expenses related to the use oflisted property as defined in section 280F(d)(4). See Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd per curiam, 412 F.2d 201 (2d Cir. 1969). The term "listed property" includes passenger automobiles. Sec. 280F(d)(4)(A)(i). To satisfy the requirements ofsection 274(d), a

Section 280A(a) disallows deductions with respect to a taxpayer's residence with an exception for a home office. Sec. 280A(c)(1). Home office expenses are deductible ifa portion ofthe dwelling unit is used exclusively and regularly for business purposes. Hamacher v. Commissioner, 94 T.C. 348, 353-354 (1990). A taxpayer may deduct expenses allocable

Section 170(a) further provides that a deduction will be allowed for a charitable contribution "only ifverified under regulations prescribed by the Secretary." Total TYE 5/31/12 Claimed Client Expense Deductions We consider now whether RJC is entitled to deduct under section 162(a) for its TYE 5/31/12 the total TYE 5/31/12 claimed cli

Specifically, and as relevant herein, section 274(d) provides that no deduction is allowable with respect to listed property as defined in section 280F(d)(4) unless the deduction is substantiated in accordance with the strict substantiation requirements ofsection 274(d) and the regulations promulgated thereunder.

tled to a deduction for cell phone expenses, and respondent's disallowance ofthat deduction is also sustained. To reflect the foregoing, Decision will be entered under Rule 155. 4For 2013 cell phones were no longer treated as "listed property" under sec. 280F(d)(4), and the strict substantiation requirements ofsec. 274(d) are not applicable to petitioner's business-related cell phone usage. However, petitioner must still show that he used his cell phone for business rather than personal purposes

2012-272, at *22.7 Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use of listed property as defined in section 280F(d)(4)(A).

In addition, for certain kinds ofexpenses that are otherwise deductible under section 162(a), such as those for "listed property", as defined in section 280F(d)(4), a taxpayermust satisfy certain additional sub- - 20 - [*20] stantiation requirements set forth in section 274(d) before such expenses will be allowed as deductions.

- 10 - 1969); sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). For expenses relating to passenger automobiles, a taxpayer must substantiate with adequate records or sufficient evidence corroborating his own statement: (1) the amount ofeach separate expense;8 (2) the mileage for each business use oft

¹°(...continued) before a taxpayermay deduct certain categories ofexpenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use of listed property (such as automobiles) as defined in sec.

In addition, for certain kinds ofexpenses that are otherwise deductible under section 162(a), such as those for "listed property", as defined in section 280F(d)(4), a taxpayer must satisfy certain additional substantiation requirements set forth in section 274(d) before such expenses will be allowed as deductions.

Section 170(a) further provides that a deduction will be allowed for a charitable contribution "only ifverified under regulations prescribed by the Secretary." Total TYE 5/31/12 Claimed Client Expense Deductions We consider now whether RJC is entitled to deduct under section 162(a) for its TYE 5/31/12 the total TYE 5/31/12 claimed cli

Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, or listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (1) the amount of expense or item; (2) the time and place o

2015-42; see also Graev v.

No deductions under section 162 shall be allowed for "listed property", as defined in section 280F(d)(4), "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement".

No deductions under section 162 shall be allowed for "listed property" as defined in section 280F(d)(4), "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement".

No deductions under section 162 shall be allowed for "listed property", as defined in section 280F(d)(4), "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement".

74, 77 (1986)); see also Sparkman v.

The strict substantiation rules under section 274(d) apply to the use of "listed property", as defined in section 280F(d)(4), which includes passenger automobiles.

3(...continued) section 280F(d)(4)(C), then these vehicles would be considered "listed property" under section 274(d)(4) and be subject to heightened substantiation requirements.

The strict substantiation rules under section 274(d) apply to the use of "listed property", as defined in section 280F(d)(4), which includes passenger automobiles.

280F(d)(4)(A)(i). To satisfy the requirements ofsection 274(d), a taxpayer generally must maintain adequate records or produce sufficient evidence corroborating his or her own statement, which, in combination, are sufficient to establish the amount, date and time, and business purpose for each expenditure for travel away from home or expenditu

Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, and listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by - 6 - [*6] sufficient evidence corroborating the taxpayer's own statement (1) the amount ofthe expense or item; (2) the

Section 274(d) applies to: (1) any traveling expense, including meals and lodging away from home; (2) entertainment, amusement, and recreational expenses; (3) any expense for gifts; or (4) the use oflisted property, as defined in section 280F(d)(4), including passenger automobiles.

Section 280A Deductions Section 280A(a) generally disallows deductions attributable to a dwelling unit used by the taxpayer as a residence during the taxable year. A dwelling unit is used as a residence ifthe taxpayer, or a family member, uses it for personal purposes for more than the greater of 14 days during a year or 10% ofthe number ofdays the

Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, or listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (1) the amount of the expense or item; (2) the time and pla

Deductions for expenses attributable to travel ("including meals and lodging while away from home"), entertainment, gifts, and the use of"listed property" (as defined in section 280F(d)(4) and including passenger automobiles), ifotherwise allowable, are subject to strict rules ofsubstantiation.

280F(d)(4)(A)(i). To satisfy the requirements ofsection 274(d), a taxpayer generally must maintain adequate records and documentary evidence which, in combination, are sufficient to establish the amount, date, and business purpose for a covered expenditure or business use oflisted property. Sec. 1.274-5T(b)(6), (c)(1), Temporary Income Tax Reg

Section 274(d) imposes relatively strict substantiation requirements for de- ductions claimed for (among other things) "listed property." Under section 280F(d)(4) listed property includes any "passenger automobile." No deduction is allowed under section 274(d) unless the taxpayer substantiates, by adequate rec- ords or by sufficient evidence corroborating her own statements, the amount, time and place, and business purpose for each expenditure.

iving, or family expenses. Sec. 262(a). Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including expenses related to the use oflisted property as defined in section 280F(d)(4). See Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd per curiam, 412 F.2d 201 - 9 - (2d Cir. 1969). The term "listed property" includes passenger automobiles. Sec. 280F(d)(4)(A)(i). To satisfy the requirements ofsection 274(

; Smith v. Commissioner, T.C. Memo. 1998-33; Watson v. Commissioner, T.C. Memo. 1988-29. There is no evidence that petitioners made any such attempt to reconstruct their substantiation. -50- [*50] patients in the normal course ofthe business.36 See sec. 280A(c)(1)(A) and (B); see also Commissioner v. Soliman, 506 U.S. 168, 172-173 (1993). Trade or business deductions for travel expenses are allowable only ifthe taxpayer satisfies the stricter substantiation requirements ofsection 274(d) in addit

352, 363-364 (1988); see also Primuth v.

See id.; see also Dunkelberger v.

Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, or listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (1) the amount of the expense or item; (2) the time and pla

; Smith v. Commissioner, T.C. Memo. 1998-33; Watson v. Commissioner, T.C. Memo. 1988-29. There is no evidence that petitioners made any such attempt to reconstruct their substantiation. -50- [*50] patients in the normal course ofthe business.36 See sec. 280A(c)(1)(A) and (B); see also Commissioner v. Soliman, 506 U.S. 168, 172-173 (1993). Trade or business deductions for travel expenses are allowable only ifthe taxpayer satisfies the stricter substantiation requirements ofsection 274(d) in addit

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 deduction onl

A "qualified residence" for purposes ofsection 163 includes the taxpayer's primary residence and one other home "which is used by the taxpayer as a resi- dence (within the meaning ofsection 280A(d)(1))." To meet the latter require- ment the taxpayer must use the home "for personal purposes for a period exceed- ing the greater of 14 days or 10% ofthe number ofdays during the year for which 2The interest deduction on the second loan was limited because ofthe $100,000 cap on home equity indebtednes

280F(d)(4)(A)(i). To satisfy the requirements ofsection 274(d) by adequate records, a taxpayer must maintain records and documentary evidence that in combination are sufficient to establish - 9 - [*9] each element ofan expenditure or use. Sec. 1.274-5T(c)(1) and (2), Temporary Income Tax Regs., 50 Fed. Reg. 46016-46017 (Nov. 6, 1985). Petitio

No deductions are allowed for, among other things, traveling expenses (including meals and lodging away from home) and expenses with respect to "listed property" defined in section 280F(d)(4) "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement": (1) the amount ofthe expense, (2) the time and place ofthe travel or use, and (3) the business purposes ofthe expense.

Deductions for expenses attributable to travel ("including meals and lodging while away from home"), entertainment, gifts, and the use of"listed property" (as defined in section 280F(d)(4) and including passenger automobiles), ifotherwise allowable, are subject to strict rules ofsubstantiation.

- 7 - Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use of listed property as defined in section 280F(d)(4)(A).

280F(d)(4)(A)(i); Fernandez v. Commissioner, T.C. Memo. 2011-216. Petitioner offered no substantiation whatever for these alleged ex- penses and thus failed to discharge his burden ofproof. - 7 - [*7] pose. Sec. 6001; Nunn v. Commissioner, T.C. Memo. 2002-250, 84 T.C.M. (CCH) 403, 408; sec. 1.6001-1(a), Income Tax Regs. Ifa taxpayerwith inade

es underlying their claimed deductions,¹° but deductions for certain expenses are subject to strict substantiation rules under section 274(d)." Such expenses include those relating to travel, meals and entertainment, gifts, and listed property under section 280F(d)(4).¹² For the years in issue listed property includes any passenger automobile, any other property used as a means oftransportation, any property of a type generally used for purposes ofentertainment, recreation, or amusement, compute

Ambulances used in a trade or business are excluded from "listed property" as defined in section 280F(d)(5)(B)(i) and thus not subject to the strict substantiation rules.

Home Office Section 280A(a) provides as a general rule that no deduction otherwise allowable to an individual "shall be allowed with respect to the use ofa dwelling unit which is used by the taxpayer during the taxable year as a residence." The term "dwelling unit" is defined as "a house, apartment, condominium, mobile home, boat, or similar property, and all

Listed property does not include property used as a means oftransportation when substantially all ofthe use ofthe property "is in a trade or business ofproviding to unrelated persons services consisting ofthe transportation ofpersons or property for compensation - 44 - [*44] or hire." See sec. 280F(d)(4)(C). Another exception t

Listed property does not include property used as a means oftransportation when substantially all ofthe use ofthe property "is in a trade or business ofproviding to unrelated persons services consisting ofthe transportation ofpersons or property for compensation - 44 - [*44] or hire." See sec. 280F(d)(4)(C). Another exception t

663, 667 (1970) ("[W]here a taxpayer does not have a nontemporary principal place ofbusiness away from the vicinity ofhis residence, then his place ofresidence remains his home for tax purposes."); see also Henderson v.

to strict substantiation rules that supersede the Cohan rule. Boyd v. Commissioner, 122 T.C. 305, 320 (2004); sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). These include expenses for "listed property" defined under section 280F(d)(4). Listed property includes passenger automobiles and other property used for transportation. Sec. 280F(d)(4)(A)(i) and (ii). To meet these strict substantiation rules with respect to passenger automobiles, a taxpayer must substantia

Section 274(d) provides that no deduction is allowed with respect to travel, entertainment, and listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (1) the amount ofthe expense or item; (2) the time and place ofthe travel, entertainment, or expense; (3) the business purpose ofthe entertainment or expense; and (4) the taxpayer's relationship to the perso

me and that he occasionally hired other family members and their friends as part-time workers to staffthe trailer and drive vehicles. At trial he produced canceled checks totaling $20,678 in an effort to 5Cell phones were not "listed property" under sec. 280F(d)(4) for 2010 and petitioners thus were not required to meet the strict substantiation requirements of sec. 274(d). However, they must still show that the cell phones were used for business rather than personal purposes and provide some cr

"Listed property" is defined by section 280F(d)(4)(A)(iv) to include "any computer or peripheral equipment." The substantiation requirements ofsection 274(d) thus apply to petitioners' reported expenses for travel, parking, meals, business gifts, and a laptop computer.

Section 274(d) prescribes stringent substantiation requirements to be met before a taxpayermay deduct certain categories ofexpenses, including meals and entertainment expenditures and expenses related to the use oflisted property as defined in section 280F(d)(4)(A).

rds relating to the expense, see sec. 6001. Taxpayers aiming to deduct expenses for (among other things) travel, entertainment, and the use ofa vehicle also must meet strict substantiation rules set forth in section 274(d). See sec. 274(d); see also sec. 280F(d)(4)(A)(i). These rules require that a taxpayer substantiate, by adequate records or by other sufficient evidence corroborating his or her own statement, each ofthe following elements: (1) the amount ofan expense; (2) the time and place th

ent to substantiate expenses underlying deductions claimed on a Federal income tax return. Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs. Passenger automobiles and any other property used as a means oftransportation are "listed property" under section 280F(d)(4). Section 274(d) disallows any deduction with respect to listed property unless the taxpayer adequately substantiates: (1) the amount ofthe underlying expense, (2) the time and place oftravel or use ofthe property, (3) the business pu

ent to substantiate expenses underlying deductions claimed on a Federal income tax return. Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs. Passenger automobiles and any other property used as a means oftransportation are "listed property" under section 280F(d)(4). Section 274(d) disallows any deduction with respect to listed property unless the taxpayer adequately substantiates: (1) the amount ofthe underlying expense, (2) the time and place oftravel or use ofthe property, (3) the business pu

Section 280A requires that the home office be used exclusively and regularly as a taxpayer's principal place ofbusiness. Mrs. Hastings passes this - 16 - [*16] test, and the room in her home qualifies under the statute as a home office for which substantiated expenses may be deductible. With respect to the home office, Mrs. Hastings was reimbursed

Section 274(d)(4) provides, among other things, that no deduction may be allowed with respect to any property listed in section 280F(d)(4) unless the taxpayer establishes: (A) the amount ofthe expense or other item, (B) the time and place ofthe use ofthe property, (C) the business purpose of - 7 - [*7] the expense, and (D) the business relationship to the taxpayer ofthe person using the property.

Depreciation Expense Amount claimed Amount allowed Amount disallowed Depreciation $5,522 --- $5,522 2 Section 280F no longer includes cellular phones as listed property.

Deductions for expenses attributable to travel ("including meals and lodging while away from home"), entertainment, gifts, and the use of"listed property" (as defined in section 280F(d)(4) and including passenger automobiles, and for the year in issue, cellular telephones), ifotherwise allowable, are subject to strict rules ofsubstantiation.

280F(d)(4)(A)(i). To satisfy the requirements ofsection 274(d), a taxpayer generally must maintain adequate records and documentary evidence which, in combination, are sufficient to establish the amount, date, and business purpose for a covered expenditure or business use oflisted property. Sec. 1.274-5T(b)(6), (c)(1), Temporary Income Tax Reg

He should have reported these expenses on his Schedule C. The Commissioner takes his argument one step further. He argues that even ifNiemann moves the $29,000 to his Schedule C, he still can't take a deduction for them because he hasn't substantiatedthem. The Commissioner raised this issue for the first time during trial, so before we c

- 13 - [*13] gifts, and listed property under section 280F(d)(4).¹7 For the years in issue listed property included passenger automobiles, any other property used as a means oftransportation, any property ofa type generally used for purposes of entertainment, recreation, or amusement, computers, and cellular telephones.¹ª To comply with the strict substantiation rules, the taxpayer must have a

280F(d)(4)(A)(i). To satisfy the requirements ofsection 274(d) by adequate records, a taxpayermust maintain records and documentary evidence that in combination are sufficient to establish each element ofan expenditure or use. Sec. 1.274-5T(c)(1) and (2), Temporary Income Tax Regs., 50 Fed. Reg. 46016-46017 (Nov. 6, 1985). The - 15 - Cohan ru

Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including expenses related to the use oflisted property as defined in section 280F(d)(4)(A).

Section 274(d) provides that no deduction shall be allowed for, among other things, traveling expenses, entertainment expenses, gifts, and expenses with respect to listed property (as defined in section 280F(d)(4), which includes passenger automobiles) "unless the taxpayer substantiates by adequate records or by sufficient evi

ed substantiation requirements ofsection 274(d) apply to: (1) any traveling expense, including meals and lodging away from home; - 8 - [*8] (2) any item with respect to in activity in the nature ofentertainment, amusement, or recreation; (3) an expense for gifts; or (4) the use of"listed property" as defined in section 280F(d)(4), including any passenger automobiles.

Section 274(d) provides that no deduction shall be allowed for, among other things, traveling expenses, entertainment expenses, gifts, and expenses with respect to listed property (as defined in section 280F(d)(4) and including passenger automobiles, computer equipment, and property generally used for entertainment, recreation or amusement) "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement": (1) the amount ofthe expenditur

Section 274(d) prescribes more stringent substantiationrequirements to be met before a taxpayer may deduct certain categories ofexpenses, including travel expenses, meals and entertainmentexpenditures, and expenses related to the use of listed property as defined in section 280F(d)(4)(A).

