Leslie Freeman, Jr., Petitioner

T .C . Memo . 2009- 21 3 `

UNITED STATES TAX COUR T

LESLIE FREEMAN, JR ., Petitioner v .(cid:127) COMMISSIONER OF INTERNAL REV NUE, Responden t Docket Nos . 12761-08, 12793-08 . F fled September 16, 2009 .

In'1999 and 2000 P worked as a courier for an auto parts delivery business . Each workday, P drove his own vehicle from a warehouse to several customers in a loop through Maryland and Delaware, dropping off auto parts and picking up cash and returned auto parts to deliver back to the warehouse . P drove from the location of his last customer to his home in the evening and then drove from his home to the wareho se in the morning to deliver the cash and returned aut parts he had collected the previous day . At trial P alleged for the first time that his wife also wor ed as a courier for the auto parts delivery business nd earned some of the income he reported as his own .

Held : P is entitled to deduct his mileage incurred in connection with the auto parts delivery business, except for mileage adde by his commute to and from his home .

SERVED Sep 16 2009 Held , further , P is not entitled to exclude his wife's alleged income from the auto parts delivery business or deduct her alleged mileage incurred in connection with that business .

T . Keith Fogg , for petitioner .

- Ronald S . Collins , Keith L : Gorman , Kelly Anne Hicks , an d Gary J! Merken , for responden t .

MEMORANDUM FINDINGS OF FACT AND OPINIO N

GUSTAFSON, Judge : The Internal Revenue Service (IRS) issue d e F `t'o-pet°tioner, Leslie Freeman, Jr ., two statutory notices o f deficiency on February 21, 2008, pursuant to section 6212,1 showing determinations of the following deficiencies in income tax and accompanying failure-to-file additions to tax under section 6651(a)(1) for tax years 1999 and 2000 :

Tax Year 1999 2000 Addition to Tax Deficiency Sec . 6651(a)(1 ) $16,058 8,514 $4,014 .5 0 2,128 .5 0 'Unless otherwise indicated, all citations of sections refer to the Internal Revenue Code of 1986 (26 U .S .C .), as amended, and all citations of Rules refer to the Tax Court Rules of Practice and Procedure .

3 - After concessions,' the issues for decision are whethe r Mr . Freeman is entitled to (i) a deduct on under section 162 for his mileage between his personal residece and job locations, an d (ii) either an exclusion of his wife' s lleged portion of the delivery business income or a deductio n for his wife's allege d business mileage . We find that Mr .

Freeman is entitled to a deduction for his mileage, except for t e mileage added by his commute to and from his residence . We ;lso find that Mr . Freeman is, not entitled to an exclusion for his wife's alleged income o r a deduction for her alleged business milleage .

FINDINGS OF FA

T Some of the facts have been stipul ted and are so found .

The stipulation of facts filed February 23, 2009, and th e attached exhibits are incorporated here in by this reference .

Trial of this case was held in Philadel hia, Pennsylvania, on February 23, 2009 . Mr . Freeman was the only witness who testified . At the time that Mr . Freema n filed his petition, h e resided in Delaware .

'Mr . Freeman concedes that to the extent he is required to show tax on his Form 1040, U .S . Indivi ual Income Tax Return, for either or both of the tax years at issue, he is liable for the failure-to-file addition to tax,under section 6651(a)(1) .

Mr . Freeman ' s Residence and Job at PD X During tax .years 1999 and 2000, Mr . Freeman resided with his wife, Cheryl Freeman,' in a house in Lincoln, Delaware, and worked as a courier for Parts Distribution Xpress, Inc . (PDX), an auto parts delivery company . Mr .-Freeman's job as a courier, .

involved picking up auto parts at PDX's warehouse in Baltimore, Maryland, and delivering those parts to 15 or more of PDX's customers on a route that went through several cities in Maryland and Delaware . Mr . Freeman also collected cash and returned aut o parts from PDX's customers at each stop along his route .

Following the last stop on his route, Mr . .Freeman returned to hi s residence in Lincoln, Delaware, without going back to PDX's .

warehouse in Baltimore . After he arrived home, he filled out invoices .

