T.C. Summary Opinion 2002-3
UNITED STATES TAX COURT
GEORGE H. RICHARDS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18523-99S. Filed January 14, 2002.
George H. Richards, pro se.
Monica J. Miller, for respondent.
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of section 7463 of the Internal
Revenue Code in effect at the time the petition was filed. The
decision to be entered is not reviewable by any other court, and
this opinion should not be cited as authority. Unless otherwise
indicated, subsequent section references are to the Internal - 2 -
Revenue Code in effect for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Respondent determined a deficiency in petitioner’s Federal
income tax for the taxable year 1997 of $1,334. At some point
before trial, petitioner conceded the adjustment in the notice of
deficiency; however, each party made additional claims. The
issues remaining for decision are: (1) Whether petitioner is
entitled to the claimed dependency exemption deductions; (2)
whether petitioner is entitled to head-of-household filing
status; (3) whether petitioner is entitled to the additional
claimed alimony deduction; and (4) whether petitioner is entitled
to the claimed Schedule C, Profit or Loss From Business, expense
deductions.
Some of the facts have been stipulated, and they are so
found. The stipulation of facts and the attached exhibits are
incorporated herein by this reference.
Petitioner lived in Clearwater, Florida, at the time he
filed his Tax Court petition.
Background
Petitioner was employed by an architectural firm as a
licensed architect during 1997. Petitioner and his wife,
Virginia Richards (Ms. Richards), had three children, Matthew,
Brigid, and Shannon, who in 1997 were ages 17, 13, and 11,
respectively. Petitioner, Ms. Richards, and their children lived - 3 -
together in the marital home until July 25, 1997, when petitioner
and Matthew moved out. Although Matthew moved into a new
residence with petitioner in July 1997, the record is unclear as
to whether Matthew continued to live with petitioner for the
remainder of 1997. Ms. Richards continued to live in the marital
home with Brigid and Shannon for the remainder of the year.
Ms. Richards was awarded permanent custody of all three
children. Petitioner and Ms. Richards were divorced in August
1998. Effective August 1, 1997, petitioner was obligated to pay
$784.62 biweekly in alimony and $346.84 biweekly in child support
pursuant to the terms of the Report and Recommendation of General
Master on Motion for Temporary Relief (the Report) and the Order
of the Pinellas County Circuit Court (the Order). Petitioner did
not pay the full amount of the alimony as scheduled. The records
that petitioner submitted, including a Family Law Case History
from Pinellas County, photocopies of petitioner’s calendar with
handwritten notes and calculations, photocopies of petitioner’s
handwritten checking account balance sheets, and Ms. Richards’s
handwritten notes with photocopies of canceled checks that
respondent submitted indicate that petitioner made the following
alimony and child support payments: - 4 -
Date Alimony Child Support
8/4/97 $253.16 $346.84 8/17/97 437.78 346.84 8/30/97 --- 346.84 9/12/97 --- 346.84 9/14/97 346.84 --- 9/26/97 --- 346.84 10/6/97 253.16 346.84 10/24/97 --- 346.84 11/10/97 359.63 346.84 11/24/97 359.63 346.84 12/9/97 359.63 346.84 12/21/97 359.63 346.84 Total 2,729.46 3,815.24
In addition to his employment with the architectural firm,
petitioner performed architectural computer-aided design (CAD)
drafting services in the evenings. During the period he resided
at the marital home, petitioner performed the CAD drafting on his
computer at a computer desk in a room in the marital home that he
exclusively used as his home office. The square footage of the
room in which petitioner performed the CAD drafting was 13
percent of the square footage of the marital home. After
petitioner moved on July 25, 1997, he performed the CAD drafting
in the kitchen area of each of the rental units in which he
lived. Petitioner often drove from his residence to a client’s
office to deliver his completed work. Petitioner wanted to
develop an Internet Web site to promote his CAD drafting business
and to allow him to work from any location. This Web site was
never completed. - 5 -
Petitioner filed a 1997 Federal income tax return1 in which
he claimed, among other items, head-of-household filing status,
dependency exemption deductions for his three children, and an
alimony deduction of $2,515.