Section 274(d) provides that no deduction shall be allowed for, among other things, traveling expenses, entertainment expenses, gifts, and expenses with respect to listed property (as defined in section 280F(d)(4) and including passenger automobiles, computer equipment, and in the years at issue and up until 2010, cellular tel

- 19 - [*19] property under section 280F(d)(4).¹6 For the years in issue, listed property included passenger automobiles; any other propertyused as a means of transportation; any property ofa type generally used for purposes of entertainment, recreation, or amusement; computers; and cellular telephones.¹7 To comply with the strict substantiation rules, the taxpayermust have a

- 19 - [*19] property under section 280F(d)(4).¹6 For the years in issue, listed property included passenger automobiles; any other propertyused as a means of transportation; any property ofa type generally used for purposes of entertainment, recreation, or amusement; computers; and cellular telephones.¹7 To comply with the strict substantiation rules, the taxpayermust have a

Home Office Expenses Laudon also took deductions for using his basement and garage as a home office in 2007 and 2009: Business use ofhome expense Year Amount reported Amount allowed Adjustment on return by exam 2007 $5,235 $0 $5,235 2009 $1,787 $0 $1,787 Section 280A(c)(1) allows a taxpayer to claim a deduction for the portion ofhis home allocated for business use.

senger automobiles. The Code's definition ofa passenger automobile includes "any 4-wheeled * * * [truck] * * * manufacturedprimarily for use on public streets, roads, and highways, and * * * rated at 6,000 pounds * * * gross vehicle weight or less." Sec. 280F(d)(5)(A). From the make and model information in the record, the Court can conclude only that petitioners' trucks fell within that definition; petitioners have not provided evidence to the contrary. Moreover, petitioners acknowledge that th

Section 274(d) provides that no deduction shall be allowed for, among other things, traveling expenses, entertainment expenses, gifts, and expenses with respect to listed property (as defined in section 280F(d)(4) and including passenger automobiles, computer equipment, and in the years at issue and up until 2010, cellular telephones) "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement": (1) the amount ofthe expenditure or u

These strict substantiation requirements apply to any traveling expense, including meals and lodging away from home, any item with respect to an activity in the nature of entertainment, or the use oflisted property, as defined in section 280F(d)(4), including passenger automobiles.

280F(d)(4)(A) (as amended by the Small Business Jobs Act of 2010, Pub. L. No. 111-240, sec. 2043, 124 Stat. at 2560). Deductions for the types ofexpenses listed in section 274(d) are disallowed in full unless the taxpayercan satisfy all ofthe section 274(d) substantiationrequirements. Sanford v. Commissioner, 50 T.C. 823 at 827-828. Among the

al basis upon which to estimate the business component ofher automobile expenses; and in any event, the Court lacks discretion to make such an estimate. 7 Petitioner has not argued that the Toyota Corolla was not a passenger automobile as defined by sec. 280F(d)(5)(A). In addition, petitioner has not argued for the application ofthe exception provided by sec. 280F(d)(5)(B). - 8 - [*8] See Sanford v. Commissioner, 50 T.C. at 827-828; sec. 1.274-5T, Temporary Income Tax Regs., supra. Petitioner di

emporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). Section 274 and section 1.274-5T, Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, - 20 - [*20] 1985), provide heightened substantiation requirements for any listed property under section 280F(d)(4). Listed property under section 280F(d)(4) includes any passenger automobile. Colvin v. Commissioner, T.C. Memo. 2007-157, aff'd, 285 F. App'x 157 (5th Cir. 2008). Petitioners argue that the car and truck expense deductions for the r

Section 274(d) provides that no deduction shall be allowed for, among other things, traveling expenses, entertainment expenses, gifts, and expenses with respect to listed property (as defined in section 280F(d)(4) and including passenger automobiles, computer equipment, and in the years at issue and up until 2010, cellular tel

cessary business expenses within the meaning ofsection 162. Section 274(d) prescribes stringent substantiation requirements for certain categories ofexpenses, including travel expenses and expenses related to the use oflisted property as defined in section 280F(d)(4). See Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd, 412 F.2d 201 (2d Cir. 1969). To satisfy the requirements ofsection 274(d), a taxpayer generally must maintain adequate - 10 - records or produce sufficient evidence corro

The heightened substantiation requirements ofsection 274(d) apply to: (1) any traveling expense, including meals and lodging away from home; (2) any item with respect to an activity in the nature ofentertainment, amusement, or recreation; (3) an expense for gifts; or (4) the use of"listed property" as defined in section 280F(d)(4), including any passenger automobiles.

These strict substantiation requirements apply to any traveling expense, including meals and lodging away from home, any item with respect to an activity in the nature of entertainment, or the use oflisted property, as defined in section 280F(d)(4), including passenger automobiles.

280F(d)(4)(A) (as amended by the Small Business Jobs Act of 2010, Pub. L. No. 111-240, sec. 2043, 124 Stat. at 2560). Deductions for the types ofexpenses listed in section 274(d) are disallowed in full unless the taxpayercan satisfy all ofthe section 274(d) substantiationrequirements. Sanford v. Commissioner, 50 T.C. 823 at 827-828. Among the

Rent/Lease Expenses Section 280A(a) generally disallows a deduction for business use ofa taxpayer's personal residence.

Rent/Lease Expenses Section 280A(a) generally disallows a deduction for business use ofa taxpayer's personal residence.

280F(d)(4)(A)(i). To satisfy the requirements ofsection 274(d) by adequate records, a taxpayer must maintain records and documentary evidence that in combination are sufficient to establish each element ofan expenditure or use. Sec. 1.274-5T(c)(1) and (2), Temporary Income Tax Regs., 50 Fed. Reg. 46016-46017 (Nov. 6, 1985). - 10 - [*10] II. P

280F(d)(4)(A)(i) and (ii). To claim expenses related to listed property, taxpayers must corroborate their own statements with additional substantiation that adequately establishes the amount, time, place, and business purpose ofthese expenditures. Sec. 274(d)(4) and flush language; see also sec. 1.274-5T(b)(6), (c)(1) and (2), Temporary Income

Respondent also determined that petitioner's rental real estate losses attributable to Orange Jubilee were limited by section 280A and disallowed all Schedule E expenses (except for propertytax and home mortgage interest expenses, which respondent allowed as itemized deductions on petitioner's Schedules A) for both tax years.

280F(d)(4)(A)(i) and (ii). To claim expenses related to listed property, taxpayers must corroborate their own statements with additional substantiation that adequately establishes the amount, time, place, and business purpose ofthese expenditures. Sec. 274(d)(4) and flush language; see also sec. 1.274-5T(b)(6), (c)(1) and (2), Temporary Income

ommissioner v. Heininger, 320 U.S. 467, 475 (1943). Section 274(d) prescribes more stringent substantiation requirements before a taxpayermay deduct certain categories ofexpenses, including expenses related to the use oflisted property as defined in section 280F(d)(4). See Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd, 412 F.2d 201 (2d Cir. 1969). To satisfy the requirements ofsection 274(d), a taxpayergenerally must maintain adequate records or produce sufficient evidence corroboratin

There is also no evidence whetherpetitionerrented out the property during 2010, and thus petitioners cannot take advantage ofsection 163(h)(4)(A)(iii) ("[N]ot- withstanding section 280A(d)(1), ifthe taxpayer does not rent a dwelling unit at any time during a taxable year, such unit may be treated as a residence for such taxable year.").

Specifically, section 274(d) provides that no deduction shall be allowed for, among other things, expenses with respect to listed property (as defined in section 280F(d)(4) and including passenger automobiles) "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement" certain

ice during the year. - 22 - [*22] Sec. 179(a), (b), (d)(1); sec. 1.179-4(a), Income Tax Regs. To be eligible to make this election, the taxpayermust show that the business use ofsuch property exceeds 50%. Sec. 1.179-1(d), Income Tax Regs.; see also sec. 280F(b)(3) (relating to listed property). Petitioner's business use ofthe airplane did not exceed 50% in either 2006 or 2007, and he is therefore ineligible to elect section 179 treatment. Respondent concedes that petitioner is allowed a deprecia

ice during the year. - 22 - [*22] Sec. 179(a), (b), (d)(1); sec. 1.179-4(a), Income Tax Regs. To be eligible to make this election, the taxpayermust show that the business use ofsuch property exceeds 50%. Sec. 1.179-1(d), Income Tax Regs.; see also sec. 280F(b)(3) (relating to listed property). Petitioner's business use ofthe airplane did not exceed 50% in either 2006 or 2007, and he is therefore ineligible to elect section 179 treatment. Respondent concedes that petitioner is allowed a deprecia

The heigl)tened substantiation requirements ofsection 274(d) apply to: (1) any traveling expense, including meals and lodging away from home; (2) any item with respect to an activity in the nature ofentertainment, amusement, or recreation; (3) an expense for gifts; or (4) the use of"listed property" as defined in section 280F(d)(4), including any passenger automobiles.

Expenses attributable to a home office are also excepted from the general rule ifthe expenses are allocable to a portion ofthe residence which is exclusively used on a regular basis by clients in meeting with the taxpayer in the normal course ofhis trade or business. See sec. 280A(c)(1)(B). A. ExclusivelyUsed Petitioner testifie

These strict substantiation requirements ofsection 274(d) apply to any traveling expense, - 29 - [*29] including meals and lodging away from home; any item with respect to an activity in the nature ofentertainment; or the use oflisted property, as defined in section 280F(d)(4), including computers and property used as a means of transportation.

- 9 - Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including expenses related to the use oflisted property as defined in section 280F(d)(4)(A).

Section 274(d) provides that no deduction shall be allowed with respect to: (a) any traveling expense, including meals and lodging away from - 7 - home; (b) any item related to an activity ofa type considered to be entertainment, amusement, or recreation; or (c) the use ofany "listed property", as defined in section 280F(d)(4

1.162-2(e), Income Tax Regs.; see also Steinhort v.

e" includes the taxpayer's principal residence within the meaning of section 121 and one other residence ofthe taxpayerthat is selected by the taxpayer for purposes ofthe deduction and that is used by the taxpayer as a residence within the meaning ofsection 280A(d)(1).8 Section 280A(d)(1) provides: "[A] taxpayer uses a dwelling unit during the taxable year as a residence ifhe uses such unit (or portion thereof) for personal purposes for a number ofdays which exceeds the greater of--A) 14 days, o

Section 280A(a) generally disallows any deduction for expenses related to a private residence. Section 280A(c)(1), however, allows a deduction allocable to the portion ofa dwelling used exclusively, on a regular basis, as the taxpayer's principal place ofbusiness. At trial Mr. Boring stated that 100% ofhis residence was used for business and that a

Section 274(d) prescribes stringent substantiationrequirements to be met before a taxpayermay deduct certain categories ofexpenses, including transportation expenses, meals and entertainment expenditures, and expenses related to the use oflisted property as defined in section 280F(d)(4)(A).

Vehicle Expenses Section 274(d) prescribes stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use of listed property as defined in section 280F(d)(4)(A).

Section 274(d) provides that no deduction shall be allowed with respect to certain items, including: (a) any traveling expense, including meals and lodging away from home; (b) any item related to an activity ofa type considered to be entertainment, amusement, or recreation; or (c) the use ofany "listed property", as defined in

280F(d)(4)(A).2 Deductions for these expenses are disallowedun- less the taxpayer substantiates by adequate records or by sufficient evidence cor- roborating his own statement: (1) the amount ofthe expense; (2) the time and place ofthe travel, meal, or entertainment, or use ofthe property; (3) the business purpose ofthe expense; and (4) in the

Such expenses include those relating to travel expenses, meals and entertainment expenditures, and expenses related to the use oflisted property as defined under section 280F(d)(4)(A).

However, business use ofa passenger automobile is subject to the substantiation requirements ofsection 274(d) because such a vehicle is "listed property" as defined in section 280F(d)(4)(A)(i).

ted, and we sustain the IRS's disallowance ofthe remaining $27,890 in travel expenses and $3,620 in meals expenses. D. Transportation Deductions related to passenger vehicles are subject to strict substantiation requirements under section 274(d) and section 280F(d)(4). Taxpayers must prove: (a) the amount ofeach separate expenditure with respect to the vehicle; (b) the exact date ofthe expenditure; and (c) the business purpose with respect to each expenditure. 26 C.F.R. sec. 1.274-5T(b)(6). Taxp

Section 280A(a) generally disallows any deduction for expenses related to a private residence. Section 280A(c)(1), however, allows a deduction allocable to the portion ofa dwelling used exclusively, on a regular basis, as the taxpayer's principal place ofbusiness. At trial Mr. Boring stated that 100% ofhis residence was used for business and that a

Section 280A(a) generally disallows any deduction for expenses related to a private residence. Section 280A(c)(1), however, allows a deduction allocable to the portion ofa dwelling used exclusively, on a regular basis, as the taxpayer's principal place ofbusiness. At trial Mr. Boring stated that 100% ofhis residence was used for business and that a

Moreover, section 274(d) prescribes stringent substantiationrequirements a taxpayer must satisfy before deducting certain categories ofexpenses, including transportation expenses, meals and entertainment expenditures, and expenses related to the use oflisted property as defined in section 280F(d)(4)(A).

Because petitioner's truck is listed property under section 280F(d)(4)(A)(i) or (ii), a deduction for the truck expenses requires additional substantiation.

nses. A. Home office expenses Unless a relevant exception applies, "no deduction otherwise allowable under this chapter shall be allowed with respect to the use ofa dwelling unit which is used by the taxpayer during the taxable year as a residence." Sec. 280A(a). ¹²Even ifMrs. Robinson were entitled to Schedule C deductions, the amounts ofher home office deductions would be radically reduced (to 3.33% of the relevant amounts, rather than the much larger percentages she claimed) and her vehicle e

Because passenger automobiles are listed propertyunder section 280F(d)(4)(A)(i), a deduction for automobile expenses requires additional substantiation.

No deduction is allowed with respect to the use ofany "listed property", as defined in section 280F(d)(4), unless certain elements are substantiated.

These _ 9 _ requirements apply to any expense related to the use oflisted property as defined in section 280F(d)(4), including passenger vehicles.6 Section 274(d) requires a taxpayerto substantiate vehicle expenses by adequate records or other corroborating evidence establishing (1) the amount of each use (i.e., the mileage for vehicles), (2) the time and place ofthe use, and (3) the business

The issues for consideration are (1) whether petitioners' deductions for rental real estate losses for 2008 and 2010 are limited by section 280A; and ifnot whether those deductions are limited by the passive loss rules ofsection 469, and (2) to what extent petitioners' rental real estate loss deduction for 2009 is limited by section 280A.

2) 1286, 1286; see also sec.

r. 1985). The determination of 6For certain expenses otherwise deductible under sec. 162(a), such as ex- penses for travel, meals, and entertainment, see sec. 274(d)(1) and (2), and ex- penses for a cellular telephone that is "listed property", see sec. 280F(d)(4), a tax- payer must also satisfy the substantiation requirements set forth in sec. 274(d) before such expenses will be allowed as deductions. - 10 - [*10] whether an expenditure satisfies the requirements for deductibility under section

280F(d)(4)(A)(i). 9For entertainment expenses, the taxpayermust also substantiate the business relationship to the taxpayer ofpersons being entertained. Sec. 274(d)(4). - 12 - [*12] receipts or bills, that show each element ofeach expenditure or use. See sec. 1.274-5T(c)(2), Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). Conte

Section 1.274-5(j)(2), Income Tax Regs., provides that the strict substantiation requirements ofsection 274(d) for vehicle expenses must be met even where the optional standard mileage rate is used.

Specifically, and as pertinent herein, section 274(d) provides that no deduction is allowable for traveling expenses (including meals and lodging while away from home) or entertainment expenses or with respect to listed property as defined in section 280F(d)(4), unless the deduction is substantiated in accordance with the strict substantiation requirements ofsectio

- 21 - Section 274(d) prescribes more stringent substantiation requirements that must be satisfied before a taxpayermay deduct certain categories ofexpenses, including travel, meals and entertainment, gifts, and expenses related to the use of listed property as defined in section 280F(d)(4)(A).

280F(d)(4); sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). To obtain a deduction for such items, the taxpayermust substantiate "by [either] adequate records or by sufficient evidence corroborating * * * [his] own statement" the amounts ofsuch expenses, their business purpose, and the business relationship to t

e professional who materially participated in a real estate trade or business for either tax year 2008 or 2009; (2) whether the rental income petitioner received for use ofhis properties in Maine and Connecticut is nonpassive income under the self-rental rules ofsection 469; (3) whetherpetitioner's rental real estate losses for 2009 are limited by section 280A; and (4) whetherpetitioner is liable for the accuracy-relatedpenalty under section 6662(a) for tax year 2009.

