DAIZ v. COMMISSIONER

¶2MEMORANDUM FINDINGS OF FACT AND OPINION

¶3WOLFE, Special Trial Judge: Respondent determined a deficiency of $ 5,152 in petitioner's 1997 Federal income tax. The issues for decision are whether petitioner is entitled to claimed deductions for: (1) Automobile expenses incurred in traveling between her residence and various job sites; and (2) certain other unreimbursed employee expenses.

¶4Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. At the time the petition was filed, petitioner resided in Benicia, California.

¶5             FINDINGS OF FACT

¶6During the year in issue petitioner earned $ 24 hourly working as a nurse and as a nursing consultant for Pleasant Care Corporation (PCC). Petitioner began working*198 for PCC during the early 1990s. From that time through the year in issue petitioner maintained an apartment in Stockton, California. During her first few years of employment by PCC, petitioner regularly worked in or near Stockton. From approximately March 31, 1996, until 2001, she was assigned to work at various facilities outside of Stockton. In 1997, the year in issue, petitioner was assigned to work at facilities in the following cities:

¶7                      Round trip

¶8Job site       Number of weeks   mileage from Stockton

¶9________       _______________   _____________________

¶10Novato            9          171

¶11Napa             1          141

¶12Bakersfield         11          491

¶13Ukiah            18          337

¶14Yuba City          10          174

¶15Petitioner was assured by her supervisor that the assignments would only be temporary and that she would be reassigned to the facility in Stockton. The supervisor's assurances about the temporary*199 nature of petitioner's assignments during 1997 were accurate. The supervisor's assurances that petitioner would be reassigned to a PCC facility in or near Stockton proved to be false. PCC was expanding by acquiring additional facilities, and, at least partly for this reason, petitioner repeatedly was assigned to work at PCC's facilities in various cities other than Stockton until 2001. Then petitioner gave up her hopes for reassignment to Stockton, told her supervisor that she would not be moved about any longer, and accepted a permanent position at a PCC subsidiary's facility in Vista, California.

¶16Petitioner owned only one vehicle during the year in issue, a 1993 Toyota Corolla. She commuted daily in that vehicle between her apartment in Stockton and the job sites in Novato, Napa, and Yuba City. During the periods that she worked in Bakersfield and Ukiah, she lodged overnight at the residence of a coworker during the week and returned to her apartment in Stockton on the weekends. Although petitioner continued to live in Stockton and seek assignment to a PCC facility in or near Stockton, she did not work at the Stockton facility at any time during the year in issue.

¶17On her 1997 Federal*200 income tax return, petitioner reported total income of $ 82,085 and itemized deductions of $ 26,353. She claimed unreimbursed employee expenses on Schedule A, Itemized Deductions, as follows:

¶18Continuing education           $ 250

¶19Books/subscriptions/etc.          420

¶20Uniforms/maintenance           1,325

¶21Telephone                 625

¶22Vehicle                 17,190

¶23Total                 $ 19,810

¶24She also deducted $ 192 for telephone expenses and $ 782 for uniform/maintenance and $ 1,588 for car and truck expenses, among other items, on Schedule C, Profit or Loss From Business. Petitioner reported total business mileage of 59,610 miles, of which 5,040 miles were reported on Schedule C. Petitioner's income from her work in Bakersfield, unlike her income from her work at the other locations, was reported as nonemployee compensation on the Schedule C.

¶25During 1997 petitioner maintained a log of her vehicle's mileage. According to the log, her vehicle was driven a total of 48,490 miles between January 16, 1997, the first day of her first job assignments*201 that year, and December 31, 1997.

