T.C. Summary Opinion 2018-11



                         UNITED STATES TAX COURT



               RON WILLIAM THOMPSON, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 19372-16S.                         Filed March 12, 2018.


      Ron William Thompson, pro se.

      Jeri L. Acromite and Miles B. Fuller, for respondent.



                              SUMMARY OPINION


      LAUBER, Judge: This case was heard pursuant to the provisions of section

7463 of the Internal Revenue Code in effect when the petition was filed.1 Pursu-




      1
        All statutory references are to the Internal Revenue Code (Code) in effect
for the tax year in issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure. We round all monetary amounts to the nearest dollar.
                                         -2-

ant to section 7463(b), the decision to be entered is not reviewable by any other

court, and this opinion shall not be treated as precedent for any other case.

      With respect to petitioner’s Federal income tax for 2013, the Internal Reve-

nue Service (IRS or respondent) determined a deficiency of $2,962. This deficien-

cy is attributable to the disallowance of miscellaneous deductions that petitioner

claimed on Schedule A, Itemized Deductions. Finding that he has substantiated

the underlying expenses in part, we will sustain the deficiency in part.

                                    Background

      The parties filed a stipulation of facts that is incorporated by this reference.

Petitioner resided in Arizona when he timely petitioned this Court.

      Petitioner is a biologist who was semi-retired during 2013. He specializes

in the ecology and predatory habits of mountain lions (and to a lesser extent, jag-

uars and pumas) in desert areas of Mexico, New Mexico, and Texas. One issue of

interest to him is the extent to which these predators prey on livestock as opposed

to wild animals such as deer, elk, and rabbits. Needless to say, this issue is also of

concern to ranchers who own livestock in these areas.

      Petitioner engages in field research concerning birth rates, survival, popula-

tion density, migratory patterns, and predatory habits of mountain lions and jag-

uars near the U.S.-Mexico border. He and his fellow researchers seek to do this in
                                        -3-

various ways. One technique involves installation of stationary cameras that track

the animals’ activity at key locations. Another technique involves catching and

sedating the animals, then putting radio-collars around their necks by which their

activities can be tracked using GPS monitoring. Petitioner has published a number

of scholarly articles documenting the results of his research.

      Petitioner engaged in his research under the auspices of two universities:

Sul Ross State University (Sul Ross) in Alpine, Texas, and the University of Ari-

zona in Tucson, Arizona. Petitioner made numerous trips to Mexico, Texas, and

New Mexico in conducting his research. He made these trips to assist in setting

up cameras and collaring mountain lions and jaguars, meeting with ranchers who

had lost livestock, visiting ranches to observe killed prey, meeting with research-

ers in Mexico, and training graduate students from Mexico City.

      Petitioner timely filed, jointly with his wife, Form 1040, U.S. Individual In-

come Tax Return, for the 2013 tax year.2 As relevant here, he reported wage

income of $7,500 from Sul Ross and included a Schedule C, Profit or Loss from

Business, for an activity described as “border study.” He reported on Schedule C

gross receipts of $17,167, apparently reflecting a contract fee or grant from one of


      2
       Petitioner’s wife, Brenda L. Thompson, did not join the petition seeking
redetermination of the deficiency and is not a petitioner in this Court.
                                          -4-

the universities that supervised his research. The only expenses reported on his

Schedule C were car and truck expenses of $11,865, reflecting a mileage allow-

ance of $0.565 per mile for 21,000 business miles driven on a vehicle placed in

service on January 1, 2002. Respondent has not questioned the deduction for peti-

tioner’s Schedule C vehicle expense.

      Separately, petitioner reported on Schedule A miscellaneous expenses of

$21,643. These consisted of $17,918 of unreimbursed employee business expen-

ses (including $12,882 of car and truck expenses); $150 of tax preparation fees;

and $3,575 of “other expenses.” The “other expenses” included union and profes-

sional dues of $89, equipment expenses of $2,465, and expenses of $1,021 some-

how related to mountain lions. After applying the 2% floor prescribed by section

67(a), petitioner claimed a miscellaneous itemized deduction of $19,733.3 In a

timely notice of deficiency the IRS disallowed this deduction in full for lack of

substantiation. Petitioner timely petitioned for redetermination.




      3
        Petitioner included with his 2013 return a Schedule E, Supplemental In-
come and Loss, reporting a nonpassive loss of $2,049 attributable to his distribu-
tive share of a loss incurred by Primero Conservation Outfitters LLC. Although
that entity also had activities in Mexico, petitioner credibly testified that all of its
income and expenses were reported on its Form 1065, U.S. Return of Partnership
Income, and that none of the expenses at issue here were connected with its activi-
ties.
                                        -5-

                                    Discussion

A.    Governing Statutory Framework

      The IRS’ determinations in a notice of deficiency are generally presumed

correct, and the taxpayer bears the burden of proving those determinations erro-

neous. Rule 142(a); Welch v. Helvering, 

, 115 (1933). Petitioner

does not contend that the burden of proof shifts to respondent under section

7491(a) as to any issue of fact.