280F(d)(4); sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). To deduct such items, the taxpayermust substantiate "by [either] adequate records or by sufficient evidence corroborating * * * [his] own statement" the amounts ofsuch expenses, their business purpose, and the business relationship to the taxpayer ofth

Moreover, passenger automobiles and cell phones were listed property in 2009 under section 280F(d)(4)(A)(i), (v).

ss purpose ofeach expense. Sec. 274(d)(4); sec. 1.274- 5T(b) and (c), Temporary Income Tax Regs., 50 Fed. Reg. 46014-46016 (Nov. 6, 4"Listed property" includes any passenger automobile and "any other property used as a means oftransportation", s_eee sec. 280F(d)(4)(A)(i) and (ii), but sec. 274(d)'s stringent substantiationrules do not apply to a "qualified nonpersonal use vehicle", sec. 274(d), defined as "any vehicle which, by reason of its nature, is not likely to be used more than a de minimi

280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd per curiam, 412 F.2d 201 (2d Cir. 1969). Listed property includes any passenger automobile and cellular telephone. Sec. 280F(d)(4)(A). For these expenses, only certain types of"other sufficient evidence" will suffice. Sec. 1.274-5T(c)(3), Temporary Income Tax Regs., 50 Fed.

Section 274(d) prescribes more stringent substantiation requirements before a taxpayer may deduct certain categories ofexpenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use oflisted property as defined in section 280F(d)(4)(A).

280F(d)(4)(A); Sanfordv. Commissioner, 50 T.C. 823, 827 (1968), aff'd per curiam, 412 F.2d 201 (2d Cir. 1969). Section 274(d) applies to certain business expenses including, among other things, expenses for gifts and listed property (e.g., automobile expenses, cellular telephones, computer equipment, or any property ofa type generally used for

Section 1.274-5(j)(2), Income Tax Regs., provides that the strict substantiation requirements for vehicle expenses prescribed in section 274(d) - 25 - must be met even where the optional standard mileage rate is used." Moreover, the Court may not use the rule established in Cohan v.

Section 280A(a) provides that for individual taxpayers "no deduction otherwise allowable under this chapter shall be allowed with respect to the use ofa dwelling unit which is used by the taxpayer during the taxable year as a residence." Section 280A(c) contains an exception to section 280A(a). It provides: "Subsection (a) shall not apply to any it

As an exception to this general rule, section 461(g)(2) provides that points may be immediately deductible if"paid in respect ofany indebtedness incurred i connection with the purchase or improvement of, and secured by, the principal residence ofthe taxpayer".

280F(d)(4)(A)(i). -9- 2. Insurance Petitioners are not entitled to an additional deduction for insurance because they have failed to establish that än insurance expense in excess ofthe amount shown on their 2006 return has been paid or incurred. 3. Legal and Professional Fees The evidence shows that pëtitioners paid closing costs totaling $10

(i), the term "qualified residence" means: (I) the principal residence (within the meaning ofsection 121) ofthe taxpayer, and (II) 1 other residence ofthe taxpayer which is selected by the taxpayer for purposes ofthis subsection for the taxable year and which is used by the taxpayer as a residence (within the meaning of section 280A(d)(1)).

72. Section 274(d) prescribes more stringent substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including expenses related to business meals and entertainment and the use oflisted property as defined in section 280F(d)(4). See Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd per curiam, 412 F.2d 201 (2d Cir. 1969). As relevant here, the term - 10 - "listed property" includes passenger automobiles and cell phones. Sec. 280F(d)(4)(A)(i), (v).4

Section 274(d) prescribes more stringent substantiation requirements before a taxpayermay deduct certain categories ofexpenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use oflisted property as defined in section 280F(d)(A)(4).

Moreover, deductions relating to travel, meals.and entertainment, and certain listed property defined in section 280F(d)(4), including passenger 5A taxpayer is entitled to deduct unreimbursed employee expenses only to the extent the taxpayer demonstrates that he or she could not have been reimbursed by his or her employer.

Section 274(d) prescribes more stringent.substantiation requirements to be met before a taxpayer may deduct certain categories ofexpenses, including travel expenses, meals and entertainment expenditures, and expenses related to the use of listed property as defined in section 280F(d)(4)(A).

7491(a)(2); see also Rule 142(a)(2).

These expenses include travel expenses and section 280F(d)(4) listed property expenses.

These strict substantiation requirements apply to any traveling expense, including meals and lodging away from home, any item with respect to an activity in the nature of entertainment, or the use oflisted property, as defined in section 280F(d)(4), including passenger automobiles and, for the years at issue, cellular telephones.

Deductions with respect to "listed property" described in section 280F(d)(4), such as vehicles, computers, and cellular telephones during 2009, are subject to special substantiation rules under section 274(d).

elatives. A taxpayermay not deduct a personal, living, or family expense unless the Code expressly provides otherwise Sec. 262(a).2 Petitioners periodically allowed family members to live in the 2Although neither petitioners nor respondent discussed sec. 280A, we note that no deduction is allowed with respect to the use ofa dwelling unit which is (continued...) - 8 - [*8] farmhouse rent free and, at other times, left the farmhouse vacant. Petitioners contend that these family members provided se

Section 1.274-5(j)(2), Income Tax Regs., provides that the strict substantiation requirements ofsection 274(d) for vehicle expenses must be met even where the optional standard mileage rate is used.

nses of$8,231 on his 2006 Schedule A. Petitioners claimed, and respondent disallowed, a deduction of$2,421 for "misc mi" on their 2007 Schedule A. Passenger automobiles and any other property used as a means oftransportation are listed property, see sec. 280F(d)(4)(A)(i) and (ii), and these expenses are subject to the strict substantiation -31-- requirements ofsection 274(d). Section 274(d) requires a taxpayer.to substantiate the expenses by adequate records or other corroborating evidence of(1)

Section 274(d) provides that no deduction shall be allowed with respect to any listed property defined in section 280F(d)(4), unless the taxpayer substantiates: the amount ofthe expense, the time and place ofthe use ofthe property, the business purpose ofthe expense, and the business relationship to the taxpayer ofthe property used.

To deduct items in these categories, a taxpayermust show that the item claimed is directly related to or associated with the active conduct ofher trade or business. Sec. 274(a). She must also provide "adequate records" showing the amount ofthe expense, the time and place ofthe expense, the business purpose ofthe expense, and the

, living, or family expenses. Sec. 262(a). Section 274(d) prescribes more stringent substantiation requirements before a taxpayer may deduct certain categories ofexpenses, including expenses related - 10 - to the use oflisted property as defined in section 280F(d)(4). See Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd, 412 F.2d 201 (2d Cir. 1969). As relevant here, the term "listed property" includes passenger automobiles. Sec. 280F(d)(4)(A)(i). To satisfy the requirements ofsection 274

titled "Mileage Travel" to substantiate the amount claimed on his Schedule C; but when he was asked at trial about the amount ofcar and truck expenses he claimed, petitioner stated: "I have no idea." Passenger automobiles are "listed property" under section 280F(d)(4). Section 274(d) disallows any deduction with respect to listed property unless the taxpayer adequately substantiates: (1) the amount ofthe expense, (2) the time and place ofthe travel or use ofthe property, (3) the business purpose

Under section 280A(c)(1), a taxpayermay be allowed a deduction.forthe business use ofhis or her home ifthe item is allocable to a portion ofthe dwelling unit that is exclusively used on a regular basis for certain enumerated business purposes. See sec. 280A(c)(1)(A), (B), and (C). Petitioner did not claim deductions for business use ofhis home in his ori

280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827-828 (1968), aff'd per curiam, 412 F.2d 201 (2d Cir. 1969). II. Car and Truck Expenses Generally, passenger automobiles and any other property used as a means of transportation are listed property, see sec. 280F(d)(4)(A)(i) and (ii), and these expenses are subject to the strict substantia

And to determine whether section 168(g) applies to property, we must first apply section 280F(b)--a section that relates to "listed property" with limited business use.

However, section 274(d) overrides the Cohan rule with respect to section 280F(d)(4) "listed property" and thus specifically precludes the Court from allowing automobile expenses on the basis ofany approximation or the taxpayer's uncorroboratedtestimony.

280F(d)(4)(A)(i).5 .. . . 5To satisfy the regilirements ofsec. 274(d), a taxpayer generally must maintain records and documentary evidence which, in combination, are sufficient to establish the amount, date and time, and business purpose ofeach sepárate expenditure or business use oflisted property.. Sec. 1.274-5T(b)(6), Temporary, Income Tax

Ifin any yeartaxpayers' business use ofproperty falls to 50% or less, deductions previously claimed under section 179 are subject to rebapture under section 280F(b)(2) if"listed" property or under section 179(d)(10) ifnot - "listed" property.

2009 was used 100% ofthe time in eitherNorthside Construction or for services as an employee ofthe fire department, both admitted that the automobile was also used for personal, family, and household purposes. An automobile is a "listed property", sec. 280F(d)(4); sec. 1.280F-6(b)(1)(i), Income Tax Regs. and is subject to the special limitations ofsection 280F(d), which provides in part: SEC. 280F(d). Definitions and Special Rules.--For purposes of this section-- (1) Coordination with Section 1

tements. Nothing in the trial record indicates the amount, time and place, "Ifthe telephone expense relates to a cellular telephone, it is subject to the strict substantiation requirements ofsec. 274(d) because cellular phones are listed property in sec. 280F(d)(4)(A)(v). Mr. Phillips did not substantiate the date, time, and business purpose ofany use ofthe telephone. Ifthe telephone expense relates to a landline, it is subject to sec. 262(b), which disallows deductions for the first telephone l

l, living, or family expenses. Sec. 262(a). - 10 - Section 274(d) prescribes more stringent substantiation requirements before a taxpayermay deduct certain categories ofexpenses, including expenses related to the use oflisted property as defined in section 280F(d)(4). See Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd, 412 F.2d 201 (2d Cir. 1969). As relevant here, the term "listed property" includes, inter alia, passenger automobiles and computers and peripheral equipment. Sec. 280F(d)

led to maintain adequate records. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930) (Cohan rule); sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). However, sec. 274(d) overrides the Cohan rule with respect to sec. 280F(d)(4) "listed property" and thus specifically precludes the Court from allowing a deduction for automobile expenses on the basis ofany approximation or the taxpayer's uncorroborated testimony. - 10 - evidence ofitems such as the amount ofth

Section 274(d) prescribes more stringent substantiation requirements before a taxpayer may deduct certain categories ofexpenses, including expenses related to the use oflisted pi·operty as defined in section 280F(d)(4).

And to determine whether section 168(g) applies to property, we must first apply section 280F(b)--a section that relates to "listed property" with limited business use.

To deduct items in these categories, a taxpayermust show that the item claimed is directly related to or associated with the active conduct ofher trade or business. Sec. 274(a). She must also provide "adequate records" showing the amount ofthe expense, the time and place ofthe expense, the business purpose ofthe expense, and the

become material and must be kept available for inspection." Certain expenses are subject to strict substantiation rules under section 274(d). Such expenses include those relating to travel, meals and entertainment, gifts, and listed property under section 280F(d)(4). For the years in issue listed property included passenger automobiles, any other property used as a means of transportation, computers, and cellular telephones." To comply with the strict substantiation rules, the taxpayer must sub

And to determine whether section 168(g) applies to property, we must first apply section 280F(b)--a section that relates to "listed property" with limited business use.

become material and must be kept available for inspection." Certain expenses are subject to strict substantiation rules under section 274(d). Such expenses include those relating to travel, meals and entertainment, gifts, and listed property under section 280F(d)(4). For the years in issue listed property included passenger automobiles, any other property used as a means of transportation, computers, and cellular telephones." To comply with the strict substantiation rules, the taxpayer must sub

ed by adequate records or sufficient evidence corroborating the taxpayer's own statement. Sec. 274(d); sec. 1.274-5T(a) and (b), Temporary Income Tax Regs., - 7 - 50 Fed. Reg. 46014 (Nov. 6, 1985). Listed property includes any passenger automobile Sec. 280F(d)(4)(A)(i). Petitioner created "memos" on.a personal digital device to detail Leaks' expenses for 2006 and 2007. Each memo has a time stamp at the bottom ofthe page. The time stamp on the 2006 memo is 2/15/2007, and the time stamp on the 200

280F(d)(4); sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). To deduct such items, the taxpayermust substantiate "by [either] adequate records or by sufficient evidence corroborating * * * [his] own statement" the amount ofthe expense, the business purpose ofthe expense, and the business relationship to the taxp

which includes passenger automobiles and cellular phones.5 Sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985); see also Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd, 412 F.2d 201 (2d Cir. 1969). See generally sec. 280F(d)(4). In the ensuing discussion, where appropriate, we will identify the applicable substantiation standard used to analyze petitioner's claims. 5A cellular phone was considered listed property for the year at issue. Sec. 280F(d)(4) was am

280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd per curiam, 412 F.2d 201 (2d Cir. 1969). But for the reasonable-basis and section 274(d) limitations on the authority under Cohan to estimate a taxpayer's deductible business expenses, we would be inclined to attempt an estimate ofpetitioner's allowable business expenses. H

To satisfy the adequate records requirement ofsection 274(d), the taxpayer shall maintain an account book, a diary, a log, a statement ofexpense, trip sheets, or similar record and documentary evidence that in combination are sufficient to establish each element ofthe expenditure or use. Sec. 1.274-5T(c)(2)(i), Temporary Income Tax

Section 274(d) requires a taxpayer to substantiate "by adequate records or by sufficient evidence corroboratirig the taxpayer's own statement" any expen es for travel and "with respect to any listed property (as def'med by section 280F(d)(4))".

Business Use ofHome Deductions Section 280A, in general, provides that no deduction is allowed,with respect to the use ofa taxpayer's personal residence.

These strict ' substantiation requirements ofsection 274(d) apply to any traveling expense, including meals and lodging away from home, any item with respect to an activity in the nature ofentértainment, or the use'oflisted property, as defined in section 280F(d)(4), including.passengerautoinóbiles..

280F(d)(4)(A)(i), - 10 - I. Disallowed Deductions Keeping these fundamental principles ofFederal income taxation in mind, we turn our attention to each Schedule C. According to petitioners, all ofthe deductions claimed on anÿ ofthe Schedules C relate to expenses incurred in one or the other oftheir trades or businesses. , . A. Deductions Clai

Subject to certain exceptions, section 280A bars a taxpayer from deducting expenses incurred with respect to use ofthe taxpayer's residence.

Trze'ciak rhalntained án area or an offiòe in petitioner(cid:0)54r1e'sidence where she did work relating to her real- estate activities, let alone an area or an office in that residence that qüalifiëd as her "principal place ofbusiness under section 280A*(section 280A principal place of All section references are to the Internal Revenue Code (Code) i ëffect at all rel vanttimes.

280F(d)(4)(A)(v). Under section 274(d), the taxpayer generally must substantiate either by adequate records or by sufficient evidence corroborating the taxpayer's own statement: (A) the amount ofthe expense; (B) the time and place the expense was incurred; (C) the business purpose ofthe expense; and (D) in the case ofan entertainment or gift e

280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd per curiam, 412 F.2d 201 (2d Cir. 1969). Section 274(d) applies to certain business expenses including, among other things, expenses for listed property (e.g., automobile expenses, cellular telephones, - 6 - computer equipment, r any property ofa type generally used for pu

Accordingly, respondent disallowed many ofthe above-claimed business expense and depreciation deductions relatingthereto, and under section 280F(b)(2) respondent required recapture on petitioners' 2006 tax return ofairplane and other costs petitioners claimed as current expense deductions under section 179 for 2005 and prior years.4 Respondent also determined that for 2007 petitioners had not substantiated their bases in Lakebreeze and Trinity.

But respondent contends that, as a legal matter, petitioners may not allocate any part ofthe mortgage to investment property because they did not actually subdivide the propertyor use it for any business purpose enumerated under section 280A.8 Respondent further contends that even ifpetitioners were not legally precluded 7As discussed in more detail infra, the evidence does not support any premise that the amount ofthe mortgage debt was exactly $1.8 million at any relevant time.

Section 274(d) requires a taxpayerto substantiate "by adequate records or by sufficientevidence - 5 - [*5] corroborating the taxpayer's own statement" any deduction "with respect to any listed property (as defined by section 280F(d)(4))".

