Jozsef and Zsuzsanna Balla - Page 4




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          documents entitled “Sailor Travel Statement” to substantiate                
          their claim to unreimbursed employee expenses.  The Sailor Travel           
          Statement includes the “Supplemental Tug/Barge Sailor Travel                
          Schedule” reproduced below, authorities upon which petitioners              
          rely in support of their tax position, a 2002 port list for the             
          Yabucoa vessel, and a schedule listing ports where petitioner               
          purportedly was stationed on particular dates in 2002.  The                 
          Supplemental Tug/Barge Sailor Travel Schedule, with original                
          emphases, that petitioners attached to their 2002 return is                 
          reproduced in part below:                                                   
               Taxpayer is a Merchant Sailor assigned to work aboard a Tug Boat       
               traveling between ports located on the Atlantic Ocean and              
               therefore qualifies per attached Rev Proc 2001-47’s                    
               “Transportation Industry Employees” and attached MARIN JOHNSON TAX     
               COURT DECISION & IRS Publication 463 (Chapter 1 Page 5) to compute     
               his DEEMED SUBSTANTIATED Out-of-Town Travel Costs by using             
               attached Pub 1542’s Standard Foreign OCONUS Rates for EACH CITY as     
               follows:                                                               
                    80 Days x  $75 Guayama <San Juan>, Puerto Rico =  6,000.          
                    39 Days x  $75 Arecibo <San Juan>, Puerto Rico =  2,925.          
                    44 Days x  $57 Guayaquil, Ecuador       =  2,508.                 
                    25 Days x  $76 St. Croix, Virgin Islands=  1,900.                 
                    33 Days x  $57 Mayaguez <Other>, Puerto Rico=  1,881.                 
                    18 Days x  $75 San Juan, Puerto Rico    =  1,350.                 
                    4 Days x  $75 Aguirre <San Juan>, Puerto Rico =    300.           
                    5 Days x  $57 Yabaccoa <Other>, Puerto Rico=    285.                 
                                                            --------                  
               Total Sailor Travel Costs Allowed per OCONUS Rates17,149.                   
               LESS EMPLOYER PROVIDED REIMBURSEMENTS        <2,852>                   
                                                            --------                  
               Sailor Travel Allowance in Excess of Reimbursements   14,297.          
               As a MERCHANT SAILOR, taxpayer was required by his employer to         
               travel to various locations to meet his ships.  Per IRS Rev Rul        
               99-7 and attached Marin Johnson Tax Court Decision, his auto           
               mileage and possibly other travel-related costs are FULLY              
               DEDUCTIBLE as follows:                                                 









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