The following day he delivered the previous day' s invoices, cash, and returned auto parts to the warehouse i n Baltimore, where he picked up the next shipment of auto parts and repeated his-route . Mr . Freeman made these deliveries for PDX 5 days each week, 50 weeks each year, during the tax years a t 3Mr . Freeman-is .still married to Cheryl Freeman . However, he separated from Mrs . Freeman after their house in Lincoln, Delaware,_was .destroyed by an accidental fire on November 13, 2004 . She did not testify at trial .

issue .' He used his own vehicles to make these deliveries and S was-not reimbursed by PDX for his milea~e . 5 Mr . Freeman's Delivery Route 6 During tax years 1999 and 2000,,Mr¹ Freeman's delivery rout e took the form of a loop through Delaware and Maryland, with 15 or more stops at automobile dealers and repair shops' . Mr . Freeman started his delivery route at 5 a .m . ea h workday by driving 98 miles west and north from his house in Lincoln, Delaware, to PDX's warehouse in Baltimore, Maryland . (At mile 12 on that 98- .mile route, he passed through Harrington, Delaware, which would later be the last stop on his delivery route .) When Mr . Freeman arrived at the Baltimore warehouse, he dropped off the invoices , cash , and returned auto parts that he h customers the day before,' picked up th e 4Mr . Freeman alleged that he worked as a courier for PDX 5 days for every week of the year, except "Christmas and Easter" or when he was "gravely sick" . Thus, we flnd that the record shows that Mr . Freeman did take some workdays off, and that he worked 5 . days each week for only 50 weeks each y ar, for a total of 250 workdays in each of 1999 and 2000 .

5Mr . Freeman credibly testified that he purchased and used three vehicles for his work as a courier for PDX (of which he used one at any given time) and that he was-not reimbursed for the purchase or use of his vehicles .

'The distances given in this opinion were not proved at trial, but we take judicial notice of them pursuant to Fed . R . Evid . 201(b) . Mr . Freeman testified that traffic or other considerations sometimes caused him to :ake alternate routes ; but he did not substantiate these alternate E ;, and in this opinion we assume the shortest distances between tie cities on his route .

6 - parts, and drove 58 . miles northeast from Baltimore to Elkton, Maryland, then 36 miles southward-to Chestertown, Maryland, then 36 miles eastward to Dover, . Delaware, then 18 miles southward to Harrington, Delaware . Along each of these legs of his route , Mr . Freeman left the highway to. make stops at various locations , but he did not testify about the particular locations . As a result, the record shows only the main cities along his route, between which the mileages are as follows :

Baltimore to Elkton 58 Elkton to Chestertown 36 -Chestertown to Dover 36 Dover to Harrington Total 14 8 The total minimum for this route from warehouse to last stop was therefore 148 . miles . Mr .,Freeman apparently drove more than 148 miles to make his individual stops ; but as we explain below, he did not substantiate the greater number of miles he actuall y drove on this route .

After his last stop in Harrington, Mr . Freeman drov e 12 miles east to his house in Lincoln, Delaware . Thus, he drove a total of no less than 258 miles each workday (i .e ., 98 miles to the warehouse, plus a minimum of 148 miles on his route, plus 12 miles to his house) . It should be noted that if Mr . Freeman had driven directly from his last delivery stop in Harrington , Delaware, back to PDX's warehouse in Baltimore, Maryland--a tri p of'86 miles--rather than first driving the 12 miles to his house in Lincoln plus the 12 miles back to Ha : rington--then her woul d have driven a total of 234 miles each work day, rather than the 258 miles he actually drove . His drive to his house and back therefore constituted a 24-mile side trip from the route he otherwise would have driven ; but 234 miles of his daily circuit were the same miles that he would have riven (and on the same highways on which he would have driven hem) if . he had neve r veered from his delivery route .

Mr . Freeman's Forms 109 9 During tax years 1999 and 2000, Mr Freeman was a n .independent contractor with respect to PDX . PDX paid Mr . Freema n weekly with bank checks . PDX issued to Mr . Freeman (in his sol e name) Forms 1099-MISC, Miscellaneous In ome, which showed non- employee compensation of'$52,904 for 1999 and $35,986 for 2000 .