To satisfy the adequate records requirement ofsection 274(d), the taxpayer shall maintain an account book, a diary, a log, a statement ofexpense, trip sheets, or similar record and documentary evidence that in combination are sufficient to establish each element ofthe expenditure or use. Sec. 1.274-5T(c)(2)(i), Temporary Income Tax

ng and for a passenger automobile. For certain expenses otherwise deductible under section 162(a), such as expenses for meals while traveling away from home, see sec. 274(d)(1), and expenses for a passenger automobile that is "listed property", see sec. 280F(d)(4), a taxpayer must also satisfy the substantiation requirements set forth in section 274(d) before such expenses will be allowed as deductions. As pertinent here, in order to satisfy the substantiation requirements in section 274(d) the

No deductions under section 162 or 212 shall be allowed for, among other things, travel expenses, entertainment expenses, gifts, and expenses with respect to "listed property" as defined in section 280F(d)(4)"unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement": (1) the amount ofthe expense or other item; (2) the time and place of the travel, entertainment, or use, or date and description ofthe gift; (3) the business purpose

Phone Expenses Petitioner claims a $1,862 deduction for a cellular phone plan. The deduction was disallowed for lack ofsubstantiation. A cell phone is "listed property" and subject to the strict substantiation requirements ofsection 274(d). - 12 - Sec. 280F(d)(4)(A)(v).4 The deduction includes the total cost ofpetitioner's plan; no allocation between business and personal use has been provided. A taxpayer must establish the amount ofbusiness use and the amount oftotal use forthe property to subs

Section 280A(c)(1)(A), however, provides that section 280A shall not apply ifa portion ofthe taxpayer's personal residence is exclusively used on a regular basis as the principal place·of business for any trade or business ofthe taxpayer.

280F(d)(4)(A)(i). For expenses relating to automobiles, a taxpayer must substantiate with adequate records: (1) the amount ofeach separate expense; (2) the mileage for each business use ofthe automobile and the total mileage for all purposes during the taxable period; (3) the date ofthe business use; and (4) the business purpose ofthe use. See

No deductions under section 162 shall be allowed for "listed property", as defined in section 280F(d)(4), "unless the taxpayer substantiates by adequate records or by sufficient evidence corroboratingthe taxpayer's own statement".

- The heightened substantiation requirements ofsection 274(d) apply to: (1) any travel expense, including meals and lodging away from home; (2) any item with respectto an activity in the nature ofentertainment, amusement, or recreation; (3) an expense for gifts; or (4) the use of"listed property", as defined in section 280F(d)(4), including any passenger automobiles.

The office expense deductions include the cost ofa computer, printer and ink cartridges, a DVD player, a digital camera, and a GPS device, all ofwhich are listed propertyunder section 280F(d)(4) subject to the strict substantiation requirements ofsection 274(d).

ened substantiation requirements of section 274 (d) apply to: (1) Any travel expense, including meals and lodging while away from home; (2) any item with respect to an activity in the nature of entertainment, amusement, or recreation; (3) any expense for gifts; and (4) the use of "listed property," as defined in section 280F(d) (4), which includes any "passenger automobile".

280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd per curiam, 412 F.2d 201 (2d Cir. 1969). Section 274(d) applies to certain business expenses including, among other things, expenses for gifts and listed property (e.g., automobile expenses, cellular telephones, computer equipment, or any property ofa type generally used fo

No deduction under section 162 shall be allowed for, among other things, travel expenses, entertainment, gifts, and expenses with respect to "listed property" defined in section 280F(d)(4)"unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement": (1) the amount ofthe expense or other item; (2) the time and place ofthe travel, entertainment, or use, or date and description ofthe gift; (3) the business purpose ofthe expense or othe

o Commissioner, T.C. Memo. 1997-89, aff'd withoutpublished opinion, 173 F.3d 427 (4th Cir. 1999); see, e.g., Murata v. Commissioner, T.C. Memo. 1996 321; Golden v. Commissioner, T.C. Memo. 1993-602. 5 Included in the definition oflisted property in sec. 280F(d)(4)'is any passenger automobile or other property used as a means oftransportation. - 24 - In the iristant case, the documentary evidence regarding petitioners' deductions is limited. On the basis ofthe record, however, we are convinced t

280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), aff'd per curiam, 412 F.2d 201.(2d Cir. 1969). The expenses to which the strict,substantiation requirements ofsection 274(d) apply include, among other things, expenses for listed property (e.g., automobile expenses, cellular telephones, computer equipment, or any property of a t

280F (d) (4) (A) (i) cand ("i-i) , -(5) ; Larson v. Commissioner, 3 T. C. Memo. 2008-187; sec..1.274-5T(a)s, Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6,, 1985) (expressly superseding the so- a called Cohan rule and making -it inapplicable) . - The flush language, of section 274 (d) , however, specifically excludes from the strict s

For example, section 274(d) provides that no deduction is allowed with respect to, inter alia, any listed property (as defined in section 280F(d) (4)), unless the taxpayer subs antiates by adequate records or by sufficient evidence cor oborating the taxpayer's own statement (1) the amount of the se pense or item; (2) the time and place of the travel, entertainment, or expense; (3) the business purpose of the entertainment or expense; and (4) the taxpayer's relationship to the

"Listed property" is defined in section 280F(d) (4) to include any property used as a means of transportation.

An except on to the general ,rule is found in section 280A (c) (1) .(A) , which provides that.

ightened substantiation requirements of section 274 (d) apply to: (1) Any traveling expense, including meals and lodging away from home; (2) any item with respect to an activity in the nature of entertainment, amusement, or recreation; (3) any expense for gifts; or (4) the use of "listed property", as defined in section 280F(d) (4), including any pass nger automobiles.

- 21 - invoices, payment confirmations, and receipts." With respect to the charges for utilities and security, house cleaning, and exterminator services, generally, under section 280A" no deduction is allowable for use of a home in connection with an activity which is merely for the production of income within the meaning of section 212 but is not a trade or business under section 162.

Section 274 requires strict substantiation for expenses relating to any section 280F(d) (4) listed property.

Section 274 (d) overrides the Cohan rule "and thus specifically precludes the Court from allowing a deduction for travel expenses, entertainment expenses, gifts, and expenses with respect to section 280F(d) (4) "listed property" (including passenger automobiles) "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement": (1) The amount of the expense or other item; (2) the time and place of the travel, entertainment or use, or dat

I Passenger automobiles are subject to th substantiation requirements of section 274(d) because they ire listed property as defined in section 280F(d) (4) (A) (I).

As respondent states on brief, to allow petitioners two deductions would be to double the amount of the allowed deduction under section 280A(c).- Accordingly, we sustain respondent's determination that petitioners are not entitled to the deduction for business use of their home claimed on their 2006 ACI Schedule C.

of business property, as reported on Schedule E. 8After trial respondent amended his answer to assert, alternatively, that pursuant to sec. 212(2) petitioners' claimed deductions are limited as relating to investment properties and that pursuant to sec. 280A petitioners' personal use of the Washington Harbour condominiums and Batts Neck Plantation precludes the deduction of any expenses relating to these properties. Respondent acknowledges that he has the burden of proof on these new issues. Se

Car and Truck Expenses Cars and trucks are "listed property" pursuant to.section 280F(d) (4).

280F(d) (4) (A) (i). To satisfy the adequate records requirement of section 274 (d), the taxpayer shall maintain an account book, a diary, a log, a statement of expense, trip sheets, or similar record and documentary evidence that in combination are sufficient to establish each element of the expenditure or use. Sec. 1:274- ST(c) (2) (i), Temp

280F(d) (4) (A) (i) and (ii), (5); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969); Larson v. Commissioner, T.C. Memo. 2008-187; sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985) (expressly superseding the "so-called Cohan rule and making it inapplicable). Thus, in or

A "qualified residence" is the taxpayer's principal residence or one other residence of the taxpayer which is selected by the taxpayer for purposes of the deduction and which is used by the taxpayer as a residence within the meaning of section 280A(d) (1).

ertained. Sec. 274(d). Listed property includes passenger automobiles, any type of property generally used for entertainment or recreation, any computer or peripheral equipment, and any cellular phone or other similar telecommunications equipment.4 Sec. 280F(d) (4). Generally, deductions for expenses subject to the strict 4Sec. 280F(d) (4) was amended by the Small Business Jobs Act of 2010, Pub. L. 111-240, sec. 2043(a), 124 Stat. 2560, which removed cellular phones and other similar telecommuni

Business Use of Personal Residence In addition to the requirements discussed above, section 280A(a) provides the general rule that deductions with respect to the use of the taxpayer's residence are not allowable unless an exception applies.

An except on to the general ,rule is found in section 280A (c) (1) .(A) , which provides that.

Petitioner did not provide adequate substantiation of the business use of the computer. Accordingly, we sustain respondentl's disallowance of the deduction for the claimed .computer expense. 3. Claimed Classroom Improvement and Maintenance Expenses Petitioner produced receipts purportedly for various . improvements to and maintena

In addition to the requirements discussed above, section 280A(a) provides the general rule that deductions with respect to -7- the use of the taxpayer's residence are not allowable unless an exception applies.

Section 274 (d) provides that no.deduction under section 162 shall be allowed for: (a) Travel expenses (including meals 'and lodging while away from home) ; (b) any item related to an activity of a type considered to .be entertainment, amusement, or recreation; (c) any expense for gifts; or (d) the use of any "listed property",

280F(d) (4) (A) (v). A taxpayer must establish the amount of business use and the amount of total use'for the property to substantiate the amount of expenses for listed property. Sec. 1.274-5T(b) (6) (i) (:B), Temporary Income Tax Regs., 50 Fed. Reg. 'We note that sec. 170(j) prohibits a deduction for unreimbursed travel expenses incurred ,inc

274(d) (4) (disallowing unsubstantiated deductions for listed property as defined in section 280F(d) (4)); sec.

eightened substantiation requirements of section 274(d) apply to: (1) Any traveling expense, including meals and lodging away from home; (2) any item with respect to an activity in the nature of entertainment, amusement, or recreation; (3) any expense for gifts; or (4) the use of "listed property", as defined in section 280F(d) (4), including any passenger automobiles.

e event, as seems likely, that "substantially all" of petitioner's use of the limousine was not "in a trade or business of providing to unrelated persons services consisting of the transportation of persons or property for compensation or hire", see sec. 280F(d) (4) (C), petitioner would be subject to the strict substantiation requirements of sec. 274 (d). Petitioner, however, has failed to show he meets the substantiation requirements of sec. 1.6001-1(a) and (e), Income Tax Regs., or to provide

280F(d) (4) (A) (i), (v). If otherwise deductible, then expenses subject to section 274 (d) must be substantiated either by adequate records or by sufficient evidence corroborating the taxpayer's own statement showing: (A) The amount of the expense; (B) the time and place the expense was incurred; (C) the business purpose of the expense; and (

Specifically, and as pertinent herein, section 274 (d) provides that no deduction is allowable for traveling expenses (including meals and lodging while away from home) or with respect to listed property such as a passenger automobile, see sec.

Moreover, to claim a section 179 deduction for "listed property", whibh is defined in section 280F(d) (4) to include any passenger automobile, the taxpayer must satisfy the strict substantiation re uirements of section 274(d).

979). As discussed below, petitioner must establish his entitlement to any deduction claimed. sFor certain expenses otherwise deductible under sec. 162(a), such as business expenses relating to."listed property", including passenger automobiles, see sec. 280F(d) (4) (A) (i), petitioner must satisfy the substantiation requirements set forth in sec. 274(d) before such expenses will be allowed as deduc- tions. See sec. 274(d). In support of his position that he is entitled to deduct the claimed bus

As respondent states on brief, to allow petitioners two deductions would be to double the amount of the allowed deduction under section 280A(c).- Accordingly, we sustain respondent's determination that petitioners are not entitled to the deduction for business use of their home claimed on their 2006 ACI Schedule C.

Generally, section 280A(a) sprohibits a taxpayer from deducting expenses for the ,userof a dwelling unit that is the 3Sed.

Petitioners' Home Office Deduction Section 280A(a) provides as a general rule that no deduction otherwise allowable to an individual "shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence." Section - 13 - 280A(c) (1), however, provides that the general rule of section 280A(a) is not applicable for certain bu

. At tl e time they filed their petition, petitioners resided in California. At trial respondent co ceded that any amount of mortgage interest and real estate ta es not allowed on Schedule C, Profit or Lcss From Business, by the allocation effect of sec. 280A(c) (1) would be claimed on Schedule A, Itemized Deductions. Respåndent also conceded thÉt the rooms in petitioners' residence desidnated as the library aZd as the garage were used exclusively by petitioners to conduct båsiness. All other is

6, 1985) , Section 274 (d) provides that no deduction shall be allowed with respect to: (a) Any traveling expense, including meals and lodging away from home; ·(b) any item related t an activity.of a type considered to be entertainment, amusement, or recreation; or (c) the use of any "listed property", as definecl in section 280F(d) (4) (

- 6 - Section 274 (d) overrides the Cohan rule and thus specifically precludes the Court from allowing a deduction for travel expenses, entertainment expenses, gifts, and expenses with respect to section 280F(d) (4) "listed property" (including passenger automobiles) "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement": (1) The amount of the expense or other item; (2) the time and place of the travel, entertainment or use, o

280F(d) (4)_(A)'(i). The automobile expenses stem from petitioner's use of two pas.senger automobiles and ·are . therefore subject to the strict substantiation requirements of section -274 (d) . A taxpayer shall substantiate certain elements of ~ expenditure and use by adequate.records or sufficient evidence to corroborate his or her own state

"Listed property" is defined in section 280F(d) (4) to include any property used as a means of transportation.

6, 1985) .' Specifically, and'as pertinent herein,' section 274(d) provides that no deduction is allowable for, traveling expenses (including meals and lodging, while away from home) or entertainment expenses or with respect to listed property as defined in section 280F(d)(4), unless the deduction is substantiated in accordance with the strict substantiation .

Section 280F(d)(4) includes as listed property any passenger automobile or cellular telephone . Generally, expenses subject to the strict substantiation requirements of section - 5 - 274(d) must be disallowed in full'unless the taxpayer satisfies every element of those requirements . Sanford v . Commissioner , supra ; Larson v . Commissioner, T .C

Section 274(d) imposes strict -substantiation requirements for "listed property". To substantiate expenses for listed property, a taxpayer must show either by adequate records or by sufficient evidence corroborating the taxpayer's own statement: (1) The amount of each separate expenditure with respect to an item of listed property

Section 274(d) imposes strict substantiation requirements for "listed property". To substantiate expenses for listed property, a taxpayer must show either by adequate records or by sufficient evidence corroborating the taxpayer's own statement: (1) The amount of each separate expenditure with respect to an item of listed property;

Section 274(d) .provides that no deduction shall be allowed with respect to : (cid:127)(a) Any traveling expense, including , meals and lodging away from home ; (b) any item related to an activity of a type considered .to .be `entertainment , amusement, or recreation; or (c) the -use of any " listed property", as defined if - 8 in section 280F(d)(4),4 unless the taxpayer substantiates certain elements .

Furthermore, respondent .,argues that the Mustang -is.- listed property within :the meaning of section 280F(d) (4) (A) (i)- and therefore does not qualify for,the bonus depreciation afforded by section 168(k) .

Section 274(d) provides that no deduction shall be allowed with respect to : (a) Any traveling expense, including meals and lodging away from home ; (b) any item related to an activity of a type considered to be entertainment, amusement, or recreation ; or (c) the use of any "listed property", as defined in section 280F(d)(4),

Section 274(d) provides that no deduction shall be allowed with respect to: (a) Any traveling expense, including meals and lodging away from home; (b) any item related to an activity of a type considered to be entertainment, amusement,, or recreation; or (c) the use of any "listed property", as defined in section 280F(d) (4),3

280F(d) (4) (A); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969). Under section 7491(a) (1), the burden of proof shifts from the taxpayer to the Commissioner if the taxpayer produces credible evidence with respect to any factual issue relevant to ascertaining the taxpayer's tax liability and the t

Section 274 (d)(4) provides that no deduction is allowed for listed property as defined by section 280F(d)(4) unless the taxpayer substantiates by adequate records or corroborative evidence (1) the amount of such expense, (2) the time and place of use, (3) the business purpose of the expense , and (4) the business relationship of

Section 280F(d)(4) includes as listed property any passenger automobile . Generally, automobile expenses must,be disallowed in full unless the taxpayer satisfies the strict substantiation requirements of section 274(d) . Sanford v . Commissioner , 50 T .C. 823, 827-.828 (1968), affd . per curiam 412 F .2d 201 (2d Cir . 1969) ; Larson v . Commission

ightened substantiation requirements of section 274(d) apply to: (1) Any traveling expense, including meals and lodging away from home; (2) any item with respect to an activity in thes nature of entertainment, amusement, or recreation; (3) an expense for gifts; or (4) the use of "listed property",- as defined in section 280F.(d) (4), including- any passenger automobiles.

