T.C. Memo. 2008-65



                UNITED STATES TAX COURT



            BARRY L. MORRIS, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 14487-05.            Filed March 17, 2008.



     P failed to file Federal income tax returns for
1999, 2000, 2001, and 2002. R determined deficiencies
and additions to tax pursuant to sec. 6651(a)(1),
I.R.C. After concessions, P and R dispute only whether
P is entitled to certain additional deductions.

     Held: P is not entitled to deductions in excess
of those conceded by R.



Barry L. Morris, pro se.

Annie Lee, for respondent.
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             MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge:    This case is before the Court on a petition

for redetermination of Federal income tax deficiencies and

additions to tax under section 6651(a)(1) that respondent

determined with respect to petitioner’s 1999, 2000, 2001, and

2002 taxable years.1

     Before trial, the parties resolved a number of issues and

filed a stipulation of settled issues, which is hereby

incorporated by reference into our findings.   After concessions,

the issues remaining for decision are:

     (1) Whether petitioner is entitled to numerous additional

deductions claimed on Schedule C, Profit or Loss From Business,

for all 4 taxable years at issue;

     (2) whether petitioner is entitled to a deduction for state

taxes paid in 2000; and

     (3) whether petitioner is entitled to a deduction for

alimony payments in 2001.

                          FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts and accompanying exhibits are hereby incorporated by

reference into our findings.   Petitioner failed to file Federal


     1
       All section references are to the Internal Revenue Code of
1986, as amended and in effect for the taxable years at issue.
The Rule reference is to the Tax Court Rules of Practice and
Procedure.
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income tax returns for the 1999, 2000, 2001, and 2002 taxable

years.   Respondent issued notices of deficiency on May 6, 2005.

Petitioner then filed a timely petition with this Court.    At the

time he filed his petition, petitioner resided in Hayward,

California.   A trial was held on May 22-23, 2007, in San

Francisco, California.

     Before proceeding, it is noteworthy that Mr. Morris is an

experienced attorney specializing in criminal law.   This case was

initially set for trial in August 2006.   At petitioner’s request,

he was granted two continuances.   The second continuance was

granted in March 2007 over respondent’s objection.

     Despite the additional time he was granted and his

representations to the Court that if the continuances were

granted he would promptly find and provide respondent with

relevant documents demonstrating his entitlement to additional

deductions, petitioner failed to do so.   To make matters worse,

petitioner violated the Court’s standing pretrial order by

providing respondent with documents less than the required 14

days before trial.   He also showed up for trial without records

pertaining to 3 of the 4 taxable years at issue on the basis that

his “computer wasn’t printing.”    The case was nevertheless tried,

although 3 of the 4 taxable years at issue had to be tried on the

following day in order to permit petitioner to finalize and print
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the rest of the accounting records that he was relying on and to

provide them to respondent.

     Because petitioner’s records were discovered, during trial,

to be fraught with errors, the Court concluded that respondent

was prejudiced by petitioner’s violation of the pretrial order.

The Court therefore sustained respondent’s objection to the

admission of those documents into evidence.    However, the record

was held open until July, 9, 2007, to offer petitioner an

opportunity to confer with respondent in order to reach an

agreement concerning the filing of additional documents.      Such

documents could have included corrected versions of the documents

that were not admitted into evidence at trial and additional

supplemental stipulations of the parties.    Petitioner failed to

confer with respondent and then inexplicably failed to file a

brief or a reply brief.    In the end, although provided ample

opportunity, petitioner has done little to help himself prevail

on the remaining issues.

                                OPINION

I.   General Deduction Rules

     Deductions are a matter of legislative grace, and the

taxpayer must maintain adequate records to substantiate the

amounts of any deductions or credits claimed.    Sec. 6001;

INDOPCO, Inc. v. Commissioner, 

, 84 (1992); sec.

1.6001-1(a), Income Tax Regs.
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      Generally, the Court may allow for the deduction of a

claimed expense (other than those subjected to the strict

substantiation requirements of section 274) even where the

taxpayer is unable to fully substantiate it, provided the Court

has an evidentiary basis for doing so.    Cohan v. Commissioner, 

, 543-544 (2d Cir. 1930); Vanicek v. Commissioner, 

, 742-743 (1985); sec. 1.274-5T(a), Temporary Income Tax

Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).   In these instances,

the Court is permitted to approximate the allowable expense,

bearing heavily against the taxpayer whose inexactitude is of his

or her own making.   Cohan v. Commissioner, supra at 544.