Mr . Freeman's Substantiation of His Exp use s Mr . Freeman testified that during is work with PDX in 199 9 and 2000, he drove the delivery route described above eac h workday .

Mr . Freeman kept a daily log f that delivery route, i n part because he needed to verify his au o part deliveries to PD X and its customers :

You almost had to keep a log, and specially when you took a part and a customer said that you didn't bring it, you could say,-yes, I did, and you would keep the amount .that the part was so that you could have our tax record . You would also keep your mileage in your logs so that you could refer to them .

Mr . Freeman kept this log by recording daily his vehicles' odometer readings and his stops in a spiral-bound logbook, the pages of which were . formatted to include dates and spaces for different entries . However, Mr . Freeman did not present this logbook, or any other log, calendar, diary, work or leave record, or written record to corroborate his testimony .

Destruction of Mr . Freeman's House and Record s On November .13, 2004, Mr . Freeman's house in Lincoln, Delaware, in which he had resided with his wife during the tax years at issue, was destroyed by an accidental fire . The fire was caused by water leakage that short circuited Mr . Freeman's clothes dryer . This fire. and its cause were both confirmed by a "Statement of Verification" issued by the office of the State Fire Marshal of the State of Delaware on January 2, 2008 .

Mr . Freeman credibly testified that he kept his PDX,logbook in his house-in Lincoln, Delaware, and that the logbook was destroyed along with his house in the 2004 fire .

Mr . Freeman's Forms 1040 and the IRS's Notices of Deficienc y Mr . Freeman did not timely file his Forms 1040 for 19,99 and 2000 . However, Mr . Freeman had begun to self-prepare his Forms 1040 for 1999 and 2000 before the occurrence of the 2004 ...fire that destroyed the daily log of his mileage for PDX along with his house . Mr . Freeman used entries from his daily log to calculate his business mileage for PDX for purposes of fillin g out the drafts of his Forms 1040 for 199 and 2000 .

Mr . Freeman kept those drafts in a small briefcase, which he used to transport the drafts to and from alibrary where he worked on them . On the day of the-2004'fire, that briefcase and the partially completed Forms 1040 were behind the seat of one of Mr . Freeman's vehicles and therefore we e not destroyed . After the 2004 fire Mr . Freeman discovered the partially completed Forms 1040 with the business mileage for 'PDX already listed on Schedule G , Profit or Loss From Business . He completed ynd file d those forms using the status of married filirig'separately on October 27, 2006 .

On the 1999 Form 1040, Mr . Freeman claimeda deduction of $57,900 on Schedule C under the heading "Car and truck expenses" .

He claimed '$48, 700' on the Form 1040 foi 2000 . Mr . Freema n calculated these claimed deductions by'multiplying 30 dents' pe r 7Mr . Freeman acknowledges that he miscalculated the amount shown on Schedule C of the 2000 Form 1040, i .e ., 30 cents, multiplied by 129,000 equals $38,700, not $48,700 a s claimed .

'Section 1 .274-5(g)(1), Income Tax Regs ., provides that the Commissioner may prescribe (in pronouncements of general applicability) a standard mileage rate that a°taxpayer~"may use to determine a deduction with respect to the business use of a passenger automobile . This rate is set forth in a revenue procedure published by the IRS each year . For 1999 the rate was 32 .5 cents per mile from January 1(cid:127)throughtMarch 31 and 31 cents per mile for the remainder of the year . Rev . Proc . 98-63, sec . 2 .01, 1998-2 C .B ."818, 818 ; Announcement 99-7, 1999-1 C .B . 306 .

(continued .

. .)' mile by the 193,000 business miles he . reported on the Schedule C for 1999 and the 129,000 business miles he reported for 2000 .9 In the two notices of deficiency dated February 21, 2008 , the IRS disallowed Mr . Freeman's claimed, deductions for car and truck expenses and determined the resulting deficiencies .

OPINION ~ At issue is Mr . Freeman's entitlement to deductions for job- related-expenses . Section 162(a) allows a deduction for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business . Section 262, however, provides that no deduction is allowed for personal, living, or family expenses . Deductions are strictly a matter o f legislative grace, and taxpayers must satisfy the specific requirements for any deduction claimed . See INDOPCO, Inc . v .