Petitioner filed an amended 1997 Federal income tax return
dated May 15, 2000, in which he increased the amount of his
alimony deduction to $4,991. With his amended return petitioner
included a Schedule C relating to his drafting activity on which
he reported gross income of $3,840 and a net loss of $1,548.
Petitioner deducted the following expenses on his Schedule C:
Expense Amount 1 Car and truck $186 Depreciation and sec. 179 expense 3,485 Office expense 57 Rent or lease--vehicles, machinery, and equipment 189 1 Rent or lease--other business property 401 Repairs and maintenance 30 Supplies 181 Taxes and licenses 90 Utilities 289 Other expenses (books) 16 Expenses from business use of house 464 Total 5,388 1 The exact amount of this expense is unclear from the copy of the Schedule C but has been derived using the total.
Ms. Richards filed a separate income tax return for the 1997
tax year. On Schedule A, Itemized Deductions, attached to her
1 The return was electronically filed. This is relevant with respect to the issue of whether a waiver was attached to the return, as will be discussed infra. Sec. 152(e)(2)(B). - 6 -
return, she claimed deductions for both mortgage interest and
real estate taxes. Ms. Richards initially claimed dependency
exemption deductions on her 1997 return for Brigid and Shannon,
but she did not claim dependency exemption deductions on her
amended return.
After trial, respondent filed (1) a motion to file an answer
to conform the pleadings to the proof, which the Court granted,
and (2) an answer to amended petition.
Discussion
As a preliminary matter, we note that petitioner conceded
the adjustment determined in the notice of deficiency.
After the issuance of the notice of deficiency, in the amended
petition and at trial, petitioner raised the issues concerning
his Schedule C expenses and his increased alimony deduction;
accordingly, petitioner bears the burden of proof on those
issues.2 Rule 142(a)(1).
In his answer to amended petition, respondent denied the
allegations in the amended petition and made affirmative
allegations that petitioner was not entitled to dependency
2 Sec. 7491 does not apply to shift the burden of proof to respondent on these issues because petitioner has neither alleged that sec. 7491 is applicable nor established that he complied with the requirements of sec. 7491(a)(2)(A) and (B) to substantiate items, maintain required records, and fully cooperate with respondent’s reasonable requests. - 7 -
exemption deductions and head-of-household filing status. These
are new matters for which respondent bears the burden of proof.
Id.
Issue 1. Dependency Exemption Deductions
A dependent is defined as an individual, such as a son or
daughter of the taxpayer, over half of whose support for the
calendar year was received from the taxpayer. Sec. 152(a)(1);
sec. 1.152-1(a), Income Tax Regs. As relevant here, the child
must not have attained the age of 19 by the close of the calendar
year. Sec. 151(c)(1)(B)(i).
Support includes food, shelter, clothing, medical and dental
care, education, and the like. Sec. 1.152-1(a)(2)(i), Income Tax
Regs. The total amount of support for each claimed dependent
furnished by all sources during the year in issue must be
established by competent evidence. Blanco v. Commissioner, 56
T.C. 512, 514 (1971). The amount of support that the claimed
dependent received from the taxpayer is compared to the total
amount of support the claimed dependent received from all
sources. Sec. 1.152-1(a)(2)(i), Income Tax Regs. It must also
be established that the taxpayer provided more than one-half of
the total support for each claimed dependent. Secs. 151 and 152;
sec. 1.152-1(a)(1), Income Tax Regs.
In the case of a child who receives over half of his support
from parents who are divorced or legally separated under a decree - 8 -
of divorce or separate maintenance under section 152(e)(1)(A)(i),
or separated under a “written separation agreement” under section
152(e)(1)(A)(ii),3 and the child is in the custody of one or both
parents for more than one-half of the calendar year, then such
child shall be treated as receiving over one-half of his support
from the parent having custody for a greater portion of the
calendar year. Sec. 152(e)(1).
The custodial parent is the parent who has custody of a
child for the greater portion of the year. Id. The noncustodial
parent may claim the dependency exemption deduction, and a
dependent may be treated as having received over one-half of his
support from the noncustodial parent, if the custodial parent
signs a written statement that she will not claim the child as a
dependent for the taxable year, under section 152(e)(2)(A). The
noncustodial parent must then attach this waiver to his return.
Sec. 152(e)(2)(B); sec. 1.152-4T(a), Q&A-3, Temporary Income Tax
Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984).