      The taxpayer bears the burden of proving entitlement to any

claimed exemptions or deductions; the taxpayer’s burden includes

the burden of substantiation.    Hradesky v. Commissioner, 

, 89-90 (1975), affd. 

(5th Cir. 1976).   Although

section 7491(a) may shift the burden of proof to the Commissioner

in specified circumstances, petitioner has not established that

he meets the requirements under section 7491(a)(1) and (2) for

such a shift.

II.   Business Expense Deductions

      Section 162(a) authorizes a deduction for “all the ordinary

and necessary expenses paid or incurred during the taxable year

in carrying on any trade or business”.   A trade or business

expense is ordinary for purposes of section 162 if it is normal
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or customary within a particular trade, business, or industry and

is necessary if it is appropriate and helpful for the development

of the business.   Commissioner v. Heininger, 

, 471

(1943); Deputy v. du Pont, 

, 495 (1940).     In

contrast, “personal, living, or family expenses” are generally

nondeductible.   See sec. 262(a).

     Certain business expenses described in section 274(d) are

subject to strict substantiation rules that supersede the Cohan

doctrine.   Sanford v. Commissioner, 

, 827-828 (1968),

affd. 

(2d Cir. 1969); sec. 1.274-5T(a), Temporary

Income Tax Regs., supra.    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.

To deduct such expenses, the taxpayer must substantiate by

adequate records or sufficient evidence to corroborate the

taxpayer’s own testimony:   (1) The amount of the expenditure or

use, which includes mileage in the case of automobiles; (2) the

time and place of the travel, entertainment, or use; (3) its

business purpose; and in the case of entertainment, (4) the

business relationship to the taxpayer of each expenditure or use.

Sec. 274(d) (flush language).
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       Because petitioner has failed to file a brief, the nature of

his arguments is not entirely clear.    In any event, no evidence

has been admitted that would tend to support any of the claimed

business expense deductions that were not conceded by respondent.

To make matters worse, petitioner’s testimony was plagued by

memory lapses and confessions of error with respect to some of

his claimed deductions.    The Court therefore concludes that

petitioner has failed to demonstrate entitlement to deductions

for any business expenses in excess of those conceded by

respondent.

III.    Deduction for State Tax Payments

       State income taxes paid or accrued during the taxable year

are generally deductible.    See sec. 164(a)(3).   At trial,

petitioner asserted tersely that he made five payments of $310 to

the California Franchise Tax Board in 2000.    Aside from that

assertion, there is no evidence of record to demonstrate that

petitioner actually made those payments on behalf of his

business.    Because petitioner has failed to properly substantiate

the claimed State tax payments, he has not demonstrated

entitlement to a deduction for State tax payments with respect to

his 2000 taxable year.

IV.    Deduction for Alimony or Separate Maintenance Payments

       Payments incident to a divorce that are characterized as

alimony or separate maintenance are deductible by the payor.
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See sec. 215(a) (“In the case of an individual, there shall be

allowed as a deduction an amount equal to the alimony or separate

maintenance payments paid during such individual’s taxable

year.”).   For Federal income tax purposes, alimony is defined as

any payment in cash that satisfies all of the following

requirements: (a) Such payment is received by, or on behalf of, a

spouse under a divorce or separation instrument; (b) the divorce

or separation instrument does not designate such payment as a

payment which is not includable in gross income under section 71

and not allowable as a deduction under section 215; (c) the payee

spouse and the payor spouse are not members of the same household

at the time the payment is made; and (d) there is no liability to

make any such payment, or a substitute for such payments, in cash

or property, after the death of the payee spouse.

Sec. 71(b)(1)(A)-(D).

     At trial, petitioner testified that he “paid $59,000 in

spousal support in the year 2001.”     Respondent indicates, on

brief, that respondent was willing to allow petitioner a

deduction for alimony payments if petitioner provided adequate

documentation to show the year in which alimony was paid.

Petitioner attempted to do so at trial by submitting copies of

computer records reflecting numerous transfers of funds ($850 per

transfer) to his ex-wife in 2001.    However, those amounts could

also have been for child support and, in any event, those records
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were not admitted into evidence.     As a result, we are left to

guess if and when petitioner paid alimony.       Petitioner has

therefore not demonstrated entitlement to a deduction for alimony

payments with respect to his 2001 taxable year.

     The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.       To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

     To reflect the foregoing,



                                              Decision will be entered

                                         under Rule 155.