¶26The record shows the number of round trips that were made as well as the mileage between petitioner's apartment in Stockton and the facilities to which she drove. The record establishes that in addition to the undisputed 5,040 business miles that she drove to and from Bakersfield, petitioner drove 24,598 miles for business purposes during 1997 based on the following figures:

¶27         Number of     Round trip     Total

¶28Job site     round trips     mileage     mileage

¶29________     ___________    __________     _______

¶30Novato        50         171       8,550

¶31Napa          3         141        423

¶32Ukiah         19         337       6,403

¶33Yuba City       53         174       9,222

¶34                         24,598

¶35In the notice of deficiency, respondent disallowed all of the unreimbursed employee expenses that petitioner claimed on her Schedule A. Respondent did not make any adjustments to*202 petitioner's Schedule C.

¶36                OPINION

¶37Section 162(a)(2) generally permits a deduction for traveling expenses incurred while away from home in the pursuit of a trade or business. See Commissioner v. Flowers, 326 U.S. 465, 470, 90 L. Ed. 203, 66 S. Ct. 250 (1946). For a taxpayer to be considered "away from home" within the meaning of section 162(a)(2), the taxpayer must be on a trip requiring sleep or rest. United States v. Correll, 389 U.S. 299, 19 L. Ed. 2d 537, 88 S. Ct. 445 (1967).

¶38We have generally defined the word "home" as used in section 162(a)(2) to refer to the vicinity of a taxpayer's principal place of employment and not to the place where the taxpayer's personal residence is located, if that personal residence is different from the principal place of employment. Daly v. Commissioner, 72 T.C. 190, 195 (1979), affd. 662 F.2d 253 (4th Cir. 1981). An exception is made if the taxpayer's place of employment in another area is temporary as opposed to indefinite; in that case the taxpayer's personal residence may be her tax home. Peurifoy v. Commissioner, 358 U.S. 59, 60, 3 L. Ed. 2d 30, 79 S. Ct. 104 (1958); Mitchell v. Commissioner, T.C. Memo 1999-283.*203Similarly, if a taxpayer does not have a principal place of employment, her permanent residence is her tax home for purposes of section 162(a)(2). Johnson v. Commissioner, 115 T.C. 210, 221 (2000).

¶39A place of business is temporary if the employment is such that termination within a short period could be foreseen. Mitchell v. Commissioner, 74 T.C. 578, 581 (1980); see Michaels v. Commissioner, 53 T.C. 269 (1969). Conversely, employment is indefinite if termination could not be foreseen within a "reasonably short period". Stricker v. Commissioner, 54 T.C. 355, 361 (1970), affd. 438 F.2d 1216 (6th Cir. 1971). Whether employment is temporary or indefinite is a question of fact. Peurifoy v. Commissioner, 358 U.S. at 60-61.

¶40In Rev. Rul. 93-86, 1993-2 C.B. 71, 72 the Commissioner ruled that under section 162(a)(2) if employment at a work location is realistically expected to last (and does in fact last) for one year or less, the employment will be treated as temporary in the absence of facts and circumstances indicating otherwise. ¹

¶41*204 In the present case, petitioner's expenses incurred in traveling to Bakersfield and Ukiah required an overnight stay. Those expenses are deductible, if at all, as traveling expenses under section 162(a)(2). Since petitioner's traveling expenses incurred with respect to her work activity in Bakersfield are not at issue, we need only decide whether the expenses petitioner incurred in traveling to Ukiah are deductible. Petitioner worked at six facilities in five cities during 1997. At the time she was assigned to work at the facility in Ukiah in June 1997, she had already worked 9 weeks in Novato, 1 week in Napa, and 11 weeks at two facilities in Bakersfield between January and June of 1997. Her work at Ukiah lasted 18 weeks until she was transferred to Yuba City where she worked during the remaining 10 weeks of 1997. At the time of each assignment, petitioner was assured that it would be temporary and that soon she would be reassigned to the facility in Stockton.

¶42It is clear that petitioner's work at the facility in Ukiah, as well as at the other facilities where she worked in 1997, was temporary, rather than indefinite. Petitioner stayed overnight in Ukiah during the week when she*205 worked there and returned to her apartment in Stockton only on weekends. Accordingly, the traveling expenses she incurred on her trips to Ukiah are deductible under section 162(a)(2) to the extent that they can be substantiated.