Section 280F(d)(4) includes cellular telephones as listed property. Generally, deductions for expenses subject t o the strict. substantiation requirements of section .274(d) must be disallowed in full unless the taxpayer satisfies every element of {d those requirements . Sanford v . Commissioner , supra at 827-828 ; Larson v . Commissioner, T .C. M

,Car and Truck Expenses Passenger automobiles and any other property used as a means of transportation are "listed property" as defined by section 280F(d) (4).

n ac which is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility u connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed propert defined in section 280F(d) (4)) , unless .the taxpayer substantiates by adequate re ords or by sufficient evidence corroborating the taxpayer's own statement (A) the amount of such expense or othe item, (B) the time and place of the travel , entertainment, amus

Business .Use of Home Section 280A(c)(1)(A) permits the deduction of expenses allocable to a portion of the dwelling unit that was used exclusively and regularly as the principal place of business for the taxpayer's trade or business .

-18- Vehicle expenses are subject to the substantiatio n requirements of section 274(d) because vehicles are listed property under section 280F(d)(4)(A)(i) .

Section 274(d) disallows deductions for travel expenses ; gifts, meals, and entertainment, as well as-for listed property as, defined by section 280F(d)(4), unless the taxpayer substantiates by adequate records or corroborates by sufficient evidence the taxpayer's own statements as to : (1) The amount of the expense ; (2) the time and place of the travel or entertainment, or the date and description of the gift ; (3) the business purpose of the expense ; and (4) the business relatio

280F(d) (4) 2 Section 274 (d) and the regulations thereunder require taxpayers to substantiate their deductions by adequate records or sufficient evidence establishing the amount, time, place, and business purpose of the expense to corroborate the taxpayer's own testimony. See sec. 1.274-5T(b), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (N

Section 274(d) imposes strict substantiation requirements for, among other things, traveling expenses and expenses relating to listed property, defined in section 280F(d) (4) (A) (i) to include passenger automobiles.

Section 274(d) applies to : (1) Any traveling expense, including meals and lodging away from home ; (2) entertainment, amusement, and recreational expenses ; (3) any expense for gifts ; or (4) the use of "listed property", as defined in section 280F(d)(4), including passenger automobiles .

280F(d) (4) (A) (i) and (ii), (5); Sanford v. Commissioner, 50.T.C. 823, 827 (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969); Larson v. Commissioner, T.C. Memo. 2008-187; sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985) (expressly superseding the so-called Cohan rule and making it inapplicable). Thus, in ord

280F(d) (4) (A). To deduct any expenses related to such property, a taxpayer must "[substantiate] by adequate records or by sufficient evidence" the amount, time and place, and business purpose of the expenditure. Sec. 274(d). 1. Car Expenses5 Claimed RA's NOD P claimed P claimed R argued on return report adjust. at trial in brief at trial $8,

Section 274(d) provides that no deduction shall be allowed with respect to: (a) Any traveling expense, including meals and lodging away from home; (b) any item related to an - 14 - activity of: a type considered to be entertainment, amusement,, or recreation; or (c) the use of any "listed property", as, defined in section 280F(d) (4).,4 unless the taxpayer substantiates certain elements.

Section 274'1;(d) overrides the Cohan rule with respect to section 280F(d)(1 .) "listed property" and thus specifically precludes the Court from allowing automobile expenses on the basis of any approximation or the taxpayer's uncorroborated testimony .

No deduction shall be allowed for, among other things, traveling expenses, entertainment expenses, gifts, and expenses«with-respect to "listed property" defined in section 280F(d) (4) "unleas the taxpayer substantiates by adequate records or by sufficient evidence.corroborating the taxpayer's own a statement": (1) Thelamount of the expense or other item; (2)-the time and place of the stravel entertainment'or use, or date and description of the gift; (3) the business purpose of the expense or -ot

* Under section 274(d), a deduction for traveling expenses, meals and entertainment, or listed property (as defined in section 280F(d) (4)) is disallowed unless the taxpayer properly substantiates.

and as pertinent herein, section 274(d) provides that no deduction isiallowable for traveling expenses (including meals and lodging while away from home) or with respect to listed property as defined in section 280F(d)(4), unless the deduction is substantiated in accordance with the strict substantiation requirements of section 274(d) and the regulations promulgated thereunder .' Included within the Sec .

recreational expenses.; or (3) the use of "listed property,', as defined in section 280F(d)(4), including personal computers .

ss, for 2004 relating to petitioner's real property in California ; (2) if petitioner is not entitled to deduct Schedule E expenses for th e 2004 tax year, whether the real property in California is a residence of petitioner for 2004 for purposes of section 280A . 2 FINDINGS OF FACT Some of the facts have been stipulated, and the stipulated facts and accompanying . exhibits are hereby incorporated by 'Petitioner conceded that he received $67 .3 of unreported income in 2004 . This amount included

he mobile home . The amount is not deductible for either year . First, the Wolfgrams cannot deduct a portion of the mobile home .rent because the Wolfgrams were not engaged in a trade or business . See sec .. 280A(c) (1) (A) .9 Second, even if this 9Sec. 280A provides, in relevant part : SEC . 280A(a) . (a) General Rule .--Except as otherwise provided in this section, in the case of a taxpayer who is an individual or an S corporation, no deduction otherwise allowable under this chapter shall be

Any gain attributable to the original house and land would be realized on the sale of the land (and new house). That approach requires the allocation of the proceeds between the new house and the land, which apparently petitioners did not think to address. Conclusion I would treat the demolition and reconstruction of petitioners’ house

In addition, the amount of the deduction allowable under section 179(a) with respect to any listed property is subject to the limitations of section 280F(a),5 (b),6 and (d)(3) in the same manner as if it were a .recovery deduction allowable under section 168 .7 Sec .

in section 280F(d)(4)(A), automobile expenses otherwise deductible are not allowed unless the taxpayer meets strict substantiation requirements . See sec . 27.4(d) ; Larson v. Commissioner, T .C. Memo . 2008-187 . Specifically, the taxpayer must substantiate the claimed automobile expenses by adequate records or other corroborating. evidence showing t

He claims that he is entitled to use section 280A (d)(4)(A) to deduct all of the expenses concerning the home used as an office before September 2004, but that section relates only to rental property .

Petitioner's claimed deductions for business use of her vehicle have not been substantiated by adequate records as required by section 274(d) .' A passenger vehicle is listed property under section 280F(d)(4) .

6,, .1985) Section 280A(a) generally does not allow a deduction with respect to the use of a residence, by a taxpayer who is an .

In addition, section 274 ( d) impose stringent substantiation requirements for claimed deductions relating to the use of "listed property", which is defined und~r section 280F (d)(4)(A)(i) to include passenger aitomobiles .

A passenger vehicle is listed property under section 280F(d)(4) .

Cell phones are also listed property under section 280F(d) (4) (A) (v) and thus subject to section' 274 (d) .

respondent's adjustments, the Court nevertheless concludes that she is not entitled to a home office deduction . Petitioner has not substantiated the amount of her claimed deduction, nor has she established that she satisfies the requirements under section 280A . III . Accuracy-Related Penalty In pertinent part, section 6662(a) and (b)(2) imposes an accuracy-related-penalty equal to 20 percent of the underpayment that is attributable to a substantial understatement of income tax .6 A substantia

Section 280A(c)(1) permits the deduction of expenses allocable to a portion of a dwelling unit that is use d exclusively and on a regular basis as either (1) the principal place of business for the taxpayer's trade or business, or (2) 7 -12- place of business that is used by clients or customers in meeting or dealing with the taxpayer in the norma

Section 274 ( d) imposes stringent substantiation requirements for claimed deductions relating to the use of "listed property" , which is defined'under section 280F(d)(4)(A)- to include passenger automobiles .

Section 280A(a) provides : "Except as otherwise provided i n this section, in. the case of a taxpayer who is an individual no deduction otherwise allowable under this chapter shal l be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence ." Section 280A(c)°(1)(A) provides an excepti

Allen's ' business use of the home in The Dalles under section 280A(c)'(1 ) for 7 months in 2003, and utility expenses have been include'dEas a part of this deduction .

Expenses associated with travel, -, l 1 meals,(cid:127) and certain listed property ° defined- in section 280F (d)(4) , including passenger.

Section 274(d) imposes stringent substantiation requirements for claimed deductions relating to the use of "listed property", which is defined under: section 280F(d)(4)(A)(i) to include passenger automobiles .

Section 274(d) applies to : (1) Any traveling expense, including meals and lodging away from home ; (2) entertainment, amusement, or recreational expenses ; (3) any expense for gifts ; or (4) the use of "listed property", as defined in section 280F(d) .(4), including passenger automobiles .

465, 472- 473 (1946) ; see also secs .

Cellular Telephone Expense Section 274(d) applies to the use of "listed property" as defined in section 280F(d)(4), .-which,includes cellular telephones .

Section 274 requires more stringent substantiation for travel, meals, and listed property, defined under section 280F(d)(4) to include passenger automobiles, computers or peripheral equipment., and cellular telephones .

Section 274(d) provides that no 6 - deduction shall be allowed with respect to : (a) Any traveling expense, including meals and lodging away from home ; (b) any item related to an activity of a type considered;to be entertainment, amusement, or recreation ; or (c) the use of any "listed property", as defined in section 280F(d

property (as defined in section 280F(d)(4)) , unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (A) the amount of such expense or other item, (B) the time and place of the travel , entertainment, amusement, recreation, or use of the facility or prope

UCC elected the reduced research credit under section 280C(c)(3) on its 1995 return, but not on its 1994 return .

Section 274(d) applies to : (1) Any traveling expense, including meals and lodging away from home ; (2) entertainment, amusement, - 15 - and recreational expenses; (3) any expe se for gifts ;' or (4) the use of "listed property", as defined in section 280F(d)(4) , including passenger automobiles .

Section 274(d)(4) governs the subst ntiation requirements related to listed property, which under section 280F(d) (4) (A) ( includes cellular telephones .

in section 280F(d)(4)(A), automobile expenses otherwise deductible are not allowed unless the taxpayer meets strict substantiation requirements . See sec . 27.4(d) ; Larson v. Commissioner, T .C. Memo . 2008-187 . Specifically, the taxpayer must substantiate the claimed automobile expenses by adequate records or other corroborating. evidence showing t

Section 274(d) provides that no deduction sha 1 be allowed with respect to : (a) Any traveling expense, inclu ing meals and lodging away from home ; (b) any item related o an activity of a type considered to be entertainment, amusemen , or recreation; or (c) the use of any "listed property", as defi ed in section 280F(d)(4), unless the taxpayer substantiates certain elements .

Passenger automobiles are "listed pr perty" under section 280F(d)(4) .

1971) Section 274 further requires strict substantiation-by either adequate records or sufficient .- evidence of expenses with 'respect- to'listed ..property.as defined "in section 280F(d)(4), which includes the Dodge Dakota-in the instant case.?

Section 274(d)(4) overrides the Cohan rule with respect to section 280F(d)(4) "listed property" and thus specifically precludes the Court from allowing automobile expenses on the basis of any approximation or the taxpayer's uncorroborated testimony .

Listed property is defined in section 280F(d)'(4) to include computers and passenger automobiles .

Substantiation Requirements of Section 274(d) Section 274(d) applies to: (1) Any traveling expense, including meals and lodging away from home ; (2) entertainment, amusement, and recreational expenses ; (3) gift expenses ; or (4) the use of "listed property", as defined in section 280F(d)(4), including automobiles .

Automobiles are listed property under section 280F(d)(4)(A)(i) .

However, section 274(d) overrides the Cohan rule with 7 12 respect to section 280F(d)(4) "listed property" and thus specifically precludes the Court from allowing automobile expenses on the basis of any approximation or the taxpayer's, uncorroborated testimony .

Section 274(d) disallows deductions for travel expenses, gifts, meals, and entertainment, as well as for listed property defined by section 280F(d)(4), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statements : (1) The amount of the expense ; .(2) the time and place of the travel or entertainment, or the date and description of the gift ; (3) the business purpose of the expense ; and (4) the business relationshi

Car and truck expenses are subject to the strict substantiation requirement found in section 274(d) and section 280F(d)(4)(A)(i) and (ii) .

Section 280F (d)(4)(A) subjects computers to special substantiation requirements of section 274 as "listed property" . However, section 280F ( d).(4)(B) provides an exception, subject to certain requirements, for computers that taxpayers use exclusively in their business . Whalley v . Commissioner, T .C. Memo . 1996- 533 . On the basis of Ms . Spiv

Section 274 (d) applies to : (1) Any traveling expense, including meals and lodging away from home ; (2) entertainment , amusement , and recreational expenses; (3) any expense for gifts ; or (4) the use of "listed property", as defined in section 280F (d)(4), including passenger automobiles .

Section 274(d)(4) overrides the Cohan rule with respect to section 280F(d)(4) "listed property" and thus specifically precludes the Court from allowing automobile expenses on the basis of any approximation or the taxpayer's uncorroborated testimony .

Section 274(d) applies to : (1) Any traveling expense, including meals and lodging away from home ; (2) entertainment, amusement, and recreational expenses ; (3) any expense for gifts ; or (4) the use of "listed property", as defined in section 280F(d)(4), including passenger automobiles .

Business Expenses Related to Petitioners' Use of Their Residence In addition to the limitations on business expenses discussed above, section 280A(a) provides that a deduction otherwise allowable is not allowed with respect to the use of the taxpayer's residence .

* * * Section 280F(d)(4)(A) i) provides that passenger automobiles are "listed property" .

away from home ; (2) entertainment,,amusement, and recreational expenses ; (3) any expense for gifts ; or (4) the use of listed,property, , as' defined in section 280F(d)(4), including passenger automobiles .` To deduct such expenses, the taxpayer must substantiate by adequate: records or evidence sufficient to corroborate the taxpayer's own testimony : .

For certain kinds of expenses otherwise deductible under section 162(a), such as expenses related to travel, meals and entertainment, and "listed property", as defined in section 280F(d)(4), a taxpayer must satisfy substantiation requirements set forth in section 274(d) before such expenses will be allowed as deductions .

"Listed property" is defined in section 280F(d)(4) to include passenger automobiles .

Section 274(d) provides that no deduction shall be allowed with respect to : (a) Any traveling expense, including meals and lodging away from home ; (b) any item related t an activity of a type considered to be entertainment, amusement, or recreation ; or (c) the use of any "listed property", as defined in section 280F(d)(4), unless the taxpayer substantiates certain elements .

Specifically, section 274(d) provides that no deduction is allowable with respect to listed property as defined in section 280F(d)(4) unless the deduction is substantiated in accordance with the strict substantiation requirements of section 274(d) and the regulations promulgated thereunder .

Vehicle Insurance Section 274(d)(4) provides that no deduction shall be allowed with respect to listed property (as defined in section 280F(d)(4)) unless certain substantiation requirements are met .

Specifically, and as relevant herein, section 274(d) provides that no deduction is allowable with respect to listed property as defined in section 280F(d)(4) unless the deduction is substantiated in accordance with the strict substantiation requirements of section 274(d) and the regulations promulgated thereunder .

Section 274(d) provides that no deduction shall be allowed with respect to : (a) Any traveling expense, including meals and lodging away from home ; (b) any item related to an activity of a type considered to be entertainment, amusemen , or recreation; or (c) the use of any "listed property", as defined in section 280F(d)(4), unless the taxpayer substantiates certain elements .

Substantiation Requirements of Section 274 Section 274(d) applies to: (1) Any traveling expense, including meals and lodging away from home; (2) entertainment, amusement, and recreational expenses; or (3) the use of “listed property”, as defined in section 280F(d), including personal computers.

Listed property is defined in section 280F(d)(4) to include passenger automobiles and other property used for transportation .

5 - was not permitted to write the book at his university office, but rather, he was constrained to write the book at his home .' Petitioner posits that because he used a portion of his home exclusively in connection with his book writing project, he is entitled to deduct under section 280A expenses of $5,094 relating to that portion of his home used as an office .

Section 274(d) applies to : (1) Any traveling expense, including meals and lodging away from home ; (2) entertainment, amusement, and recreational expenses ; or (3) the use of "listed property", as defined in section 280F(d), including passenger automobiles .

Business Use of Home Section 280A(a) denies deductions with respect to the use of a dwelling unit which was used by the taxpayer as a residence during the taxable year .