Respondent argues (and has the burden of proving) that
petitioner is not entitled to the dependency exemption deductions
claimed for his three children. Respondent has not argued that
petitioner and Ms. Richards were not legally separated under
3 Sec. 152(e)(1)(A)(iii) concerns parents living apart at all times during the last 6 months of the taxable year. This section is not applicable because petitioner was not living apart from Ms. Richards at all times during the last 6 months of 1997. - 9 -
section 152(e)(1)(A)(i), or that there was no “written separation
agreement” under section 152(e)(1)(A)(ii). Respondent did not
present evidence that anyone, including Ms. Richards, other than
petitioner provided any support for the children. See sec.
1.152-1(a)(2)(i), Income Tax Regs.
Respondent did not present evidence that Matthew did not
live with petitioner for a greater portion of the year and,
therefore, has not met his burden of proof. Accordingly,
petitioner was the custodial parent for Matthew in 1997 under
section 152(e)(1). Therefore, petitioner provided over half of
Matthew’s support, and he is entitled to a dependency exemption
deduction for Matthew for 1997. See sec. 152(a)(1).
Ms. Richards was the custodial parent for Shannon and Brigid
in 1997. As previously indicated, petitioner, as the
noncustodial parent, would be entitled to the dependency
exemption deductions for Shannon and Brigid only if he attached
the proper waiver signed by Ms. Richards to his return.
Respondent neither asserted nor presented evidence that
petitioner failed to attach a waiver signed by Ms. Richards to
his return as required by section 152(e)(2). While we recognize
that proof of a negative may be difficult, a copy of a transcript
indicating that no such waiver was attached to the 1997 return
would have provided some evidence on this matter. Cf. Kessler v.
Commissioner, T.C. Memo. 1977-117 (determining that the taxpayer, - 10 -
who had the burden of proof, met the burden of proving the
negative by providing credible testimony). The copy of
petitioner’s electronically filed 1997 return produced to the
Court does not indicate whether petitioner attached a waiver or
subsequently mailed a waiver to the Internal Revenue Service. We
are unable to find that a waiver was not attached or mailed
separately, along with Form 8453, U.S. Individual Income Tax
Declaration for Electronic Filing.4 Thus, we cannot conclude
that respondent met his burden of proof.
Accordingly, petitioner is allowed the claimed dependency
exemption deductions.
Issue 2. Head-of-Household Filing Status
For a taxpayer to qualify for head-of-household filing
status, he must satisfy the requirements of section 2(b). An
individual shall be considered a head of household if he is not
married at the close of the taxable year, is not a surviving
spouse, and, in relevant part, maintains as his home a household
4 Respondent asserts in his answer to amended petition that Ms. Richards initially claimed two children as dependents; accordingly, respondent concluded that she did not sign a waiver. We note that while Ms. Richards initially claimed her two daughters as dependents on her separate income tax return, she did not claim the children as dependents on her amended return for the 1997 tax year and she testified at trial that she was not entitled to. Ms. Richards’s treatment of the dependency exemption deductions on her original and amended returns does not affect the outcome of this issue as to petitioner. Nevertheless, allowing petitioner the dependency exemption deductions does not create a result inconsistent with Ms. Richards’s treatment of this item. - 11 -
which constitutes for more than one-half of the taxable year the
principal place of abode of a child as a member of such
household. Sec. 2(b)(1)(A)(i). An individual maintains a
household only if he furnishes over half of the costs of
maintaining the household during the taxable year. Sec. 2(b)(1);
sec. 1.2-2(b)(1), Income Tax Regs. The costs of maintaining the
household include property taxes, mortgage interest, utility
charges, upkeep and repairs, property insurance, and food
consumed on the premises. Sec. 1.2-2(d), Income Tax Regs.
An individual who is married shall not be considered married
if he is legally separated from his spouse under a decree of
divorce or of separate maintenance. Secs. 2(b)(2)(B) and (c),
7703(a).
Petitioner claimed head-of-household filing status on his
1997 return. Respondent has argued (and has the burden of
proving) that petitioner is not entitled to the claimed head-of-
household filing status.
