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Guinn v. Dep't of Revenue4/19/2005
pense would otherwise be deductible, the deduction may still be denied if there is insufficient substantiation to support it. Sec. 1.274-5T(a)." Boyd v. Commissioner, 83 TCM (CCH) 1253 (2002) (emphasis added).
Plaintiffs submitted a handwritten document entitled "1999 Vehicle Use/Mileage Log." (Ptfs' Ex Item 2A.) The two handwritten sheets provided columns for dates, location, business purpose, and miles driven. For all entries, Plaintiffs did not place information in each of the columns. For the following reasons, the court concludes that these pages were not prepared at the time Guinn made the trips: the dates were not in chronological order; the miles driven were not listed for all dates; and the writing was neat and there were no stains on the pages even though Guinn told the auditor he did not submit the original log because "of sloppy writing and spills." (Def's Exs A-1; B-16--18.) Further, the dates on the handwritten sheets and total miles traveled for the year were different from those on the typed sheets. (Ptfs' Ex Item 2A; Def's Ex B 16 to 18.) In determining whether the mileage is a deductible business expense, the court concludes that it will review only those trips reported and completely documented in both logs.
The conference officer's report raised some questions about Guinn's "need to go to Vancouver to go to the library when you live in Tualatin" and the need "to drive to the airport to mail" his books. (Def's Ex A-2.) During trial, Guinn testified that he traveled from his place of employment in Tualatin, Oregon, to Vancouver, Washington, to use the library. After completing his research and written correspondence at the library, Guinn traveled to the Portland Airport to use the 24-hour post office, depositing in the mail his material to his publisher or other promotional documents. Guinn testified that he did no personal business while in Vancouver, Washington. After responding to the conference officer's comments, Guinn asked in his letter dated January 16, 2005, and during trial the following question: "Is it the duty of the State to determine whether or not I ran my business and made business decisions (where to drive and who to meet with) in the best and most efficient manner or is that mine?"
In response to Guinn's question, there are two criteria that must be met for an expense to be an allowable business deduction: it must be ordinary and necessary. "To be 'necessary' an expense must be 'appropriate and helpful' to the taxpayer's business." * * * "To be 'ordinary' the transaction which gives rise to the expense must be of a common or frequent occurrence in the type of business involved." Boyd (citations omitted). With respect to the term "ordinary", the Oregon Tax Court stated that, "an ordinary expense is one which is customary or usual. This does not mean customary or usual within the taxpayer's experience but rather in the experience of a particular trade, industry or community." Roelli v. Dept. of Rev., 10 Or 256, 258 (1986) (citing Welch v. Helvering, 290 US 111, 54 SCt 8, 78 LEd 212 (1933)) (emphasis added). In Roelli, a taxpayer who invested funds in a Swiss bank claimed as an ordinary and necessary business expense a trip to Switzerland to discuss reinvestment of the funds. The Tax Court found that the trip was neither necessary nor reasonable because he could have telephoned or used the mail to discuss investment options, and the cost of the trip was equivalent to 11 to 13 percent of the amount in the taxpayer's account.
In this case, the court agrees with Guinn that it was "appropriate and helpful" to his business to use the Vancouver library and the services of the U.S. Post Office at the Portland Airport. See Boyd. However, the cour
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