In the case of traveling expenses and certain othe r expenses, such as entertainment, gifts, and expenses relating to the use of listed properties, including passenger vehicles and other property used as a means of transportation, computers, and cellular phones under section 280F(d)(4)(A), section 274(d) imposes stringent substantiation requirements to document particularly the nature and amount of such expenses .

Passenger automobiles are listed property under section 280F and strict substantiation is therefore required .

On his Form 1040-SS, petitioner claimed the followin g deductions : Truck purchase (as a section 179 expense) $2,500 Insurance (other than health) 3,552 Legal and professional expenses 2,500 Other business property (as a section 280A'i 6,300 deduction for the business use of his residence ) Utilities (as a section 280A deduction for ; the 2,800 business use of his residence ) Repairs and maintenance 800 Supplies 1,000 Taxes and licenses 7,798 Meals and entertainment 5,000 Parking 250 Tolls 100 O

Section 274(d) provides that no deduction shall be allowed with respect to : (a) Any traveling expense, including meals and lodging away from home ; (b) any item related to an activity of a typ e considered to be entertainment, amusement, or recreation ; or (c) the use of any "listed property", as defined in section 280F(d)(4)

Under section 280A, however, deductions associated with a home office are generally disallowed unless the home office is used exclusively and regularly as th principal place of business of the taxpayer . ' Petitioner presented no evidence to substantiate deductions claimed for advertising expenses, car and truck expenses, legal/professional expenses, and

In the case of traveling expenses and certain othe r expenses, such as entertainment, gifts, and expenses relating to the use of listed properties, including passenger vehicles and other property used as a means of transportation, computers, and cellular phones under section 280F(d)(4)(A), section 274(d) imposes stringent substantiation requirements to document particularly the nature and amount of such expenses .

Section 274 provides that expenses paid or incurred with respect to travel and certain listed property are deductible only if the taxpayer meets the stringent substantiation requirements of section 274(d) .

The strict substantiation requirements of section 274 apply to deductions with respect to "any listed property (as defined in section 280F(d)(4))" .

We also note that passenger automobiles are "listed property" under section 280F(d)(4)(A)(i) .

We also note that passenger automobiles are "listed property" under section 280F(d)(4)(A)(i) .

Such deductions are governed by section 280A which generally disallows such deductions, unless petitioner's situation falls within one of the following three exceptions : (1) A portion of the dwelling unit is used exclusively on a regular basis as the taxpayer's principal place of business ; (2) a portion of the dwelling unit is used exclusively on a regular basis as a place of b

The term "listed property" is defined in section 280F(d)(4) and includes any passenger vehicle, any other property used as a means of transportation, and computers .

- 11 - property", as defined in section 280F(d)(4), a taxpayer must satisfy substantiation requirements set forth in section 274(d) before such expenses will be allowed as deductions .

Section 274(d) provides that no deduction shall be allowed for, among other things, traveling expenses, entertainment expenses , gifts, and expenses with respect to listed property (as defined in section 280F (d)(4) and including passenger automobiles , computer equipment, and cellular telephones) "unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement" : ( 1) The amount of the expenditure or use ; (2) the time and place of the

Passenger automobiles are listed property under section 280F, and strict substantiation is therefore required .

Section 274(d) applies to: (1) Any traveling expense, including meals and lodging away from home; (2) entertainment, amusement, and recreational expenses; or (3) the use of “listed property”, as defined in section 280F(d), including personal - 31 - computers and passenger automobiles.

' Section 280A(a) provides as a general rule that no deduction otherwise allowable to an individual "shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence ." The seemingly prohibitory rule of section 280A(a) is ameliorated by sectio n 280A(c), which provides exceptions for cer

is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the travel, entertainment, amuseme

Respondent contends that under section 280E this amount is not properly treated as an item of petitioner’s cost of goods sold.

Section 274(d) imposes strict substantiation requirements for listed property as defined in section 280F(d)(4), gifts, travel, entertainment, and meal expenses.

Section 274(d) imposes strict substantiation requirements for listed property as defined in section 280F(d)(4), gifts, travel, entertainment, and meal expenses.

In addition to applying to traveling expenses, the strict substantiation r quirements of section 274 apply to deductions with respect to `any listed property (as defined in section 280F(d)(4) ." Se tion 280F(d)(4)(A)(v), in turn, includes "any cellular telephone" in the definition of listed property .

Section 274(d) imposes strict substantiation - 6 - requirements for listed property as defined in section 280F(d)(4), gifts, travel, entertainment, and meal expenses.

465, 472- 473 (1946); see also secs.

Under section 280F(d)(4)(A)(i), “listed property” includes, among other items, passenger automobiles. If a taxpayer cannot satisfy the substantiation burden imposed by section 274(d) with respect to a deduction to which it applies, he fails to carry his burden of establishing that he is entitled to deduct that expense, regardless of any equities involved

Section 274(d) imposes strict substantiation requirements for listed property as defined in section 280F(d)(4), gifts, travel, entertainment, and meal expenses.

Section 274(d) provides that no deduction shall be allowed with respect to: (a) Any traveling expense, including meals and lodging while away from home; (b) any item related to an activity of a type considered to be entertainment, amusement, or recreation; or (c) the use of any “listed property”, as defined in section 280F(d)(

from home), (2) for any item with respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other ite

In the case of travel expenses and certain other expenses, such as entertainment, gifts, and expenses relating to the use of listed properties, including passenger vehicles and other property used as a means of transportation, computers, and cellular phones under section 280F(d)(4)(A), section 274(d) imposes stringent substantiation requirements to document particularly the nature and amount of such expenses.

Furthermore, section 274(d) provides that no deduction shall be allowed, inter alia, with respect to travel and entertainment expenses and “listed property (as defined in section 280F(d)(4))” unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (1) the amount of such exp

duction for home office ex ense on Schedule C . Shortly before trial, petitioners as erted they were entitled to deduct $3,506 of home office expense Petitioners offered no evidence, however, that any portion of their home meets the requirements of section 280A(c)(1) . A cordingly, they are not entitled to a deduction . 2 . Accurac -R lated Penalty Under Section 6662(a) Section 6662(a) provides that a taxpayer may be liable for a penalty of 20 rcent of the portion of an underpayment of tax attri

With respect to travel expenses and certain other expenses, such as expenses relating to the use of listed properties under section 280F(d)(4)(A), including passenger automobiles and any other property used as a means of transportation, section 274(d) imposes stringent substantiation requirements to document particularly the nature and amount of such expenses.

280F(d)(4)(A); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969). For such expenses, only documentary evidence will suffice. We now address whether petitioner is allowed to deduct any amounts beyond those he reported on his returns. We find that he may not. Petitioner has not introduced evidence to

Deductions related to business use of a residence are strictly circumscribed by the rules of section 280A and would require petitioners to show, at minimum and as relevant here, that some portion of the home was “exclusively used on a regular basis” for business.

Deductions related to business use of a residence are strictly circumscribed by the rules of section 280A and would require petitioners to show, at minimum and as relevant here, that some portion of the home was “exclusively used on a regular basis” for business.

In the case of travel expenses and certain other expenses, such as entertainment, gifts, and expenses relating to the use of listed properties, including other property used as a means of transportation, computers, and cellular phones under section 280F(d)(4)(A), section 274(d) imposes stringent substantiation requirements to document particularly the nature and amount of such expenses.4 For such expenses, substantiation of the amounts claimed by adequate 4Although sec.

Section 274(d) imposes strict substantiation requirements for listed property as defined in section 280F(d)(4), gifts, travel, entertainment, and meal expenses.

nicek v. Commissioner, 85 T.C. 731, 742-743 (1985). Section 274(d) imposes stringent substantiation requirements for the deduction of traveling expenses (including meals and lodging while away from home), and certain listed property as defined under section 280F(d)(4). Listed property includes any passenger automobile or other property used as a means of transportation. Taxpayers must substantiate by adequate means certain elements in order to claim deductions, such as the amount of such expendi

from home), (2) for any item with respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other ite

is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the travel, entertainment, amuseme

ence on the Schedules C for petitioner’s consulting activity. Petitioners did not offer any evidence showing that petitioner used any part of their home - 19 - exclusively for his consulting activity as required to deduct home office expenses under section 280A(c). Petitioners contend that Hughs never asked them for the dimensions of their home or of the space in their home petitioner used for business. We disagree. Hughs did so in a letter to petitioners dated July 13, 2001. We conclude that pe

Section 274(d) disallows deductions for travel expenses, gifts, - 27 - meals, and entertainment, as well as for listed property defined by section 280F(d)(4), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement: (1) The amount of the expense; (2) the time and place of the expense; (3) the business purpose of the expense; and (4) the business relationship to the taxpayer of the persons involved in the expense.

Passenger automobiles are “listed property” under section 280F(d)(4)(A)(i).

During taxable year 1999, petitioner did not maintain books and records for her jewelry activity, Port of Mystery, such as a general ledger or other appropriate journals. Petitioner purportedly kept “notes” of cash receipts received through her activity. However, petitioner claims that she could not produce such receipts because he

Section 274(d) provides that, unless the taxpayer complies with certain strict substantiation rules, no deduction is allowable: (1) For traveling expenses, (2) for entertainment expenses, (3) for expenses for gifts, or (4) with respect to listed property, see sec.

The substantiation requirements of section 274(d) are designed to encourage taxpayers to maintain records, together - 5 - with documentary evidence substantiating each element of the expense sought to be deducted. Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985). Petitioners submitted copies of

e contends that she is entitled to a deduction for the use of the Suburban. In the case of a passenger automobile, section 274(d) proscribes a deduction on the basis of any approximation or the unsupported testimony of the taxpayer. Sec. 274(d)(4), sec. 280F(d)(5). The term “passenger automobile” is defined as any 4- wheeled vehicle that is manufactured primarily for use on public streets, roads, and highways and that is rated at 6,000 pounds unloaded gross vehicle weight or less. Sec. 280F(d)(5

Section 280A further disallows business expenses with respect to the use of a dwelling unit used by the taxpayer during the taxable year as a residence. Sec. 280A(a). Section 280A(c), however, permits the deduction of expenses allocable to a portion of the dwelling unit that is used exclusively and on a regular basis as either: (1) The principal pl

- 10 - passenger automobiles, cell phones, and other similar telecommunications equipment under section 280F(d)(4)(A), section 274(d) imposes stringent substantiation requirements to document particularly the nature and amount of such expenses.

In the case of travel expenses and certain other expenses, such as entertainment, gifts, and expenses relating to the use of listed properties, including cellular telephone or other similar telecommunications equipment described in section 280F(d)(4)(A), section 274(d) imposes stringent substantiation requirements to document particularly the nature and amount of such expenses.

Specifically, section 274(d) provides that no deduction is allowable either for travel, including meals while away from home, or with respect to listed property as defined in section 280F(d)(4), unless the deduction is substantiated in accordance with the strict substantiation requirements of section 274(d) and the regulations promulgated t

The term "listed property" is defined in section 280F(d) and includes passenger vehicles.

t maintain sufficient records to establish the amount of the claimed deductions. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. Section 274(d)(4) imposes stringent substantiation requirements for the deduction of certain listed property defined under section 280F(d)(4). Listed property includes, inter alia, automobiles and computers. Sec. 280F(d)(4)(A). To deduct expenses for such listed property, including depreciation, taxpayers must substantiate by adequate records the following items: The amo

t allowed, Williams v. United States, 245 F.2d 559, 560-561 (5th Cir. 1957). In the case of travel expenses and expenses relating to the use of listed property, including any passenger automobile or other property used as a means of transportation, sec. 280F(d)(4)(A)(i) and (ii), section 274(d) imposes stringent substantiation requirements to document the nature and amount of such expenses. Sec. 274(d); Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969

Under section 280A(c)(1)(A), however, business expenses relating to use of any portion of a taxpayer's home are not allowable unless the taxpayer establishes that the portion of the taxpayer's home to which the expenses relate was used exclusively and on a regular basis as the principal place of the taxpayer's trade or business. Hamacher v. Commissioner,

280F(d)(4)(i),(v). The substantiation requirements of section 274(d) are designed to encourage taxpayers to maintain records, together with documentary evidence substantiating each element of the expense sought to be deducted. Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985). 1. Employee Business Expenses a. V

Mileage Section 280F(d)(4)(A)(i) makes a personal automobile “listed property”, and thus subject to enhanced substantiation requirements. Section 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985) describes those requirements, and provides that “[w]ritten evidence has considerably more probative value than oral evidence alone. In

We do not address the restrictions under section 280A because this section was not raised at trial.

The substantiation requirements of section 274(d) are designed to encourage taxpayers to maintain records, together with documentary evidence substantiating each element of the expense sought to be deducted. Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985). Under section 274(d), substantiation b

is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the travel, entertainment, amuseme

There is no evidence in the record that any part of petitioner’s home was used exclusively and regularly for business or otherwise qualifies for an exception from the general rule of section 280A disallowing expenses of a dwelling unit used by the taxpayer as a personal residence.

Cohan rule, see sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985), and imposes more stringent substantiation requirements for travel, meals and entertainment, gifts, and with respect to any listed property as defined in section 280F(d)(4). Sec. 274(d). Listed property includes any passenger automobile. Sec. 280F(d)(4)(A)(i). - 29 - Section 274(a) provides, in pertinent part, that no deduction otherwise allowable shall be allowed for entertainment, amusement, or recr

g to Newark T&B were claimed as deductions. Petitioner’s argument centers on the real property he bought to conduct Newark T&B’s business 40Strict substantiation is required for specific classes of expenses, including “listed property” described in sec. 280F(d)(4). See sec. 274(d). 41The Court’s ability to reasonably estimate the amount of a deduction is curtailed in the case of certain classes of expenses. Sec. 274(d) limits the Court’s estimating ability. Sanford v. Commissioner, 50 T.C. 823,

Cohan rule, see sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985), and imposes more stringent substantiation requirements for travel, meals and entertainment, gifts, and with respect to any listed property as defined in section 280F(d)(4). Sec. 274(d). Listed property includes any passenger automobile. Sec. 280F(d)(4)(A)(i). - 29 - Section 274(a) provides, in pertinent part, that no deduction otherwise allowable shall be allowed for entertainment, amusement, or recr

To meet the strict substantiation requirements, the taxpayer must substantiate the amount, time, place, and business - 9 - purpose of the expenses. Sec. 274(d); sec. 1.274-5T, Temporary Income Tax Regs., 50 Fed. Reg. 46006 (Nov. 6, 1985). Petitioners have failed to substantiate any of the Schedule C deductions or the employee busi

elephone and other unspecified expenses incurred by him as an employee of Molly Maid, Inc. Deductions for cellular telephone expenses, if otherwise allowable, are also subject to the substantiation requirements of section 274(d). See sec. 274(d)(4); sec. 280F(d)(4)(A)(v); Brodsky v. Commissioner, T.C. Memo. 2001-240. Petitioners did not attach a Form 2106 to their 1998 return, nor did petitioner maintain any records of the expenses to which the deduction relates. Therefore, petitioners are not e

After concessions by respondent, the issues for decision are: (1) Whether, under section 280A(c), petitioners are entitled to deductions for office expenses for the years at issue in connection with the use of their home and two rental apartments in their respective trade or business activities in excess of amounts allowed by respondent, and (2) whether section 280A(c)(5) is unconstitutional as applied to petitioners.2 Some of

must maintain sufficient records to establish the amount of claimed deductions. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. Section 274(d)(4) imposes stringent substantiation requirements for the deduction of certain listed property defined under section 280F(d)(4). Listed property includes, inter alia, automobiles and computers. Sec. 280F(d)(4)(A). To deduct expenses for such listed property, including depreciation, taxpayers must substantiate by adequate records the following items: The amo

must maintain sufficient records to establish the amount of claimed deductions. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. Section 274(d)(4) imposes stringent substantiation requirements for the deduction of certain listed property defined under section 280F(d)(4). Listed property includes, inter alia, automobiles and computers. Sec. 280F(d)(4)(A). To deduct expenses for such listed property, including depreciation, taxpayers must substantiate by adequate records the following items: The amo

That section provides that unless the taxpayer complies with certain strict substantiation rules, no deduction is allowable (1) for travel expenses, (2) for entertainment expenses, (3) for expenses for gifts, or (4) with respect to listed property.

That section provides that, unless the taxpayer complies with certain strict substantiation rules, no deduction is allowable (1) for travel expenses, (2) for entertainment expenses, (3) for expenses for gifts, or (4) with respect to listed property.

No deduction or credit shall be allowed under section 162 with respect to, among other items, any listed property, as defined under section 280F(d)(4), unless the taxpayer substantiates the expense.

274(d)(1), and deductions “with respect to any listed property (as defined in section 280F(d)(4)”, sec.