       Section 162(a) allows the deduction of “all the ordinary and necessary ex-

penses paid or incurred during the taxable year in carrying on any trade or busi-

ness.” Deductions are a matter of legislative grace; the taxpayer bears the burden

of proving his entitlement to deductions allowed by the Code and of substantiating

the amounts of expenses underlying claimed deductions. Sec. 6001; INDOPCO,

Inc. v. Commissioner, 

, 84 (1992); sec. 1.6001-1(a), Income Tax Regs.

The failure to keep and present accurate records counts heavily against a taxpay-

er’s attempted proof. Rogers v. Commissioner, T.C. Memo. 2014-141, 

, 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 expenditure. Sec. 1.274-5T(a), (b), and (c),

Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).

B.    Analysis

      Respondent conceded at trial that petitioner had substantiated payment of

$150 for tax preparation fees. We find that the balance of the expenses at issue, or

$21,493, although reported on Schedule A as miscellaneous deductions, actually

related to petitioner’s Schedule C business of researching predator activity along

the U.S.-Mexico border.4 We find that he has substantiated these expenses in part.

      1.   Car and Truck Expenses

      Because passenger automobiles constitute “listed property,” petitioner’s re-

ported car and truck expenses are subject to the heightened substantiation require-

ments described above. See Fernandez v. Commissioner, T.C. Memo. 2011-216,

, 244. To satisfy these requirements, the taxpayer generally

must keep a contemporaneous mileage log or a similar record, such as a diary or

      4
        The mischaracterization of these expenses may be attributable to the fact
that petitioner’s longstanding return preparer died while the 2013 return was being
prepared. Petitioner explained that “a lot of these figures were moved around” as
a result and that he was “not entirely comfortable with which schedule they sup-
posedly went on.”
                                         -7-

trip sheets, that substantiates the extent to which the vehicle was actually used for

business rather than personal purposes. See Michaels v. Commissioner, 

, 275 (1969); Flake v. Commissioner, T.C. Memo. 2014-76, 107 T.C.M.

(CCH) 1399, 1401-1402; sec. 1.274-5T(c), Temporary Income Tax Regs., supra.

Lacking contemporaneous records, the taxpayer must produce other credible evi-

dence sufficient to corroborate his own statements concerning business use. Ibid.

      Petitioner reported $12,882 of vehicle costs as an unreimbursed employee

business expense. We find that no portion of this amount is deductible, for two

reasons. First, petitioner maintained no contemporaneous mileage log or similar

records of his travel. Rather, he estimated the mileage to three destinations--Moc-

tezuma, Mexico; Las Cruces, New Mexico; and Alpine, Texas--and multiplied that

mileage by the number of trips he thought he had taken to each destination.

      Second, and more importantly, we find that the mileage deduction petitioner

claimed on Schedule A duplicates the mileage deduction that he claimed (and the

IRS allowed) on Schedule C. On Schedule A he reported vehicle expenses of

$12,882, reflecting 22,800 business miles driven in a vehicle placed in service on

January 1, 2002. On Schedule C he reported vehicle expense of $11,865, reflect-

ing 21,000 business miles driven in a vehicle placed in service on January 1, 2002.

The trips for which he claimed a mileage allowance deduction on Schedule A,
                                        -8-

moreover, were to the same destinations in Mexico, New Mexico, and Texas that

were logical destinations for his Schedule C “border study” activity. For these

reasons, we conclude that petitioner has not substantiated any car and truck ex-

penses beyond those the IRS has already allowed on Schedule C.

       2. Travel Expenses

      The $5,036 balance of the expenses petitioner categorized as unreimbursed

employee business expenses chiefly reflected costs incurred during his research-

related trips to Mexico, on which his wife occasionally accompanied him. These

expenses included the cost of hotels, restaurant meals, camping equipment, food

consumed while “camping out,” and jaguar-themed hats for Mexican research par-

ticipants. After a careful review of the record evidence, we find that petitioner has

substantiated $2,650 of deductible Schedule C expenses in these categories.

      3.   Other Expenses

      The $3,575 balance of the claimed miscellaneous expenses chiefly reflected

other costs petitioner incurred during his predator monitoring activity. At trial he

documented $4,019 of such expenses for 2013: $1,749 for the purchase of wild-

life cameras and $2,270 for satellite phone rental and service (which we find to
                                          -9-

have been an ordinary and necessary expense in remote desert areas of Mexico).5

We find that petitioner is entitled to Schedule C deductions for these amounts.

         In sum, we find that petitioner has substantiated $150 of miscellaneous ex-

penses (for tax return preparation) and, in addition to the $11,865 of vehicle costs

he originally reported, $6,669 of expenses connected with his Schedule C busi-

ness, namely $2,650 for travel expenses in Mexico and $4,019 for satellite phone

rental and service and the purchase of research-related wildlife cameras. We sus-

tain respondent’s disallowance of the remaining miscellaneous itemized deduc-

tions.

         To reflect the foregoing,


                                                Decision will be entered under

                                         Rule 155.




         5
       At trial petitioner produced five invoices for satellite phone expenses that
together totaled $2,826. However, one invoice, in the amount of $556, was not
issued until January 13, 2014. Petitioner provided no evidence that he paid this
invoice in 2013. Accordingly, the expenses reflected on that invoice would be
deductible (if at all) in a subsequent tax year.