Commissioner , 503 U .S . 79, 84 (1992) ; New Colonial Ice Co .-v .

Helvering, 292 U .S . 435, 440 (1934) . Furthermore, taxpayers are required to maintain records sufficient to substantiate-thei r 8( .

. .continued) For 200 .0 the rate was 32 .5 cents per mile . Rev . Proc . 99-38, sec . 2 .01, 1999-2 C .B . 525, 525 . Mr . Freeman rounded the standard mileage rate down to 30 cents for both 1999 and,2000 . Mr . Freeman alleged that he did so in order to simplify the calculations on his .Forms 1040 .

9Mr . Freeman alleged that he arrived at these numbers by, adding his own business mileage for PDX to his wife's alleged business mileage for PDX, discussed below, and rounding up or down to the nearest thousand miles .

claimed deductions .

See sec . 6001 ; sec 1 .6001-1(a), Income Tax Regs .

( 26 C .F .R .) . ° I .

Mr . Freeman ' s Vehicle Expense s A .

Personal Commuting Versus Bus ness Trave l Mr . Freeman contends that he is entitled to deduct the standard mileage rate for the miles he drove on his deliver y route for PDX between his residence in incoln, Delaware, and hi s job locations in Delaware and Maryland .' In general,,the cost of daily commuting to and from work is . nondeductible personal expense . See Commissioner v . Flowers , 326 U .S . 465, .473-47 4 (1946 ) ; sec . 1 .162-2( e), Income Tax Reg s . However, " [c]ertai n types. of business-related travel have ben found to be deductible", including "local travel incurred while performing a job, Lopkoff v . Commissioner ., T .C . Memo . 1982-701 ; [and] trave l between jobs or job locations, Fausner V . Commissioner , 55 T .C .

620 (1971)" .

Pollei v . Commissioner ,

Lewis v . Commissioner , 90 to prevail, Mr . Freeman must prove that his mileage arises from deductible business-related travel rather than nondeductible commuting .

"Unreimbursable transportation expenses incurred between two places of business are deductible ."

Gilliam v . Commissioner , .

T .C . Memo . 1986-90 (citing Steinhort v . Commissioner , 335 F .2d 496, 503-505 (5th Cir . 1964), affg . and remanding T .C . Memo .

1962-233) ; see also Pollei v . Commissioner , supra at 872 ; Fausner v . Commissioner , 55 T .C . 620 (1971) .

However, as .is noted above, the cost of daily commuting to and from work is a nondeductible personal expense . See Commissioner v . Flowers , supra at 473-474 ; .sec . 1 .162-2(e), Income Tax Regs . Respondent characterizes Mr . Freeman's 12-mile drive from the-Harrington delivery stop to his house and the 98- mile drive from his house to the Baltimore warehouse as personal commutes and therefore as nondeductible . Evaluating this characterization requires attention to the purpose and occasion of the miles driven .

In Lopkoff v . Commissioner , T .C . Memo . 1982-701, we observed that "[i]f traveling between two businesses is an allowable section 162(a) deduction, traveling within a business is most assuredly so ." In Lopkoff , the taxpayer worked at a hospital as an administrative employee and also ran her own x-ray delivery business on the side . In that case, the taxpayer picked up x- rays at the end of her workday at the same' hospital where sh e worked, . and then drove 27 miles to del i er them to a medica l center for interpretation by a radiolog st . Afterward, she drov e one-half mile from the medical center to her personal residence .

-The next morning, the taxpayer would dr ve one-half mile from he r personal residence to the medical cente to pick up the x-ray s she had delivered the previous day . The . taxpayer then drove .

27 miles to deliver the interpreted x-rays to the hospital, where she began her workday as an administrat've employee . In Lopkoff , we held that the taxpayer's nondeductible "commute was from her home to where she began the first of he trades or businesses," i .e ., the half mile from her personal residence to the medical center, where she began to travel within her x-ray delivery business . A "[delivery] business is the travel itself ."

Id .

Therefore, any transportation expense incurred in a delivery business is travel within a business, and "is most assuredly" .

deductible .

Id .

B .