¶43The expenses of daily commuting, unlike traveling expenses, are not deductible under section 162(a)(2) because they do not meet the sleep or rest requirement of United States v. Correll, supra.See Sanders v. Commissioner, 439 F.2d 296, 298 (9th Cir. 1971), affg. 52 T.C. 964 (1969). Rather, commuting expenses are deductible, if at all, under the "ordinary and necessary expenses" provision of section 162(a). Sanders v. Commissioner, supra.Generally, the expenses of daily commuting are not deductible because they constitute personal expenses under section 262. Fausner v. Commissioner, 413 U.S. 838, 37 L. Ed. 2d 996, 93 S. Ct. 2820 (1973); sec. 1.262-1(b)(5), Income Tax Regs. An exception exists for commuting expenses to some jobs that are temporary, as opposed to indefinite, in duration. ² See, e.g., Frederick v. United States, 603 F.2d 1292 (8th Cir. 1979).

¶44*206In cases involving a variety of circumstances, this Court and other courts have established and applied the rule that expenses incurred in commuting to a job site are deductible if work at the job site is temporary, but not if it is for an indefinite period. See Ellwein v. United States, 778 F.2d 506, 511 (8th Cir. 1985); Dahood v. United States, 747 F.2d 46, 48 (1st Cir. 1984); Neal v. Commissioner, 681 F.2d 1157, 1158 (9th Cir. 1982), affg. per curiam T.C. Memo 1981-407; Kasun v. United States, 671 F.2d 1059, 1061 (7th Cir. 1982); Williams v. Commissioner, T.C. Memo 1990-467; Epperson v. Commissioner, T.C. Memo 1985-382.

¶45In Epperson, the taxpayer was an ironworker who, during 1981, commuted daily to various job sites from his home in Seffner, Florida:

¶46                      Round trip

¶47Job site       Number of days    mileage from Seffner

¶48________       ______________    ____________________

¶49New Wales          92           44

¶50Palatka           26     *207       300

¶51St. Petersburg       43           30

¶52Crystal River        37           160

¶53After finding that all of the jobs were temporary, rather than indefinite, we held that the taxpayer's commuting expenses to the job sites in Palatka and Crystal River were deductible, but his commuting expenses to the job sites in New Wales and St. Petersburg were not deductible because they "were clearly within the general area of the petitioner's residence". Id.

¶54Other courts have likewise imposed a requirement that for a taxpayer's commuting expenses to be deductible the taxpayer's residence must be distant from the temporary job site. In Dahood v. United States, supra at 48, the Court of Appeals for the First Circuit explained the rationale for permitting the deduction of commuting expenses to temporary job sites:

   A judicial exception has been carved out of this general rule



   [that daily commuting expenses are not deductible] to cover



   instances when people commute long distances to their workplaces



   for business, rather than personal, reasons. This exception

   permits taxpayers*208 to deduct commuting expenses to a job that is

   temporary, as opposed to indefinite, in duration. The exception



   has been deemed necessary because "it is not reasonable to



   expect people to move to a distant location when a job is



   foreseeably of limited duration." Implicit in this



   exception is the requirement that the taxpayer commute to a

   worksite distant from his or her residence. Without such a

¶55   requirement, the absurd result would obtain of permitting a

¶56   taxpayer, who commuted to a succession of temporary jobs, to

¶57   deduct commuting expenses, no matter how close these jobs were

¶58   to his residence. [Emphasis added; citations omitted.]

¶59See also Ellwein v. United States, supra at 512 (holding that a taxpayer can deduct commuting expenses to a temporary job site if it is outside the area of the taxpayer's regular abode).

¶60Respondent argues that petitioner's temporary travel to work sites distant from her home in Stockton should be disallowed under the so-called "two-prong test" of Rev. Rul. 94-47, 1994-2 C.B. 18. In that ruling, largely devoted to respondent's explanation of his reasons*209 for refusing to follow this Court's opinion in Walker v. Commissioner, 101 T.C. 537 (1993), respondent stated: "A taxpayer may deduct daily transportation expenses incurred in going between the taxpayer's residence and a temporary work location outside the metropolitan area where the taxpayer lives and normally works."

