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RONALD L. AND DEBORAH L. MILLER, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, RespondentMiller v. CommissionerDocket No. 7132-94.
United States Tax Court T.C. Memo 1996-402; 1996 Tax Ct. Memo LEXIS 413; 72 T.C.M. (CCH) 568;August 27, 1996, Filed*413 Decision will be entered under Rule 155.
Ronald L. Miller, pro se.Alvin A. Ohm , for respondent.GOLDBERG, Special Trial JudgeGOLDBERGMEMORANDUM OPINION
GOLDBERG,
Special Trial Judge : This case was heard pursuant to section 7443A(b)(3) and Rules 180, 181, and 182. *414 and a bachelor of science degree in accounting from the University of Texas at Dallas. On January 15, 1989, petitioner commenced a 1-year lease of an office located at 8541 Ferguson Road in Dallas, Texas. The terms of the lease provided for a monthly rent of $ 535, to be increased to $ 650 if the lease was renewed, and utilities to be paid by petitioner. According to petitioner, at the conclusion of the lease, he and his landlord, referred to in the record only as Dr. Cantrell, orally agreed to renew the lease for 1 year and to maintain the rent payments of $ 535. There is no written documentation of this agreement.On the Schedule C filed with his 1990 return, petitioner claimed deductions for various business expenses including $ 1,188 for rental of a printer, $ 6,420 for rent of the office space, $ 2,544 for utilities, and $ 2,764 for the cost of a software program. In the notice of deficiency, respondent disallowed each of the above deductions for lack of substantiation.
We begin by noting that, as a general rule, the Commissioner's determinations are presumed correct, and the taxpayer bears the burden of proving that those determinations are erroneous. Rule 142(a);
Welch v. Helvering , 290 U.S. 111">290 U.S. 111New Colonial Ice Co. v. Helvering , 292 U.S. 435">292 U.S. 435Hradesky v. Commissioner , 65 T.C. 87">65 T.C. 87540 F.2d 821">540 F.2d 821 (5th Cir. 1976). All taxpayers are required to keep sufficient records to enable respondent to determine their correct tax liability. Sec. 6001.If the record provides sufficient evidence that a taxpayer has incurred a deductible expense, but the taxpayer is unable to adequately substantiate the amount of the deduction to which he or she is otherwise entitled, the Court may, under certain circumstances, estimate the amount of such expense and allow the deduction to that extent.
Cohan v. Commissioner , 39 F.2d 540">39 F.2d 540Vanicek v. Commissioner , 85 T.C. 731">85 T.C. 731Williams v. United States , 245 F.2d 559">245 F.2d 559Section 162(a) generally allows a deduction for all ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. The regulations promulgated under section 162 clarify that only those ordinary and necessary business expenses "directly connected with or pertaining to the taxpayer's trade or business" may be deducted.
Sec. 1.162-1(a), Income Tax Regs. In addition, under section 262(a) no portion of the expenditures attributable to personal, living, or family expenses may be deducted, except as otherwise expressly provided in the Code.Petitioner testified that he paid $ 1,188 during 1990 for the use of a laser printer. He explained that he rented the printer from January through April 1990 because he could not afford to purchase the equipment outright. In support of his deduction, at trial petitioner presented two canceled checks written in January and March, each in the amount of $ 297, which respondent agreed would be allowable. Petitioner was unable to produce any documentation*417 to support the remainder of his deduction.
In light of his profession as an income tax return preparer, petitioner should have been well aware of the requirement of a taxpayer to maintain adequate records to substantiate his income and deductions. Petitioner claims that he is unable to provide documentation because he was locked out of his office in June 1991 for failure to pay his rent, and all of his records were in the office. Petitioner presented no evidence to support his claim of eviction, nor did he explain why he did not request supporting statements from his bank to establish that the monies had in fact been paid. Moreover, we found petitioner's testimony less than credible and his attitude regarding compliance with the Internal Revenue Code and the regulations and the Tax Court Rules of Practice and Procedure to be, at best, cavalier. Therefore, we find no grounds upon which we may properly estimate an allowable deduction in excess of the amount allowed by respondent.
We next consider petitioner's deduction for monthly rental payments for his office space in the aggregate amount of $ 6,420. Immediately prior to trial, respondent conceded that four payments for rent for*418 January through April, totaling $ 2,140, were allowable.
Petitioner was unable to locate a canceled check for the rent payment he allegedly made in May, and was also unable to produce receipts of money orders he allegedly purchased to pay his rent from June through September. For the remainder of the year, petitioner presented the following carbon copies of checks written:
