1995 Tax Ct. Memo LEXIS 453">*453 Decision will be entered under Rule 155.
MEMORANDUM OPINION
POWELL,
Respondent determined a deficiency in petitioner's Federal income tax for the taxable year 1989 in the amount of $ 7,466 and an addition to tax under section 6651 in the amount of $ 1,866. Petitioner resided in Auburn, California, when he timely filed his petition.
Following a concession, 2 the issues are whether petitioner (1) may deduct certain "away from home" and car and truck expenses as trade or business expenses, (2) may deduct on Schedule C certain "draws" paid to him by his business, (3) may deduct health insurance premiums on Schedule C, and (4) is liable 1995 Tax Ct. Memo LEXIS 453">*454 for an addition to tax under section 6651 for filing his return late.
The facts may be summarized as follows. Petitioner operated a machine shop, Kirsch Machine Shop, as a sole proprietorship in Santa Clara, California, from 1968 until 1990. In 1988 petitioner sold his home in the Santa Clara area and moved his family to Auburn, California -- approximately 140 miles away from the machine shop. The reason for the move was that the quality of life was thought to be better in Auburn.
During 1989, petitioner spent weeknights in motels in Santa Clara and drove back to Auburn on weekends. Petitioner also performed an unspecified amount of driving for his business during the week. Petitioner withdrew $ 28,175 from his machine shop business during 1989 to provide himself a salary (draw), and paid $ 3,937 for health insurance in that year.
On Schedule C of petitioner's 1989 Federal income tax return, petitioner deducted1995 Tax Ct. Memo LEXIS 453">*455 $ 11,000 as "away from home" expenses, $ 1,781 in car and truck expenses, and draw expenses of $ 28,175. He also claimed a deduction for health insurance premiums in the amount of $ 3,937. Respondent received petitioner's return on January 6, 1992.
Upon examination, respondent disallowed the deductions related to away from home, car and truck, and draw expenses. Respondent also determined that the deduction for petitioner's health insurance premiums was treated incorrectly, and allowed him a deduction from gross income of 25 percent of the amount paid. As a result of the Schedule C adjustments, which turned the reported business loss into a business profit, respondent determined that petitioner was liable for self-employment income tax.
As a general rule, deductions for personal living expenses are disallowed under section 262. . Section 162(a), however, allows taxpayers to deduct "the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including * * * traveling expenses (including amounts expended for meals and lodging * * *) while away from1995 Tax Ct. Memo LEXIS 453">*456 home in the pursuit of a trade or business". With regard to deductions claimed under section 162(a)(2), the expense must be (1) reasonable and necessary, (2) incurred while away from home, and (3) incurred in pursuit of a trade or business.
This Court has consistently held that a taxpayer's "home," for purposes of the second prong of the
Furthermore, "The exigencies of business rather than the personal conveniences and necessities of the traveler must be the motivating factors." . In Had his post of duty been in * * * [Jackson] the cost of maintaining his home there and of commuting or driving to work concededly would be non-deductible living and personal expenses lacking the necessary direct relation to the prosecution of the business. * * * Whether he maintained one abode or two, whether he traveled three blocks or three hundred miles to work, the nature of these expenditures remained the same. [.]
In this case, petitioner's tax home was Santa Clara, and he lived in Auburn for personal reasons. Petitioner, therefore, is not entitled to deductions for his travel between Santa Clara and Auburn and for expenses incurred in Santa Clara.
Regarding the travel that petitioner performed on the job, petitioner has the burden of proving, through records1995 Tax Ct. Memo LEXIS 453">*458 or some type of documentary evidence, that he is entitled to the deduction. Sec. 274(d). Petitioner offered no such evidence. Further, the $ 28,175 he deducted as a draw was used for personal living expenses. As such it is part of the business profit of the sole proprietorship reported on Schedule C, and not deductible. Respondent's determinations are sustained.
Turning to the health insurance issue, we note that the deductibility of expenses is a matter of legislative grace. . Generally health insurance premiums are a medical expense deductible as an itemized deduction to the extent they exceed 7.5 percent of adjusted gross income. Sec. 213(a), (d)(1)(C). Self-employed individuals, however, generally may deduct 25 percent of the amount paid for health insurance from gross income, without the restrictions imposed on other medical expense deductions. Sec. 162(1). We, therefore, sustain respondent's disallowance of the Schedule C deduction for health insurance premiums and uphold the allowance of an adjustment to income for self-employed health insurance pursuant to section 162(1).
With regard1995 Tax Ct. Memo LEXIS 453">*459 to the addition to tax for failure to file a timely return pursuant to section 6651, the addition to tax will apply unless the taxpayer can show that the failure to file a timely return was due to reasonable cause and not to willful neglect. Sec. 6651(a)(1); Rule 142(a). Petitioner indicated that he filed his return late because he did not think he owed any tax. A taxpayer's belief that a return is not required to be filed may constitute reasonable cause under section 6651(a)(1), if supported by advice from a competent adviser who has been informed of the relevant facts. . Although petitioner had his return prepared by a professional tax service, there is no indication that the preparer was informed of the relevant facts and that petitioner's failure to timely file was based on competent advice. Respondent's determination is sustained.
To reflect the foregoing,