Although petitioner was married in 1997, he will not be
treated as married for purposes of section 2 because, as
discussed above with respect to section 152(e)(1)(A), there has
been no argument or facts produced that indicate that petitioner
and Ms. Richards were not legally separated under a decree of
separate maintenance. - 12 -
The facts of the case indicate that petitioner furnished
over one-half of the costs of maintaining the household at the
marital home (e.g., he paid the mortgage, real estate taxes, and
utilities). Petitioner’s marital home constituted a household
that was the principal place of abode for at least one-half of
the year for all three of his children, for whom he is entitled
to dependency exemption deductions under section 151, as
discussed above. Accordingly, petitioner is eligible for head-
of-household filing status.
Issue 3. Alimony
A taxpayer is allowed as a deduction an amount equal to the
amount paid that constitutes “alimony”5 or a “separate
maintenance [payment]” paid during his taxable year under section
215(a). Alimony is defined as a payment in cash that satisfies a
four-part test set forth in section 71(b)(1).
Respondent does not dispute that petitioner was responsible
for paying alimony to Ms. Richards, and we are satisfied that the
payments constitute alimony for purposes of sections 215 and
71(b). Respondent disputes the amount petitioner claimed as an
alimony deduction on his amended return.
Payments that constitute support of minor children are not
included in the definition of alimony and are not deductible.
Secs. 71(c), 215(b). If any payment that is made is less than
5 The Order refers to the payments as “alimony”. - 13 -
the full amount specified in the instrument, then the payment
amount that does not exceed the sum payable for support shall be
considered a payment for child support. Sec. 71(c)(3); Blyth v.
Commissioner, 21 T.C. 275, 279 (1953).
Pursuant to the terms of the Report and the Order,
petitioner was directed to make biweekly payments to Ms. Richards
of $784.62. Petitioner produced documents indicating that he
paid Ms. Richards alimony of $2,729.466 in 1997; therefore,
petitioner is allowed a deduction for alimony in that amount.
Issue 4. Schedule C Expense Deductions
Deductions are a matter of legislative grace, and a taxpayer
must establish his right to the deductions claimed. INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992).
Under section 162, a deduction is allowed for ordinary and
necessary expenses that are paid or incurred during the taxable
year in carrying on a trade or business. Sec. 162(a). Section
167 allows a depreciation deduction for property used in a trade
or business or held for the production of income. Sec. 167(a).
Generally, a taxpayer is required to substantiate deductions
by maintaining books and records sufficient to establish the
6 We have credited petitioner with a payment of alimony of $346.84 on Sept. 14, 1997. While it may appear that this payment was child support, petitioner met his child support obligation for September 1997 and was not otherwise in arrears. Moreover, petitioner did not designate the payment as child support as he had done with the payments on Sept. 12 and 26, 1997. - 14 -
amount of his deductions. Sec. 6001; sec. 1.6001-1(a), Income
Tax Regs. If a taxpayer is unable to fully substantiate the
expenses incurred in his trade or business but there is evidence
that deductible expenses were incurred, the Court may
nevertheless allow a deduction based upon an approximation of
expenses. Ellis Banking Corp. v. Commissioner, 688 F.2d 1376
(11th Cir. 1982), affg. in part and remanding in part T.C. Memo.
1981-123; Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir. 1930);
Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).
Respondent does not dispute and we conclude that petitioner
was in the trade or business of performing architectural CAD
drafting services in 1997. Respondent argues that petitioner
failed to substantiate the expenses for which he claimed
deductions on his Schedule C. We shall discuss each claimed
expense below.
A. Car and Truck Expenses
Petitioner claimed a deduction of $186 on his Schedule C for
car and truck expenses. It is not clear from his Schedule C or
the attached Form 4562, Depreciation and Amortization, whether
the claimed amount represents depreciation for his Nissan Altima
automobile, a standard mileage allowance, or actual expenses such
as gasoline and tolls.
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). Section 274 requires, in
relevant part, that the taxpayer substantiate by either adequate
records or sufficient corroborating evidence the following items:
(1) The amount of the claimed expense; (2) the time and place of
the use of the property; and (3) the business purpose of the
expense. Sec. 274(d); sec. 1.274-5T(b)(6), Temporary Income Tax
Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985). Even if such an
expense is otherwise deductible, the deduction for the listed
item may be denied if the substantiation is insufficient to
support it. Id. The substantiation requirements under section
274 override the general substantiation requirements of section
6001 and Cohan v. Commissioner, supra.