Analysis of Mr . Freeman's Mileag e Mr . Freeman worked as a courier for PDX, and thus there i s no dispute that he was engaged in a de every business during the tax years at issue . Any transportation expense that Mr . Freema n incurred within that business "is most assuredly" deductible t o the extent that he substantiates it . d . Therefore, the pivotal question is whether the mileage report d on Mr . Freeman's 1999 14 - and 2000 Forms 1040 was incurred in connection with his auto parts delivery business or his personal commute from his house to work .

1 .

Mileage Between PDX's Warehouse and Mr . Freeman's Stops on His Delivery Rout e PDX's warehouse and the stops on Mr . Freeman's delivery, route in Maryland and Delaware are indisputably places of business for Mr . Freeman . Respondent does not allege that Mr . Freeman's mileage between these locations was incurred in connection with his personal commute . It is clear that such mileage (at least 148 miles per workday) arose from travel between two job locations, discussed above, and travel within,a business, and is deductible under either rationale if substantiated . Therefore, Mr . Freeman is entitled to a deduction for his substantiated mileage between those job locations (i .e ., the 148 miles from Baltimore to Harrington) .

2 .

Mileage To and From Mr : Freeman's Hous e In his brief, respondent contends that even if Mr .(cid:127)Freeman substantiates his mileage in the tax years at issue, his'mileage "between home and the PDX warehouse and between the last stop of the day and home represents commuting for which no deduction is available ." Respondent points out that on these legs of the trip to and from his house,'Mr . Freeman made no stops for any customers ; and respondent contends that Mr . Freeman's mileage on 15 - those legs therefore represents personal commuting . However, as to most of the pertinent miles, this la~t contention contradicts the facts . Unlike the taxpayer in Lok ff v . Commissioner, supra, who always dropped off the x-ray before her one-half-mile commute~to and from her personal residence, Mr . Freeman was required to deliver from Harrington (his last stop) to th e Baltimore warehouse the invoices, . cash , and returned auto parts that he had collected along his delive r route . Thus, any mileage arising from this Harrington-to Baltimore delivery wa s incurred in connection with Mr . Freeman s auto parts delivery business, and its costs are deductible if substantiated .

However, PDX did not require Mr . Freeman to live 12 miles off his route in Lincoln, Delaware . Rather, Mr . Freeman must have had other reasons, sufficient to him, for living there . H e is certainly free to live there and fre to work wherever he pleases, but his reasons for living in incoln were personal i n nature and unrelated to his job at PDX .

Cf . Tucker v .

Commissioner , 55 T .C . 783, 785-788 (1971) . Mr . Freeman transported the invoices, cash, and returned .auto parts in his vehicle when he drove in the evening from his .last stop of the day in Harrington to his house in Linco n, and when he drove the -next morning from his house in Lincoln, through Harrington, and on to PDX's warehouse in Baltimore . Since Mr . Freeman wa s required to return the cash and parts to Baltimore, but was not required to do so via a side trip to and from his house,, the mileage he incurred in connection with that .route arose from both business-related and personal travel . Thus, Mr . Freeman's mileage from that route arose from travel within a business (and is therefore deductible) only to the extent that it did not .

exceed the distance of the trip that PDXrequired him to make, i .e ., the distance between his last stop of the day and PDX's warehouse . . See . Pollei v . Commissioner , 87 T .C . at 872 ; Lopkoff v . Commissioner , T .C . Memo . 1-982-701 . _Any excess mileage is nondeductible commuting that is attributable to Mr . Freeman's personal choice to live in Lincoln, Delaware . Therefore , Mr . Freeman is entitled to deduct--if substantiated--the costs of 234 miles per workday, which represents (i) the 148 miles between PDX's warehouse and the stops on his delivery route in Maryland and Delaware ;° .and (ii) the 86 miles between his last stop of-the day in Harrington, Delaware, and PDX's warehouse . The additional 24 miles, which he drove-from his last stop to home and .back, constituted nondeductible commuting that arose from his personal choice to live off his route in Lincoln, Delaware .

C .

Substantiatio n Respondent contends that Mr . Freeman's claimed deductions under section 162 for car and truck expenses of $57,900 for 1999 and $48,700 for 2000 must be disallowed for the additional reason 17 - that he has not substantiated the mileage he claims to have driven in connection with his auto part delivery business .