¶61Petitioner has satisfied the requirements of Rev. Rul. 94-47, 1994-2 C.B. at 19 because of the peculiar circumstances of this case. As we have found, petitioner's employment in issue was temporary. Plainly it was distant from her home in Stockton. For years, including a portion of 1996, petitioner also had been employed in Stockton. Starting in 1996, at least partly because her employer had acquired new facilities distant from Stockton, petitioner agreed to a series of temporary assignments requiring her to travel substantial distances from Stockton. Her supervisor repeatedly promised her reassignment to a facility in the Stockton area.

¶62Petitioner had established her home near her place of employment and only accepted temporary assignments outside that area on the promise of reassignment within the Stockton area. She had no reason to disbelieve*210 her supervisor during the year in issue. In a later year, when she did cease to believe the promises of her supervisor, she changed her place of employment. Under these circumstances, in our view throughout the year in issue petitioner properly regarded the Stockton vicinity as the metropolitan area where she "lives and normally works". Therefore, even under respondent's own revenue ruling, and the rule advocated by respondent in this case, petitioner correctly deducted transportation expenses incurred in going between Stockton and her temporary work sites at Novato, Napa, and Yuba City to the extent such expenses are substantiated.

¶63Respondent's reliance on Aldea v. Commissioner, T.C. Memo 2000-136, is unwarranted since the circumstances there were entirely different from the present case. In Aldea, we stated:

     Petitioner has not established any business reason for

   living in Yuba City; her decision to live there was entirely

   personal. … The record does not indicate that petitioner



   ever worked in, had the prospect of work in, or had any other

   business tie to Yuba City. The union hall where petitioner

   received*211 her job assignments was in Sacramento, which is south

   of Yuba City, and all of petitioner's work sites were south of

   Sacramento.

¶64The long commutes in Aldea were for personal reasons and nondeductible; in contrast, the long commutes in this case were for employment reasons and therefore are deductible to the extent they are substantiated.

¶65Section 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". Under section 274(d), no deduction claimed with respect to the use of a passenger automobile shall be allowed unless the taxpayer substantiates specified elements of the use by adequate records or by sufficient evidence corroborating the taxpayer's own statement. These substantiation requirements supersede the doctrine of Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), under which we may approximate expenses in certain cases where the exact amount cannot be determined. Sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).

¶66*212The elements that must be substantiated with respect to deductible expenses for business use of an automobile are: (1) The amount of the expenditures; (2) the mileage for each business use of the automobile and the total mileage for all use of the automobile during the taxable period; (3) the date of the business use; and (4) the business purpose for the use of the automobile. Sec. 1.274-5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).

¶67To meet the adequate records requirements of section 274(d), a taxpayer must maintain some form of records and documentary evidence that in combination are sufficient to establish each element of an expenditure or use. Sec. 1.274-5T(c)(2), Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). A contemporaneous log is not required, but corroborative evidence to support a taxpayer's reconstruction of the elements of expenditure or use must have "a high degree of probative value to elevate such statement and evidence" to the level of credibility of a contemporaneous record. Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46017*213 (Nov. 6, 1985).

¶68On her 1997 Federal income tax return, petitioner claimed that during 1997 her vehicle was driven 62,730 miles, of which 59,610 were business miles. On her Schedule A, petitioner reported business mileage of 54,570 miles, and on her Schedule C, she reported business mileage of 5,040 miles. Her vehicle expenses were computed using the appropriate standard mileage rate for 1997 of 31.5 cents. See Rev. Proc. 96-63, 1996-2 C.B. 420, 422.

¶69During 1997 petitioner maintained a log of the odometer readings for her vehicle. The log contains the names of the cities to which petitioner drove. The log shows that the vehicle was driven a total of 48,490 miles between January 16, 1997, the first day of her first job assignment that year, and December 31, 1997. Petitioner submitted two vehicle maintenance receipts that showed the odometer readings on October 5, 1997, and January 13, 1998. The odometer readings on the receipts were consistent with petitioner's log.