That section provides that, unless the taxpayer complies with certain strict substantiation rules, no deduction is allowable (1) for travel expenses, (2) for entertainment expenses, (3) for expenses for gifts, or (4) with respect to listed property.

274(d)(1), and deductions “with respect to any listed property (as defined in section 280F(d)(4)”, sec.

Section 274(d)(4) imposes stringent substantiation requirements for the deduction of certain listed property defined under section 280F(d)(4), which includes automobiles.

The individual, however, may deduct expenses allocable to portions of the dwelling that are exclusively used for business purposes. Sec. 280A(c). In the case at bar, the Hubers did not argue that their housing expenses are deductible under sec. 280A. Therefore, we do not address the question of whether certain portions of their expens

llowed-- (1) under section 162 or 212 for any traveling expense (including meals and lodging while away from home), (2) for any item with respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation * * * (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement * * *.

The individual, however, may deduct expenses allocable to portions of the dwelling that are exclusively used for business purposes. Sec. 280A(c). In the cases at bar, the Schmidts did not argue that the utility expenses are deductible under sec. 280A. Therefore, we do not address the question of whether any portion of the utility expe

The individual may, however, deduct expenses allocable to portions of the dwelling that are exclusively used for business purposes. Sec. 280A(c). The Weeldreyers did not argue that their housing expenses are deductible under sec. 280A. Therefore, we do not address the question of whether certain portions of their housing expenses may

In the case of travel expenses and certain other expenses, such as entertainment, gifts, and expenses relating to the use of listed properties, including passenger automobiles under section 280F(d)(4) (A), section 274(d) imposes stringent substantiation requirements to document particularly the nature and amount of such expenses.

The individual, however, may deduct expenses allocable to portions of (continued...) - 26 - 4. Rental Value of Residence Mr. Tschetter leased the homestead, including the farmhouse, from Wolf Creek Farm. Wolf Creek Farm received rent in the form of 30 percent of the calf crop and 40 percent of the other crops produced on the farm. Mr

Respondent concedes that if the Court finds that petitioners are not entitled to home office deductions under section 280A, then petitioners are entitled to the following additional deductions on Schedules A, Itemized Deductions, for 1997 and 1998: - 5 - Item 1997 1998 Home mortgage interest $7,791 $5,266 Real property tax 600 600 DMV renewal fees 39 39 Petitioner, on the 1997 and 1998 Federal income tax returns, claimed that he was entitled to report inc

In addition, section 280E disallows deductions and credits (but not costs of goods sold) with respect to the sale of controlled substances.

The individual, however, may deduct expenses allocable to portions of the dwelling that are exclusively used for business purposes. Sec. 280A(c). In the case at bar, the Hubers did not argue that their housing expenses are deductible under sec. 280A. Therefore, we do not address the question of whether certain portions of their expens

The term “listed property” is defined in section 280F(d) and includes cellular phones.

onduct of trade or business were it not for circumstances - 19 - beyond the taxpayer’s control. Sec. 1.274-2(c)(3), Income Tax Regs. A taxpayer must satisfy the same substantiation requirements of section 274(d) for listed property as defined under section 280F(d)(4). Listed property includes any cellular telephone (or similar telecommunications equipment). Sec. 280F(d)(4)(A)(v). Under section 274(b) deductions for gifts made by the taxpayer to an individual are not allowed to the extent that su

is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the travel, entertainment, amuseme

Section 274(d) imposes stringent substantiation requirements for deductions related to travel, entertainment, gifts, and "listed property (as defined in section 280F(d)(4))".

ve his being away from home within the intent and meaning of section 162(a)(2). Such expenses are subject to the same substantiation requirements. Section 274(d) includes transportation expenses incurred in the use of "listed property" as defined in section 280F(d)(4). Under that section, "listed property" includes, - 9 - among other means of transportation, the use of any passenger automobile. Sec. 280F(d)(4)(A)(i) and (ii). Petitioner presented no documentation, other than the log and other re

e based on 8,843 miles of travel for business purposes multiplied by the standard mileage rate of $0.315 per mile. 4 Petitioners mistakenly did not make an entry on the return line for net loss. Because petitioners did not report any expenses under sec. 280A for business use at their home, their net loss is equal to their tentative loss of $12,732. On their 1997 Federal income tax return, petitioners also claimed a deduction of $880 for self-employed health insurance expenses. In the notice of d

6, 1985), and requires strict substantiation of expenses for travel, meals and entertainment, and gifts, and with respect to any listed property as defined in section 280F(d)(4).

The statute provides an exception to this general rule, however, if the expenses are allocable to a portion of the dwelling which is used exclusively on a regular basis as the principal place of business for the taxpayer’s trade or business. Petitioner’s claims that the room was used exclusively for business purposes and that it was her

ommissioner, supra, sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985), and requires strict substantiation of expenses for travel, meals and entertainment, and gifts, and with respect to any listed property as defined in section 280F(d)(4). Sec. 274(d). Listed property includes any passenger automobile or any other property used as a means of transportation. Sec. 280F(d)(4)(A)(i) and (ii). A taxpayer is required by section 274(d) to substantiate a claimed expense by

- 20 - allowed for, among other things, traveling expenses, entertainment expenses, meal expenses, and expenses with respect to listed property (as defined in section 280F(d)(4) and including passenger automobiles) “unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement”: (1) The amount of the expenditure or use; (2) the time and place of the expenditure or use; (3) the business purpose of the expenditure or use; and (4) in the

It requires, for example, strict substantiation of expenses with respect to any listed property as defined in section 280F(d)(4).

Section 274 provides more stringent substantiation requirements for deductions with respect to any passenger automobile under section 280F(d)(4)(A)(i).

To deduct expenses, such as depreciation, with respect to “listed property” under section 280F(d)(4)(i), which includes an - 15 - automobile, the taxpayer must comply with strict substantiation requirements under section 274(d)(4).

Moreover, in the case of travel expenses and certain other expenses, such as entertainment, gifts, and the use of listed properties under section 280F(d)(4)(A), section 274(d) imposes stringent substantiation requirements to document more particularly the nature and amount of such expenses.

Section 274(d) requires a taxpayer to substantiate the business use of listed property, as defined in section 280F(d)(4), which includes a pickup truck, by adequate records or by sufficient evidence corroborating the taxpayer’s own statement.

away from home within the intent and meaning of section 162(a)(2), such expenses are also subject to the same substantiation requirements because section 274(d) includes transportation expenses incurred in the use of "listed property" as defined in section 280F(d)(4). A passenger automobile is listed property. Sec. 280F(d)(4)(A)(i) and (ii). Similarly, any computer or peripheral equipment not used at a regular business - 8 - establishment is also listed property, and, therefore, deductions for

Section - 9 - 274(d) imposes stringent substantiation requirements for deductions related to travel, entertainment, gifts, and "listed property (as defined in section 280F(d)(4))".

Section 274(d) imposes stringent substantiation requirements for claimed deductions relating to traveling expenses and to the use of “listed property”, which is defined under section 280F(d)(4) to include “any passenger automobile”.

6, 1985), and requires strict substantiation of expenses for travel, meals and entertainment, and gifts, and with respect to any listed property as defined in section 280F(d)(4), sec.

purpose as stated.” Although the parties devoted most of their arguments on brief to the issue of whether LFI was a trade or business under section 162 or an activity not engaged in for profit within the meaning of section 183, the parties also addressed the other grounds raised in the notices of deficiency as well as an additional argument under section 280A that was not enumerated in, or expressly raised by, the notices of deficiency.

parer, claimed it had not prepared petitioners’ 1995 return and ignored petitioner’s inquiry. 4 Sec. 274 requires a taxpayer to substantiate expenses for travel, meals and entertainment, and gifts, and with respect to listed property (as defined in sec. 280F(d)(4) and including passenger automobiles) by adequate records or by sufficient evidence corroborating the taxpayer’s own statement establishing the amount, time, place, and business purpose of the expense. Sec. 274(d); sec. 1.274-5T(a), Tem

ection 274 supersedes the doctrine of Cohan v. Commissioner, supra, see sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985), and requires strict substantiation of expenses with respect to any listed property as defined in section 280F(d)(4). Sec. 274(d). Listed property includes any passenger automobile or any other property used as a means of transportation, and computers. Sec. 280F(d)(4)(A)(i), (ii), (iv). Actual expenses related to the business use of an automobile

oner, supra, sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. - 6 - 46014 (Nov. 6, 1985), and requires strict substantiation of expenses for travel, meals and entertainment, and gifts, and with respect to any listed property as defined in section 280F(d)(4). Sec. 274(d). Listed property includes any passenger automobile or any other property used as a means of transportation, and computers. Sec. 280F(d)(4)(A)(i), (ii), (iv). A taxpayer is required by section 274(d) to substantiate a cl

purpose as stated.” Although the parties devoted most of their arguments on brief to the issue of whether LFI was a trade or business under section 162 or an activity not engaged in for profit within the meaning of section 183, the parties also addressed the other grounds raised in the notices of deficiency as well as an additional argument under section 280A that was not enumerated in, or expressly raised by, the notices of deficiency.

Section 274(d) provides, however, that no deduction shall be allowed with respect to any "listed property", as defined in section 280F(d)(4), unless the taxpayer substantiates by adequate records or sufficient evidence to corroborate the taxpayer's own testimony: (1) The amount of the expenditure or use based on the 1Petitioner has made no argument that the burden of proof shifting provisions of sec.

t card charges, and the documentation showed no allocation between an alleged office in the home and the personal residential quarters of petitioners. Petitioners failed to present reliable or persuasive evidence that would satisfy the conditions of section 280A(c). After examination of the documents submitted by petitioners and petitioners’ testimony, we conclude that any additional expenses beyond those conceded by respondent are not adequately substantiated. There is no excuse for petitioners

Listed property is defined under section 280F(d)(4) to include passenger automobiles and any other property used as a means of transportation.

To meet the strict substantiation requirements, the taxpayer must substantiate the amount, time, place, and business purpose of the expenses. Sec. 274(d); sec. 1.274-5T, Temporary Income Tax Regs., 50 Fed. Reg. 46006 (Nov. 6, 1985). Petitioners presented evidence of numerous credit card interest payments made during the years in is

- 20 - Section 280A(c)(1) provides an exception to this general rule for any item allocable to a portion of the dwelling unit which is exclusively used by the taxpayer on a regular basis as the principal place of business for a trade or business of the taxpayer. A taxpayer "exclusively" uses a portion of his dwelling in a trade or bu

280F(d)(4)(A)(i). To meet these requirements petitioner must substantiate the amount of the business use and total use of the automobile, the time of the use of the automobile, and the business purpose for the use. See sec. 1.274-5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985). Petitioner must maintain adequate records

Section 274(d) imposes strict substantiation requirements for listed property as defined in section 280F(d)(4), gifts, travel, entertainment, and meal expenses.

Consequently, as of the beginning of 1995, petitioner would no longer be considered to be carrying on a trade or business within the meaning of section 162(a).

Harris (petitioner) was Memphis, Tennessee, or Los Angeles, California, during 1994; (2) whether petitioners are entitled to deductions for home office expenses under section 280A for each of the years at issue; (3) whether petitioners are entitled to deductions for Schedule C expenses for 1994, 1995, and 1996 in excess of amounts allowed by respondent; and (4) whether petitioners are liable for the accuracy-related penalty under section 6662(a) for negligence or disregard of rules and regulatio

Certain expenses related to travel, entertainment, gifts, and listed property (as defined in section 280F(d)(4)) are additionally subject to the strict substantiation requirements of section 274(d).

Section 274(d) provides that no deduction shall be allowed with respect to: (a) Any traveling expense, including meals and lodging away from home; (b) any item with respect to an activity of a type generally considered to be entertainment, amusement, or recreation; or (c) the use of any “listed property”, as defined in section

Section 274(d) imposes stringent substantiation requirements for deductions related to travel, entertainment, gifts, and “listed property (as defined in section 280F(d)(4))”.

Section 274(d)(4) imposes stringent substantiation requirements for the deduction of certain listed property as defined under section 280F(d)(4), such as an automobile.

Section 274 provides that no deduction shall be - 11 - allowed for, among other things, traveling expenses, entertainment expenses, meal expenses, and expenses with respect to listed property (as defined in section 280F(d)(4) and including passenger automobiles) “unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement”: (1) The amount of the expenditure or use; (2) the time and place of the expenditure or use; (3) the business pu

Certain expenses related to travel, entertainment, gifts, and listed property (as defined in section 280F(d)(4)) are additionally subject to the strict substantiation requirements of section 274(d).

Section 280F, however, reduces the amount of depreciation that can be claimed for passenger automobiles. Specifically, section 280F limits the allowable amount of depreciation to a multiple equal to the percentage of actual business use. See sec. 1.280F- 2T(i), Temporary Income Tax Regs., 49 Fed. Reg. 42707 (Oct. 24, 1984). - 24 - Additionally, se

(d) Substantiation Required.--No deduction or credit shall be allowed-- * * * * * * * (4) with respect to any listed property (as de- fined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the * * * use of the facility or property * * *, (C) the business purpose of (continued...) - 131 - “listed property” is defined in s

Section 274(d) provides that no deduction is allowed with respect to the use of “listed property”, as defined in section 280F(d)(4), unless certain elements are substantiated.

Section 274(d)(4) operates to disallow any deduction otherwise allowable under, inter alia, section 162(a) with respect to, inter alia, any “listed property”, unless the taxpayer satisfies the substantiation requirements of that section.10 “Listed property” is defined in section 280F(d)(4) to 9Respondent did not disallow the remaining claimed Schedule C car and truck expenses for 1993, 1994, and 1995 in the amounts of $5,250, $5,438, and $5,625, respectively.

No deduction is allowed with respect to: (1) Any traveling expense (including meals and lodging while away from home); (2) any item with respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation; (3) any expense for gifts; or (4) the use of any “listed property”, as defined in section 280F(d)(4), unless certain elements are substantiated.

Section 274(d) imposes strict substantiation requirements for deducting expenses relating to listed property, defined in section 280F(d)(4)(A)(i) to include passenger automobiles.

ces and (2) petitioner did not maintain any log or other record regarding the use of his vehicle.7 By virtue of the strict substantiation requirements of section 274(d)(4), no deduction is allowable with respect to any listed property, as defined in section 280F(d)(4), on the basis of any approximation or the unsupported testimony of the 6 We decide the issues in this case without regard to the general rule of sec.

(d) Substantiation Required.--No deduction or credit shall be allowed-- * * * * * * * (4) with respect to any listed property (as de- fined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the * * * use of the facility or property * * *, (C) the business purpose of the expense or other item * * *.

Section 162 generally allows a deduction for all ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business.2 Section 280A(a), however, provides that deductions otherwise allowable to an individual are generally not allowed with respect to the use of a dwelling unit used by the individual as a residence during the taxable year.

ements of section 274 in order for a - 6 - deduction to be allowable. Among items within the purview of section 274 are traveling expenses, entertainment expenses, “any expense for gifts”, and expenses with respect to listed property (as defined in section 280F(d)(4)). Sec. 274(d). Accordingly, no deduction is allowed for gifts “unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement” the amount of the expense, the date and descr

o an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, * * * * * * * (4) with respect to any listed property (as defined in section 280F(d)(4)), - 6 - unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the travel, entertainment, a

Home Office Deduction Section 280A(c)(1)(A)5 allows a deduction for home office 5 Sec.

r petitioner is done by telephone and fax, and that, in the apartment, as in other places, he did research and wrote reports. 2 Congress has expressed skepticism that lease transactions between employers and employees are negotiated at arm’s length: Sec. 280A(c)(6) provides that no home office deduction is allowable to an employee who leases a portion of his home to his employer. The reports of the tax writing committees that preceded the addition of sec. 280A(c)(6) to the Code state the doubt o

(d) Substantiation Required.--No deduction or credit shall be allowed-- * * * * * * * (continued...) - 80 - is defined in section 280F(d)(4) to include passenger automo- biles.

Section 274(d) provides that no deduction is allowed with respect to the use of “listed property”, as defined in section 280F(d)(4), unless certain elements are substantiated.

ess the taxpayer substantiates certain elements--no deduction shall be allowed with respect to: (1) Traveling expenses under section 162, including meals and lodging while away from home; (2) any item with respect to an activity of a type considered to be entertainment, amusement, or recreation; or (3) the use of any listed property, as defined in section 280F(d)(4) to include passenger automobiles, computers and peripheral equipment, and cellular telephones.

Section 274(d) imposes stringent substantiation requirements for claimed deductions relating to the use of “listed property”, which is defined under section 280F(d)(4)(A)(i) to include passenger automobiles.