In addition , section 274 ( d) impose stringent substantiation requirements for claimed deductions relating to the use of "listed property ", which is defined und~r section 280F ( d)(4)(A)(i) to include passenger aitomobiles .

Under this provision any deduction claimed with respect to the use of a passenger automobile , like Mr . Freeman'° vehicles , will be disallowed unless the taxpayer substant i ates specified elements of the use by'adequate records or by sufficient evidence corroborating the taxpayer '' s own statem nt .

See sec . 274(d) ; sec . 1 .274-5T ( c)(1), Temporary Income Tax Regs ., 50 Fed . Reg . .

46016 (Nov . 6, 1985) .

The elements that must be substantiated to deduct the business use of an automobile are : (i) the amount of the expenditure ; (ii) the mileage for each business use of the' .

automobile and the total mileage for all uses of the automobile during the taxable period ; (iii) the date of the business use ; and (iv) the business purpose of the use of the automobile . Se e sec . 1 .274-'5T(b)(6), Temporary Income rax Regs ., supra .

In lieu of substantiating the actual amount of a n expenditure relating to the business use of a passenge r automobile, a taxpayer may use a stands rd mileage rate established by the Internal Revenue Service ." Se e - 18 N sec . 1 .274 - 5(j)(2), Income Tax Regs . Use of the standard mileage rate establishes the amount deemed expended with respect to the business use of a passenger automobile , but such use does not relieve a taxpayer of his burden of substantiating . the other elements required. by section 274 and the regulations thereunder .

Sec . 1 .274-5(j)(2), Income Tax Regs .

Mr . Freeman kept a daily log for his auto parts delivery business in a spiral - bound logbook that ;-would have provided the required information . However , Mr . Freeman testified--and provided a "Statement of Verification " from the Office of the State Fire Marshal of the State of Delaware to prove- - that his house was destroyed , along with its contents , including his logbook, .in an accidental fire . ". It is well established that the Tax Court may permit . a taxpayer to substantiate deductions through secondary evidence where the underlying documents hav e "As respondent notes, the so-called fleet rule may prohibit the use of the standard mileage rate in the tax years at issue to compute the deductible expenses of two or more automobiles used simultaneously . Rev . Proc . 98-63, sec . 5 .06,,1998-2 C .B . at 820 ; Rev . Proc . 99-38, sec . 5 .06, 1999-2 C .B . at'527 ; see also West v . Commissioner , 63 T .C . 252, 254-255 .(1974) . Mr . Freeman makes several arguments for the inapplicability of the fleet rule here . However, as is discussed below, we do not accept Mr . Freeman's unsupported testimony that his wife or others also simultaneously drove additional miles in connection with his auto parts,delivery business ; we allow a deduction for only one driving of the delivery route--by one vehicle--each day . Consequently, the fleet rule is not applicable to this case and Mr . Freeman may use the standard mileage rate .

been unintentionally lost or destroyed .'

Davis v . Commissioner , T .C . Memo . 2006-272 (citing Boyd v . Commissioner , 122 T .C . 305, 320-321 (2004), Malinowski v . Commissioner , 71 T .C . 1120, 1125 (1979), Furnish v . Commissioner , T .C . M mo . 2001-286, Joseph v .

Commissioner , T .C . Memo . 1997-447, Watson v . Commissioner , T .C .

Memo . 1988-29) . Moreover, even though ongress imposed stringen t substantiation requirements for some business deductions by enacting section 274, the regulations ulder that section allow a taxpayer to "substantiate a deduction by reasonable reconstruction of his expenditures 'or u e" when records are lost through circumstances beyond the taxpayer's control, including a fire . Sec . 1 .274-5T(c)(5), Temporary Income Tax Regs ., supra .

If documentation is unavailable, we may accept` the taxpayer' s credible testimony to substantiate the deduction . See Boyd v Commissioner , supra at 320 ; Watson v . Commissioner ., supra .

