hospital that was closer to her office. For the 3 months during
1986 when Mrs. Hilliard maintained two offices, she would drive 1
day each week from Oakland to San Ramon and then home.
Petitioners claimed 85 percent business use of
Mrs. Hilliard's automobile, and respondent, in the notice of
deficiency, determined 17 percent business use. At trial,
Mrs. Hilliard estimated about 50 to 60 percent business use.
Section 274(d)(4) (which is effective for taxable years
beginning on or after January 1, 1986, the beginning of the first
year in issue) requires substantiation by adequate records or
evidence, in addition to mere testimony, to be entitled to travel
expenses. Petitioners offered no records or other evidence of
the business use of Mrs. Hilliard's automobile other than her
testimony, which was expressed in terms of an estimate.
Petitioners have not met the section 274(d) requirements
necessary to show entitlement to transportation deductions in
excess of the amounts allowed by respondent. Rule 142(a).7
VI. Mortgage Interest
Petitioners, for 1988, claimed $85,151 of mortgage
interest. Respondent's agent was shown substantiation for
$83,216 of mortgage interest. Petitioners, for 1987, claimed
$33,629 of mortgage interest, and respondent determined that all
7 Our determination of Mrs. Hilliard's automobile use
results in an adjustment to her self-employment income, which in
turn increases her self-employment tax liability. This
adjustment is automatic (purely mathematical) and requires no
further discussion.
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