A self-employed individual may deduct a mileage allowance
under section 62(a)(1), section 1.274-5T(c)(2)(ii), Temporary
Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985), and section
1.274(d)-1, Income Tax Regs. Dehr v. Commissioner, T.C. Memo.
1998-441. A deduction for a mileage allowance requires the same
substantiation under section 274 as set forth above (i.e.,
amount, time and place, and business purpose). The amount of the
mileage can be substantiated by any reasonable means, such as
using a contemporaneous business log, or otherwise establishing
the miles driven. Smith v. Commissioner, 80 T.C. 1165 (1983).
The Commissioner is authorized to establish the standard mileage - 16 -
rate that is deemed to satisfy the substantiation requirements
and has done so for 1997. Sec. 1.274(d)-1(a), Income Tax Regs.;
Rev. Proc. 96-63, 1996-2 C.B. 420.
Actual allowable expenses such as gasoline and tolls are
deductible if incurred in a trade or business and if they do not
constitute personal commuting expenses. Sec. 162; Green v.
Commissioner, 59 T.C. 456 (1972); sec. 1.162-1(a), Income Tax
Regs.
Petitioner’s Nissan Altima qualifies as “listed property”
under sections 274(d)(4) and 280F(d)(4)(A)(i). Petitioner has
not provided any facts in support of depreciation of the
automobile. Therefore, the deduction for depreciation of the
automobile is denied.
Petitioner produced a handwritten list approximating his
miles driven and tolls paid. This list provides no assistance as
to whether petitioner has claimed as a deduction a standard
mileage rate or actual expenses. To the extent that this list
reflects mileage, it does not appear to be a contemporaneous log.
See Smith v. Commissioner, supra. It also fails to establish
petitioner’s time, place, and business purpose of the miles
driven. Therefore, petitioner has not substantiated the
deduction for a mileage allowance, and it is denied.
To the extent that petitioner’s handwritten list reflects
actual expenses associated with the automobile, petitioner has - 17 -
not substantiated any expenses except for tolls of $24, which we
allow as a deductible expense.
Accordingly, except with respect to the $24 deduction for
tolls, petitioner has failed to substantiate these deductions,
and they are denied.
B. Depreciation and Section 179 Expense
A taxpayer may elect to deduct as a current expense the cost
of any “section 179 property” which is acquired by purchase for
use in the active conduct of a trade or business. Sec. 179(a),
(d)(1). Section 179 property is tangible property to which
section 168 applies and which is section 1245 property.7 Sec.
179(d)(1); sec. 1.179-4(a), Income Tax Regs.
Computer equipment is “listed property” under section
274(d)(4), as defined under section 280F(d)(4)(A)(iv), unless it
falls under the exception in section 280F(d)(4)(B). Computer
equipment is excepted from the definition of listed property
under section 274 (and will, therefore, not be subject to the
substantiation requirements for listed property under section 274
and section 1.274-5T(b)(6), Temporary Income Tax Regs., supra) if
it is used exclusively at a regular business establishment and
owned or leased by the person operating such establishment. Sec.
280F(d)(4)(B). A regular business establishment includes a home
7 Sec. 1245 property is defined in sec. 1245(a)(3) as property subject to the allowance for depreciation under sec. 167, including personal property. - 18 -
office for which the requirements of section 280A(c)(1) are met.
Section 179 has its own substantiation and election
requirements. The taxpayer must maintain records reflecting how
and from whom the section 179 property was acquired, and when it
was placed in service. Sec. 1.179-5(a), Income Tax Regs. The
taxpayer is also required to elect on his first return for the
taxable year or on a timely filed amended return as a separate
item the total section 179 expense deduction claimed with respect
to all section 179 property selected and the portion of that
deduction allocable to each specific item. Id.
Petitioner indicated on Form 4562 attached to his Schedule C
that he elected to deduct computer equipment as a current expense
under section 179. Petitioner’s computer equipment qualifies as
section 179 property because it is tangible property to which
section 168 applies. Secs. 167(a)(1) and 168(f). The computer
equipment also qualifies as section 1245 property. Sec.