Having observed Mr . Freeman's appearance and demeanor a t trial, we find him,to be'credible with respect to the route he drove in connection with his auto parts delivery business . We find that Mr . Freeman at one time posse sed adequat e documentation, in the form of a daily 1 g,' to establish th e required elements under section 274(d) for deducting his business mileage . His failure to produce that d aily log stemmed from circumstances beyond his control--namel'jy, the accidental fir e that destroyed his house and the'logbook . Although he did not testify about the details of the locations of each stop along his route, Mr . Freeman did provide through his testimony a reasonable reconstruction of his general route . We therefore hold tha t Mr . Freeman kept : adequate records to substantiate his business mileage for tax years 1999 and 2000, to .the extent of 233 miles per day .

II .

Mr . Freeman Is Not Entitled to Exclude His Wife's Alleged Income From PDX Or Deduct Her Alleged Business Mileage Incurred In Connection With PD X At trial Mr . Freeman contended for the first time that his wife also worked as a . courier for PDX, and that half of the income and business mileage shown on his 1999 and 2000 Forms 104 0 is attributable to her . Mr . Freeman explained that his wife was contractually obligated to refrain from working for PDX, under a covenant not to compete that she had entered into with a previous employer . - To evade this contractual obligation, PDX allegedly agreed to pay Mr. . .Freeman for Mrs . Freeman's deliveries and to issue one Form 109 .9 in Mr . Freeman's name only for both of th e 'Freemans' compensation . On the basis of these alleged facts , Mr . Freeman contends in the alternative that he is entitled either (i) to exclude his wife's income from PDX, or (ii) to deduct the costs of his wife's business mileage incurred in connection with PDX .

However, Mr . Freeman's contention lacks merit for two reasons . First, this contention is not properly before the I Y Court, because Mr .' Freeman failed to raise in-his petition the issue of-his wife's working for PDX . See Lewis v . Commissioner ,

Secon d even if this issue wer e properly before the Court, Mr . Freeman ailed to prove tha t portions of the income from PDX shown on his 1999 and-2000 Forms 1040 are the income of his wife (as opposed to income properly his, even if paid by PDX for work done by~his wife as his' agen t or employee) . Neither Mrs . Freeman no r any personnel from PD X attended the trial or testified . Thus, the only evidence tha t Mrs . Freeman worked independently for PDX, earned her own income from PDX, or incurred business mileage ~,xpenses in connectio n with PDX is Mr . Freeman 's unsupported t estimony . Moreover, thi s testimony is contradicted by Mr . Freeman's 1999 and 2000 Forms 1040, and the Forms 1099-MISC issued to Mr . Freeman by PDX, whic h all identify the income from PDX as his and his alone . Mr .

Freeman made no showing that his wife reported this income on tax returns of her own . On the record before us, we cannot find that any portion of the income from PDX is attributable to Mrs .

Freeman, or that she incurred any additional business mileage expenses in connection with PDX for which Mr . Freeman might be entitled to a deduction . Accordingly, Mr . Freeman is not entitled to exclude his wife's alleged income from PDX nor to deduct any additional business mileage expenses allegedly incurred by her in connection with PDX .

22 - Therefore, we hold that Mr . Freeman is entitled to deductions under section 162 for 233 miles for each of his 250 workdays (i .e ., 58,250 miles) in both 1999 and 2000 using the .applicable .standard mileage rates . We also hold that Mr . . Freema n is not entitled . to"exclude the portions of his income allegedly attributable to his wife nor to deduct her alleged additional mileage expenses incurred in connection with PDX deliveries .

To reflect the foregoing, Decisions will be entere d under Rule 155 .

7. T .C . 869, 872 (1986) , revd . on another issue 877 F .2d 838 (10 th Cir . 1989) . In orde r 1°At trial Mr . Freeman also contended for the first time that he is entitled to deduct the tolls he allegedly paid on his delivery route . However, Mr . Freeman did not claim deductions for tolls on his 1999 and 2000 Forms 1040, nor did he place deductions for tolls in issue in his petition . Therefore, we need not consider this contention . _Se T .C . 1044, 1053-1054 (1988) . Moreover, Mr . Freeman does not allege, nor does the record show, that he ever kept any records or otherwise kept track of the tolls h allegedly paid on his delivery ;route . Therefore, even if the issue of deductions for tolls were properly before this Court, Mr . Freeman has failed to substantiate those expenses .
90. T .C . 1044, 1053-1054 ( 1988 ) .