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(Nov. 6, 1985). Petitioner did not maintain any such records2
and he has not otherwise properly substantiated the expenses
claimed for car and truck, travel, and meals.
With regard to the other Schedule C expenses claimed there
is also no substantiation. As far as the explanation that the
attorneys he consulted would not provide receipts, etc., it is
unpersuasive. Similarly there are no substantiating receipts,
canceled checks, etc., with regard to the other expenses claimed.
Respondent's determinations are sustained.
It also should be noted that generally expenses associated
with the building or improvement of a house must be capitalized
if incurred in a profit-seeking activity. See Homes By Ayres v.
Commissioner, 795 F.2d 832, 835 (9th Cir. 1986), affg. T.C. Memo.
1984-475; W.C. & A.N. Miller Dev. Co. v. Commissioner, 81 T.C.
619 (1983); see also sec. 263A. These expenses, if in fact they
were incurred by petitioner, were directly attributable to the
construction of the house. Since the sale of the house to
petitioner's mother did not occur during either of the years
before the Court, even if the claimed expenses had been
substantiated, they would not be allowable as ordinary and
2 Petitioner provided a so-called mileage log that he
constructed just before the trial allegedly based on receipts
that he did not produce. This does not meet the adequate records
requirement.
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