Hradesky v. Comm'r of Internal Revenue , Docket No. 7847-71.
| Decision Date | 15 October 1975 |
| Docket Number | Docket No. 7847-71. |
| Citation | 65 T.C. 87 |
| Parties | FRANK J. HRADESKY, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Frank J. Hradesky, pro se.
Held, petitioner has not substantiated expenses for depreciation, air travel, advertising, business meals and lodging, medical expenses, charitable contributions, and general sales taxes beyond the amounts respondent allowed. Held, further, petitioner, a cash basis taxpayer, can only deduct real estate taxes when a mortgage company pays them to the taxing authority, not when petitioner pays them into the mortgage company's escrow account. WILES, Judge:
Respondent determined deficiencies in petitioner's income taxes of $6,801.69 for 1966 and $2,744.03 for 1967. Both parties have made concessions and so there are only two issues: (1) Whether petitioner substantiated certain expenses in excess of amounts respondent allowed; (2) whether petitioner, a cash basis taxpayer, can deduct real estate taxes under section 1641 in the year petitioner paid them into a mortgage company's escrow account or the year the mortgage company paid them to the taxing authority.
Petitioner, a cash basis taxpayer, filed 1966 and 1967 income tax returns with the District Director of Internal Revenue, Jacksonville, Fla., listing his residence as Clearwater, Fla. Actually petitioner's wife and children lived in Clearwater. Petitioner made trips there but lived in Illinois when he filed his 1966 return and in Indiana when he filed his 1967 return. Petitioner lived in Houston, Tex., when he filed his petition in this case.
During 1966 and 1967, petitioner was an engineer, working primarily in Illinois and Indiana.
On his 1966 and 1967 returns, petitioner took depreciation deductions of $1,166.66 and $380.57, respectively, for a 1964 Mercury automobile. During 1966 petitioner loaned this car to a friend. While in the friend's possession, a bank repossessed it. Thus petitioner no longer had this car at the end of 1966 or in 1967. At trial, petitioner failed to submit any documentary evidence to substantiate ownership or basis for the 1964 Mercury or any other automobile.
Petitioner took deductions in 1966 and 1967 for air travel to Tampa, Fla., advertising, business meals and lodging, medical expenses, and charitable contributions. Petitioner also took a deduction in 1967 for general sales taxes. The amounts of these deductions were:
+----------------------------------------------+
¦ ¦1966 ¦1967 ¦
+--------------------------+---------+---------¦
¦ ¦ ¦ ¦
+--------------------------+---------+---------¦
¦Air travel ¦$2,112.18¦$1,995.24¦
+--------------------------+---------+---------¦
¦Advertising ¦1,600.00 ¦750.00 ¦
+--------------------------+---------+---------¦
¦Business meals and lodging¦4,819.35 ¦1,306.92 ¦
+--------------------------+---------+---------¦
¦Medical deduction ¦837.17 ¦4,359.16 ¦
+--------------------------+---------+---------¦
¦Charitable contributions ¦1,165.50 ¦655.00 ¦
+--------------------------+---------+---------¦
¦General sales taxes ¦--- ¦350.00 ¦
+----------------------------------------------+
In the case of expenses for air travel and general sales taxes, petitioner has submitted unverified oral testimony, without supporting documentary evidence, to substantiate his expenses beyond amounts respondent has allowed. In the other cases, petitioner has submitted no evidence at all to substantiate his expenses beyond amounts respondent has allowed. The amounts respondent has allowed are:
During 1966, petitioner made payments of $1,250.50 to a mortgage company's escrow account for the payment of 1966 real estate taxes. The mortgage company was to pay Illinois and Florida $560.61 and $689.89, respectively, in 1966 for petitioner's real estate taxes. However, the mortgage company paid only Illinois in 1966; it paid the $689.89 due Florida for 1966 in 1967.
OPINIONPetitioner took depreciation deductions on a 1964 Mercury automobile on his 1966 and 1967 returns. Petitioner loaned this car to a friend in 1966; a bank then repossessed it; petitioner did not have the car at the end of 1966 or in 1967. At trial, he admitted he should not have taken depreciation on the 1964 Mercury. He did contend, however, that he should have taken depreciation on a 1965 Chevrolet and a 1966 Rambler, but he offered no documentary evidence of basis or ownership of those automobiles. Petitioner has the burden of substantiating amounts taken for depreciation; we hold he has failed to carry that burden. Welch v. Helvering, 290 U.S. 111 (1933); Rule 142(a), Tax Court Rules of Practice and Procedure. Thus he may not deduct for depreciation in 1966 or 1967 for the 1964 Mercury, 1965 Chevrolet, or 1966 Rambler.
Petitioner took deductions in 1966 and 1967 for air travel, advertising, business meals and lodging, medical expenses, and charitable contributions. In 1967, he took a deduction for general sales taxes. In two instances, air travel and general sales taxes, he offered merely unverified oral testimony, with no supporting documentary evidence. In the others, he offered no substantiation at all. We hold that petitioner has again failed to carry his burden of substantiation and accordingly may not deduct for any of these expenses beyond the amounts respondent has allowed him which are:
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