Powers v. Comm'r, 2013 Tax Ct. Summary LEXIS 107

Petitioner Kristen Powers was a commissioned real estate sales agent for Centex Homes in 2007 and most of 2008, earning large commissions and routinely traveling from Centex’s Portland office to development sites (Salem, Gresham, etc.).
Centex did not reimburse employees for vehicle or transportation expenses; Powers used her personal car for business and kept a handwritten mileage log which she later transferred to an electronic spreadsheet stored on Centex equipment.
After leaving Centex in fall 2008, Powers lost access to the Centex computer and flash drive and the original handwritten log; during audit she reconstructed weekly/monthly mileage summaries and claimed large vehicle deductions on Forms 2106‑EZ (standard mileage method).
Powers also claimed home‑office deductions for use of two rooms (25% of the house) as business space; she reported mortgage interest and real‑estate taxes and prepared Forms 8829 but did not substantiate utilities or depreciation.
The IRS disallowed substantial portions of her Schedule C and Schedule A deductions; the Tax Court was asked to decide whether Powers substantiated additional vehicle miles beyond amounts respondent allowed and whether she could deduct home‑office expenses.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Powers substantiated business vehicle mileage beyond respondent's allowed amounts	Powers reconstructed mileage logs and testified credibly about routine long daily drives; argued logs and gasoline receipts substantiate high mileage	IRS argued reconstructed logs were not contemporaneous/adequate under §274(d) and allowed only industry‑standard allowances (4.76% of gross income)	Court accepted reconstructed logs as generally reliable and, applying §274(d) rules and corroborating receipts/testimony, allowed 115 miles/day, 6 days/week: 35,880 miles (2007) and 26,910 miles (Jan–Sept 2008)
Whether Powers may deduct business‑use‑of‑home expenses (mortgage interest, taxes, utilities, depreciation) on Schedule C/Form 8829	Powers claimed 25% of home used exclusively for business (two bedrooms) and reported mortgage interest/ taxes on Form 8829	IRS allowed mortgage interest and taxes only on Schedule A and disallowed business‑use allocations because amounts were not substantiated or were adjusted on audit	Court found Powers met exclusive‑use/convenience elements but failed to substantiate mortgage interest/tax differences, utilities, and depreciation; disallowed home‑office deductions and sustained respondent’s adjustment

Welch v. Helvering, 290 U.S. 111 (establishes burden of proof on taxpayer to challenge Commissioner)
New Colonial Ice Co. v. Helvering, 292 U.S. 435 (deductions are a matter of legislative grace; taxpayer must prove entitlement)
Cohan v. Commissioner, 39 F.2d 540 (permits estimation of deductible amounts when records are inadequate)
Vanicek v. Commissioner, 85 T.C. 731 (court may estimate but taxpayer must introduce sufficient evidence)
Commissioner v. Heininger, 320 U.S. 467 (facts determine whether expense is ordinary and necessary)
Hradesky v. Commissioner, 65 T.C. 87 (taxpayers must keep adequate records to substantiate deductions)
Sanford v. Commissioner, 50 T.C. 823 (strict substantiation for travel and listed property under §274(d))
Primuth v. Commissioner, 54 T.C. 374 (employee travel expenses are deductible when incurred in performing services as an employee)
Meneguzzo v. Commissioner, 43 T.C. 824 (record‑keeping requirements and substantiation for deductions)