1245(a)(3).
Petitioner’s computer equipment is not listed property under
section 274(d)(4) because it falls under the home office
exception to section 274 under section 280F(d)(4)(B) and section
280A(c)(1), as discussed below. Therefore, the computer
equipment is not subject to the substantiation requirements of
section 274. Nevertheless, the computer equipment is subject to - 19 -
the substantiation and election requirements of section 179 and
general substantiation requirements.
Although petitioner produced many receipts reflecting
purchases of computer equipment, all receipts except one reflect
a subsequent tax year and cannot be used to substantiate
purchases of property for 1997. The one receipt from 1997
indicates a purchase of computer equipment of $32.09.
Petitioner failed to maintain records reflecting the cost of
the computers, the use of the property, the date of the use, the
business purpose of the property, from whom the equipment was
acquired, and when the computer equipment was placed in service,
as required by section 1.179-5(a), Income Tax Regs. In addition,
petitioner’s amended return was dated May 15, 2000, and filed
sometime thereafter. Petitioner’s 1997 return was due on April
15, 1998, so the amended return was not timely filed.
Accordingly, petitioner is denied the deduction for his computer
equipment.
C. Expenses From Business Use of Home
Petitioner deducted depreciation of the marital home, a
casualty loss, mortgage interest, real estate taxes, insurance,
and utilities in connection with the business use of his home on
Form 8829, Expenses for Business Use of Your Home, attached to
his return. - 20 -
Deductions for expenses attributable to the taxpayer’s
business use of his home are disallowed unless they fit within
the exceptions under section 280A. Sec. 280A(a). A deduction
may be allowed to the extent the item is allocable to a portion
of the home which is exclusively used on a regular basis as the
principal place of business for his trade or business. Sec.
280A(c)(1)(A).
Deductions for expenses related to the business use of a
taxpayer’s home are further limited by section 280A(c)(5) to the
excess of the gross income derived from the use of the home
office over the deductions allocable to the home office that are
otherwise allowable.
As the facts indicate, during the period from January 1
through July 25, 1997, petitioner used a room in the marital home
exclusively as his work space for his drafting activity.
Petitioner also used the room as such on a regular basis
throughout this period.
After petitioner moved from the marital home, he performed
his drafting in the kitchen of each of his subsequent apartments.
Because petitioner did not use a portion of each rental unit
exclusively for his drafting activity, petitioner is not allowed
a deduction after July 25, 1997.
Petitioner and respondent agreed that petitioner is allowed
a deduction for home mortgage interest and real estate taxes of - 21 -
$2,555 and $683, respectively, for 1997. Accordingly, the
portions of the mortgage interest and real estate taxes that are
allocable to the portion of petitioner’s marital home devoted to
his home office during the period from January 1 through July 25,
1997, are expenses in connection with the business use of his
home and deductible on Schedule C.8
Petitioner claimed a deduction for utilities as part of his
deduction for the business use of his home and also as a separate
expense on the Schedule C. Petitioner failed to explain why he
deducted the same item twice or that the items are not, in fact,
duplications. The deduction for utilities is allowed as an
expense with respect to the home office only.
Petitioner has not substantiated his basis in the marital
home, the casualty loss, or the insurance. Accordingly, the home
office expense deduction with respect to these items is
disallowed.
D. Office Expense, Supplies, Taxes and Licenses, Utilities, and Other Expenses
We are satisfied that petitioner has provided credible
evidence relating to the following CAD drafting expenses: Office
expenses of $57; supplies of $181; taxes and licenses of $90;
8 The remaining portion of the mortgage interest and real estate taxes may be deductible by petitioner under sec. 163(h)(3) and sec. 164(a)(1), respectively. - 22 -
utilities of $289; and books of $16. These amounts are
deductible under section 162.
Petitioner provided evidence concerning the attempted
creation of his Web site. Because petitioner primarily intended
for the Web site to promote his CAD drafting services, it is a
deductible advertising expense under section 162.
Petitioner has failed to provide any facts concerning the
expenses relating to the following claimed deductions: Rent or
lease of vehicles, machinery, and equipment; rent or lease of
other business property; and repairs or maintenance.
Accordingly, these expenses are disallowed.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
under Rule 155.