¶70Although the log apparently accurately reflects petitioner's total mileage for the year, the record does not clearly show what portion of the total miles was driven for business purposes. The mileage in petitioner's*214 log was not recorded precisely. For example, the mileage for any given day was generally identical to the mileage from the day before, and her daily mileage was always rounded to the nearest multiple of ten. Petitioner testified that she often estimated the mileage from the amount of time she spent driving. For example, she admitted that it was not unusual for her to simply equate one hour of driving with a distance of 60 miles.

¶71Although revenue procedures permit taxpayers to use a per- mile estimate of automobile expenses in lieu of documenting actual expenses, taxpayers must still prove the actual business miles driven during the year. See Power v. Commissioner, T.C. Memo 1990-583. The level of detail required to substantiate the number of business miles driven may vary depending upon the facts and circumstances. Sec. 1.274-5T(c)(2)(ii)(C), Temporary Income Tax Regs., 50 Fed. Reg. 46018 (Nov. 6, 1985). Where a taxpayer makes regular trips to a certain location, she may satisfy the adequate record requirement by recording the total number of miles driven during the year, the length of the route once, and the date of each trip*215 at or near the time of the trips. Id.

¶72In the present case petitioner has substantiated the number of round trips she made for business purposes between her residence and her temporary work sites and the distance of each round trip. We have found that in addition to the undisputed 5,040 business miles that petitioner drove to Bakersfield, she also drove 24,598 miles to various temporary work sites during 1997. Since petitioner has satisfied the adequate record requirement for this mileage and therefore substantiated this business expenditure, we hold that petitioner is entitled to the claimed deduction to the extent of the substantiated mileage (24,598 miles plus the undisputed 5,040 miles) at the appropriate rate for 1997.

¶73If a taxpayer's otherwise deductible traveling expenses are reimbursed by her employer, the taxpayer is entitled to a deduction only for the amounts in excess of the reimbursements. See Jackson v. Commissioner, T.C. Memo 1999-226; sec. 1.162-17(b)(3), Income Tax Regs.; sec. 1.274-5T(f)(2)(iii), Temporary Income Tax Regs., 50 Fed. Reg. 46028 (Nov. 6, 1985).

¶74Petitioner admitted that her employer reimbursed her*216 $ 525 for her vehicle expenses in 1997. Petitioner did not report the reimbursements on her tax return. Thus, petitioner's deduction for employee expenses must be adjusted accordingly.

¶75In addition to disallowing petitioner's vehicle expenses, respondent also disallowed all of petitioner's other unreimbursed employee expenses, consisting of continuing education, books/subscriptions, uniforms/maintenance, and telephone expenses.

¶76Deductions are a matter of legislative grace, and a taxpayer bears the burden of proving entitlement to any deduction claimed. See Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84, 117 L. Ed. 2d 226, 112 S. Ct. 1039 (1992). ³ A taxpayer is required to maintain records sufficient to enable the Commissioner to determine the correct tax liability. See sec. 6001; sec. 1.6001-1(a), Income Tax Regs. We recognize that under certain circumstances, the Court may estimate the amount of a deductible expense. Cohan v. Comm'r, 39 F.2d at 543-544. However, in order to estimate the amount of an expense, we must have some basis upon which to make the estimate. Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985). Without such*217 a basis, any allowance would be sheer unguided largesse. Williams v. United States, 245 F.2d 559, 560 (5th Cir. 1957).

¶77At trial, petitioner did not introduce a single piece of documentary evidence in support of any of the deductions in issue except for her travel expenses. Likewise, petitioner did not offer testimony in support of any of those deductions. Because the record contains no evidence upon which we could base an estimate, we must sustain respondent's determinations in regard to unreimbursed employee expenses other than motor vehicle expenses.

¶78To reflect the foregoing,

¶79Decision will be entered under Rule 155.