Section 274(d) provides that no deduction shall be allowed with respect to: (a) Any traveling expense, including meals and lodging away from home; (b) any item related to an activity of a type considered to be entertainment, amusement, or recreation; or (c) the use of any "listed property", as defined in section 280F(d)(4),8 unless the taxpayer substantiates certain elements.

c. 1.6001-1(a), (e), Income Tax Regs. If section 274(d) applies, we may not use the Cohan doctrine to estimate a taxpayer’s expenses covered by that section. The substantiation requirements of section 274(d) apply to any listed property described in section 280F(d)(4). Listed property includes passenger automobile and any other property used as a means of transportation, see sec. 280F(d)(4)(A)(i) and (ii), unless excepted by section 280F(d)(4)(C) or (d)(5)(B). Petitioner’s pickup truck and car a

Listed property includes any passenger automobile and any other property used as a means of transportation, under section 280F(d)(4)(A)(i) and (ii), unless excepted by section 280F(d)(4)(C) or (d)(5)(B).

itioner is entitled to Schedule C, Profit or Loss From Business, deductions for travel expenses related to his trucking activity in excess of amounts allowed by respondent; (2) whether petitioner is entitled to a home office expense deduction under section 280A in connection with his trucking activity; and (3) whether petitioner is liable for an addition to tax under section 6651(a)(1) for failure to file his income tax return timely.

Cellular phones are classified as “listed property” under section 280F(d)(4)(A)(v), and such expenses must be substantiated by adequate records or sufficient evidence which corroborate the taxpayer's own testimony, including: (1) The amount of the expenditure or use based on the appropriate measure; (2) the time and place of the expenditure or use; and (3) the business purpose of the expenditure or use.

As best as can be determined from the record, the mortgage interest deduction of $1,665.96 claimed on the Schedule F relates to the mortgage on petitioners’ residence. Some or all of the amount might be allowable as an itemized deduction. See section 163. (Petitioners did not elect to itemize deductions on their 1994 return.) Never

280A(c)(1)(A), I.R.C.; Commissioner v. Soliman, 506 U.S. 168, 175-177 (1993). 2. Held, further, the car and truck expenses incurred by P between his residence and the places where he conducted religious services and the car and truck expenses between his residence and the first and last place of insurance customer contact each day are not dedu

is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records (continued...) - 7 - adequate records or the taxpayer's own detailed statement that is corroborated by sufficient evidence.

e must have a reasonable evidentiary basis. See Vanicek v. Commissioner, 85 T.C. 731, 743 (1985). Section 274(d), however, requires strict substantiation of certain expenses, including those incurred with respect to any listed property as defined in section 280F(d)(4). Listed property includes any passenger automobile. See sec. 280F(d)(4)(A)(i). Section 274 supersedes the doctrine in Cohan v. Commissioner, supra. See sec. 1.274-5T(a)(4), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 19

Passenger automobiles are listed property under section 280F(d)(4)(A)(i).

Section 274(d) imposes stringent substantiation requirements for deductions related to travel, entertainment, gifts, and "listed property (as defined in section 280F(d)(4))".

Passenger automobiles are listed property under section 280F(d)(4)(A)(i).

Section 280A(a) provides that in the case of a taxpayer who is an individual, no deduction otherwise allowable under chapter 1 of the Internal Revenue Code (relating to normal taxes and surtaxes) shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence. Section 280A(c) provides

tion of $3,750 for unreimbursed employee travel expenses for the miles that he drove between hospitals on the days that he worked at more than one hospital.3 Section 274(d) imposes stringent substantiation requirements for the deduction of travel expenses, entertainment expenses, gift expenses, and expenses of certain listed property defined under section 280F(d)(4) such as an automobile.

In addition to the requirements of section 162, section 274(d) requires strict substantiation of certain expenses including those incurred with respect to any listed property as defined in section 280F(d)(4), which includes any passenger automobile.

274(d)(4) provides, in part, that "No deduction or credit shall be allowed * * * with respect to any listed property (as defined in section 280F(d)(4))".

Furthermore, section 274(d) provides that no deduction is allowable under section 162 for any traveling expenses, including meals and lodging while away from home, or for any entertainment expenses, or with respect to any listed property, defined in section 280F(d)(4) to include passenger automobiles, unless the taxpayer complies with strict substantiation rules.

- 8 - Section 274(d) places strict substantiation requirements on a taxpayer for claimed deductions relating to the use of "listed property", which is defined under section 280F(d)(4)(A)(i) to include passenger automobiles.

Substantiation Required.--No deduction or credit shall be allowed-- (1) under section 162 or 212 for any traveling expense (including meals and lodging while away from home), * * * * * * * (4) with respect to any listed property (as defined in section 280F(d)(4)[3]), 3 Sec.

280F(d)(4)(A)(i) and (ii); sec. 1.280F-6T(b)(2)(i), Temporary Income Tax Regs., 49 Fed. Reg. 42713 (Oct. 24, 1984). However, section 1.274(d)-1, Income Tax Regs., authorizes the Commissioner to prescribe rules for mileage allowances for ordinary and necessary expenses for local transportation, see Dehr v. Commissioner, T.C. Memo. 1998-441, and

Section 274(d)(4) imposes stringent substantiation requirements for the deduction of certain listed property as defined under section 280F(d)(4), which includes a passenger automobile.

1.162-2(e), 1.262- 1(b)(5), Income Tax Regs.2 Moreover, section 274(d)(4) provides that no deduction is allowable with respect to listed property, as defined in section 280F(d)(4), unless the deduction is substantiated in accordance with the strict substantiation requirements of section 274(d) and the regulations promulgated thereunder.

on expenses, section 274(d) was amended, effective for taxable years beginning - 9 - after December 31, 1985, to include the same substantiation requirement for expenses claimed with respect to the use of listed property as defined and described in section 280F(d)(4). See sec. 274(d)(4). "Listed property" includes, among others, any passenger automobile or "any other property used as a means of transportation". Sec. 280F(d)(4)(A)(i) and (ii). An airplane, of course, is considered to be listed pr

93, 594. Time and place of the mileage expense can be substantiated by a "contemporaneous log of business mileage or by otherwise establishing a taxpayer's business travel." Smith v. Commissioner, 80 T.C. 1165, 1173 (1983). Business purpose may be 3 Sec. 280F(d)(4) defines listed property to include passenger automobiles. - 10 - ascertained from surrounding facts and circumstances. Id.; sec. 1.274-5(c)(2)(ii)(B), Income Tax Regs. In the instant case, petitioner did not produce any records for tr

are to the Tax Court Rules of Practice and Procedure. References to petitioner in the singular are to Peter C. LaFavor. After settlement, the issue remaining for decision is whether certain expenses qualify as deductible home office expenses under section 280A. FINDINGS OF FACT Some of the facts have been stipulated and are so found. During 1991 and 1992, petitioner traveled to Alaska and Washington State and worked there as a self-employed commercial fisherman. When petitioner was not fishing

With respect to the automobiles, the Mercury and the Lincoln are listed property under section 280F(d)(4)(A)(i) because they are passenger automobiles.

Section 274(d) provides, however, that no deduction shall be allowed with respect to any "listed property", as defined in section 280F(d)(4), unless the taxpayer substantiates by adequate records or sufficient evidence to corroborate the taxpayer's own testimony: (1) The amount of the expenditure or use based on the appropriate measure (mileage may be used in the case of - 9 - automobiles), (2) the time and place of the expenditure or use, (3) the business purpose of

the accuracy-related penalty under 6 The records petitioner provided to his accountant in support of the automobile expense fall far short of the requirements of the Code and regulations. A passenger automobile is defined as "listed property" under sec. 280F(d)(4)(A)(i), and thus is subject to the substantiation requirements of sec. 274(d). Among the elements required to be substantiated are the amount of business use and the amount of total use of the automobile for the taxable period, based u

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.

Section 280A(a) provides that in the case of a taxpayer who is an individual, no deduction otherwise allowable under chapter 1 of the Code (relating to normal taxes and surtaxes) shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence. The term "dwelling unit" includes a house

With respect to the automobiles, the Mercury and the Lincoln are listed property under section 280F(d)(4)(A)(i) because they are passenger automobiles.

Section 280A, in general, disallows deductions with respect to the use of a dwelling unit that is used by the taxpayer during the taxable year as a residence. However, section 280A(c) permits the deduction of expenses allocable to a portion of the dwelling unit which is exclusively used on a regular basis as "the principal place of business for any

Petitioner offered no records to substantiate his travel or automobile expense aside from the expense log. The expense log does not meet the substantiation requirements of section 274 because it does not show the date, place, or business purpose of these expenses or business uses. Sec. 274(d). Moreover, petitioner has failed to est

Section 274(d)(4) also provides that no deduction is allowable with respect to listed property, as defined in section 280F(d)(4), unless the deductions are substantiated in accordance with the strict substantiation requirements of section 274(d) and the regulations promulgated thereunder.

Section 274(d) requires substantiation of these expenses either "by adequate records or by sufficient evidence corroborating the taxpayer's own statement". Sec. 274(d). Rental Expenses Section 469 limits the allowance of passive activity losses. Section 469(a) provides that for an individual, no passive activity loss will be allowe

Section 274(d), for taxable years beginning after December 31, 1985, was amended - 6 - to provide that no deduction shall be allowed with respect to any listed property as defined in section 280F(d)(4)-- unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (A) the amount of such expense or other item, (B) the time and place of the travel * * *, (C) the business purpose of the expense or other item, and (D) the business relatio

Aside from the fact that all or some of these expenses appear to be duplicative, petitioner presented no evidence that these expenses, if paid or incurred, would be allowable under section 280A, which, in general, denies deductions with respect to the use of a dwelling unit used by the taxpayer as a residence, unless such expenses are, under section 280A(c)(1), allocable to that portion of the - 7 - dwelling used exclusively on a regular basis as "the principal place of business" of the taxpayer

280B expressly restricts the deduction of losses resulting from demolition of buildings.

titioners' use of a Lear jet to travel, among other places, to their Oregon timber farm property and to their property in Tahiti; and (4) to what extent expenses of petitioners' residence in Orange, California, qualify as home office expenses under section 280A. Various additional and alternative issues are also for decision (e.g., if petitioners' timber farm constitutes a for-profit trade or business activity, - 3 - whether petitioners should be required to capitalize additional costs relating

Moreover, section 274(d) provides that no deduction is allowable under section 162 or 212 for any traveling expenses, including meals and lodging while away from home, or with respect to any listed property, defined in section 280F(d)(4) to include property used as a means of transportation, unless the taxpayer complies with strict substantiation rules.

Section 274(d) requires substantiation of these expenses either "by adequate records or by sufficient evidence corroborating the taxpayer's own statement". Petitioner testified that his business mileage was based on an estimate. He also testified that his 1993 telephone expense represented amounts paid to a friend from whom he borr

Section 274(d) provides that no deduction shall be allowed with respect to any listed property (as defined in section 280F(d)(4)) unless the taxpayer substantiates by adequate records or sufficient evidence corroborating the taxpayer's own statement the amount of such expense, the time and place of the expense, the business purpose of the expense, and the business relationship of the expense.

tion 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 280A(c). Petitioner's demonstrated penchant for claiming nondeductible personal expenses as business expenses undermines the reliability of her assertions with respect to supplies and other expenses that normally would be deductible. She asks

Section 274(d)(4) provides that no deduction shall be allowed with respect to any listed property, defined in section 280F(d)(4)(A) to include passenger automobiles, unless the taxpayer meets strict substantiation rules.

Novick's use of petitioners' residence to store medical records of inactive patients and certain medical equipment), petitioners failed to come within any of the exceptions provided by section 280A(c) to the general rule denying a deduction for home office expenses.3 We specifically note that (1) 3 Sec.

The Jeep is listed property under section 280F(d)(4)(A)(i) because it is a passenger automobile.

No deduction shall be allowed with respect to listed property, within the meaning of section 280F(d)(4), unless such deductions satisfy the strict substantiation requirements of section 274(d) and the regulations thereunder.

Section 274(d) imposes stringent substantiation requirements for travel, entertainment, gifts, and "listed property (as defined in section 280F(d)(4))".

The issue for decision is whether the limitations imposed by section 280A(c)(5) are applicable to business expense deductions claimed by petitioner's wholly owned S corporation in connection with the operation of a commercial art gallery located in the building where petitioner resided.

Section 280A(a) provides the general rule that no deduction is allowed for the business use of a dwelling unit which is used by the taxpayer as a residence. Section 280A(c)(1)(A) provides, however, that the general rule will not apply as long as a portion of a taxpayer's residence is exclusively used on a regular basis as the principal place of bus

Furthermore, section 280A(a) limits the deductions that may be allowed "with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence." During the years in question, petitioners used, at least, the cottage on the Oregon Street property as a residence.

Respondent further contends that, even if petitioner was in an active trade or business, section 280A limits depreciation of a dwelling unit used by the taxpayer during the year as a residence to the gross income derived from such use for the tax year, less certain allocable deductions.

Section 280A(a) provides that, generally, taxpayers may not deduct expenses (that are otherwise allowable) with respect to the use of a dwelling unit that also serves as the taxpayer's residence during the taxable year. There are several exceptions to this rule. The limitations imposed by section 280A do not apply to expenses attributable to any po

2 office under section 280A; (2) whether petitioner is entitled to claim a deduction for health insurance premiums; and (3) whether petitioner is entitled to a deduction for a contribution to an individual retirement account (IRA).

After concessions by respondent, this Court must decide: (1) Whether petitioner wife's educational expenses are deductible under section 162; (2) whether petitioners are entitled to deduct home office expenses under section 280A; and (3) whether petitioners are liable for an accuracy-related penalty for negligence under section 6662(a).

The printer is so-called listed property as defined by section 280F(d)(4), and accordingly no deduction is allowable under section 280F(d)(3)(A).

The Home Office Deduction Section 280A(c) permits the deduction of expenses allocable to a portion of the dwelling unit that is used exclusively and on - 5 - a regular basis as "the principal place of business for any trade or business of the taxpayer".

each of the years in question, for contributions to a local singing group; (2) whether petitioners are entitled to educational expense deductions, under section 162(a) for each of the years in question; (3) whether petitioners are precluded, under section 280A for each of the years in question, from deduction of losses incurred from rental properties; (4) in the event section 280A is not applicable to petitioners' rental properties, whether petitioners have substantiated certain expenses; (5) i

Respondent does not argue that all of - 13 - the expenditures were capital improvements, but, as part of a general plan of rehabilitation, she argues that all of the expenditures nevertheless must be capitalized. In United States v. Wehrli, 400 F.2d 686, 689-690 (10th Cir. 1968), the Court of Appeals for the Tenth Circuit stated: the co

, that no deductions shall be allowed: (1) For any traveling expense, including meals and lodging while away from home, (2) for any item with respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, (3) for any expense for gifts, or (4) with respect to any "listed property" as defined in section 280F(d)(4), unless substantiated in accordance with the strict requirements of section 274(d) and the regulations promulgated thereunder.

Section 274(d)(4) provides that no deduction is allowable with respect to listed property, as defined in section 280F(d)(4), unless the deductions are substantiated in accordance with the strict substantiation requirements of section 274(d) and the regulations promulgated thereunder.

1.274-5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985). The taxpayer must have adequate records or other evidence to corroborate his or her statements. Sec. 1.274-5(c)(1), Income Tax Regs. A taxpayer must maintain an account book, diary, statement of expense, or similar record and documentary evidence which

apital improvements $9,135.03 Indirect capital improvements 1,164.56 Office expenses Telephone (Mission Viejo) 467.45 Telephone (Poway) 503.21 Cellular telephone (account 0438631) 1,138.88 (account 1019538) 471.12 Home insurance (9.53 percent of $525.33) (Mission Viejo) 25.59 (Poway) 24.47 Home operating costs (9.53 percent of $14,854.86) 1,415.67 Section 280A denies deductions with respect to the use of a dwelling unit used by the taxpayer as a residence during the taxable year.

With respect to travel and entertainment expenses and listed property (as defined in section 280F(d)(4)), section 274(d) overrides this so-called Cohan doctrine, and requires substantiation "by adequate records or by sufficient evidence corroborating the taxpayer's own statements".

Section 274(d) requires substantiation of these expenses either "by adequate records or by sufficient evidence corroborating the taxpayer's own statement." Sec. 274(d). The records must show the amount, date, and business purpose of each expense or business use. Id.; sec. 1.274-5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 460

Respondent disallowed the losses claiming the transaction was (1) a sham, (2) petitioners did not meet the requirements of section 280A, and (3) petitioners failed to substantiate the rental expenses deducted.

Respondent raised the question of whether Service met the requirements for both section 280A (business use of home) and the holding of Commissioner v.