State Bar of Wisconsin Return to Wisconsin Tax Appeals Commission





6671 W. Charles Ct.

Franklin, WI 53132




P.O. Box 8907

Madison, WI 53708


DOCKET NO. 99-I-169





This matter was heard on July 13, 2000 at Waukesha. The petitioner represented himself. Attorney Sheree Robertson represented the respondent.

At the close of the petitioner's evidence, the respondent moved for dismissal pursuant to Wis. Stat. § 805.17(1) on the ground that, upon the facts and the law, the petitioner has shown no right to relief.

On the record, a schedule was established for submission of briefs to the full Commission on the respondent's motion.(1) The briefing schedule was confirmed by a post-trial scheduling order dated and sent to the parties on July 18, 2000. Attorney Robertson timely filed the respondent's brief in support of the motion, but the petitioner made no responsive filing and has not done so as of the date of this ruling.

Having considered the record with respect to the petitioner's evidence presented to the Commission prior to the respondent's motion to dismiss under § 805.17(1), the Commission finds, rules, and orders as follows, granting the respondent's motion.


Findings of Fact

The facts are not in dispute. Mr. Zablocki was a lawyer during 1992, 1993, and 1994 (the period under review).(2) He also operated a real estate business known as J. T. Properties in 1994. The Department audited Mr. Zablocki's Wisconsin income tax returns for those years and made adjustments for each year, resulting in additional tax and interest due.

The Department's adjustments reduced Schedule C expenses claimed by Mr. Zablocki in connection with his law practice and J. T. Properties, and added a gain on the sale of his personal residence in 1993. Corresponding adjustments were made reducing Mr. Zablocki's claimed self-employment tax deductions and reducing his claimed Homestead Credit and other credits.

Mr. Zablocki petitioned the Department for redetermination, and the Department modified its assessment based on additional substantiating information submitted by Mr. Zablocki. Mr. Zablocki timely appealed the remaining assessment to this commission.

Additional facts are stated in the Discussion section, infra.

Applicable Wisconsin Statute

805.17 Trial to the court.

(1) MOTION AT CLOSE OF PLAINTIFF'S EVIDENCE. After the plaintiff, in an action tried by the court without a jury, has completed the presentation of his or her evidence, the defendant, without waiving his or her right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. The court as trier of the facts may then determine them and render judgment against the plaintiff on that ground or may decline to render any judgment until the close of all the evidence. If the court renders judgment on the merits against the plaintiff, the court shall make findings [of the ultimate facts]. Unless the court in its order for dismissal otherwise specifies, a dismissal under this section operates as an adjudication upon the merits.

Applicable Internal Revenue Code and Treasury Regulation

Sec. 274 [1986 Code].

* * *

(d) SUBSTANTIATION REQUIRED.--No deduction or credit shall be allowed --

(1) under section 162 or 212 for any traveling expense ...

* * *

unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer's own statement (A) the amount of such expense or other item, (B) the time and place of the travel, ... or use of the facility or property, ... (C) the business purpose of the expense or other item, ....

Treas. Reg. § 1.274-5T

(c) Rules of substantiation--

(1) In general. Except as otherwise provided in this section and § 1.274-6T, a taxpayer must substantiate each element of an expenditure or use by adequate records or by sufficient evidence corroborating his own statement. Section 274(d) contemplates that a taxpayer will maintain and produce such substantiation as will constitute proof of each expenditure or use referred to in section 274. Written evidence has considerably more probative value than oral evidence alone. In addition, the probative value of written evidence is greater the closer in time it relates to the expenditure or use. A contemporaneous log is not required, but a record of the elements of an expenditure or of a business use of listed property made at or near the time of the expenditure or use, supported by sufficient documentary evidence, has a high degree of credibility not present with respect to a statement prepared subsequent thereto when generally there is a lack of accurate recall. Thus, the corroborative evidence required to support a statement not made at or near the time of the expenditure or use must have a high degree of probative value to elevate such statement and evidence to the level of credibility reflected by a record made at or near the time of the expenditure or use supported by sufficient documentary evidence. The substantiation requirements of section 274(d) are designed to encourage taxpayers to maintain the records, together with documentary evidence, as provided in paragraph (c)(2) of this section.

(2) Substantiation by adequate records--

(i) In general. To meet the "adequate records" requirement of section 274(d), a taxpayer shall maintain an account book, diary, log, statement of expense, trip sheets, or similar record (as provided in paragraph (c)(2)(ii) of this section), and documentary evidence (as provided in paragraph (c)(2)(iii) of this section) which, in combination, are sufficient to establish each element of an expenditure or use specified in paragraph (b) of this section....

(ii) Account book, diary, etc. An account book, diary, log, statement of expense, trip sheet, or similar record must be prepared or maintained in such manner that each recording of an element of an expenditure or use is made at or near the time of the expenditure or use.

* * *

(B) Substantiation of business purpose. In order to constitute an adequate record of business purpose within the meaning of section 274(d) and this paragraph (c)(2), a written statement of business purpose generally is required. However, the degree of substantiation necessary to establish business purpose will vary depending upon the facts and circumstances of each case. Where the business purpose is evident from the surrounding facts and circumstances, a written explanation of such business purpose will not be required. For example, in the case of a salesman calling on customers on an established sales route, a written explanation of the business purpose of such travel ordinarily will not be required....

* * *

(C) Substantiation of business use of listed property--

(1) Degree of substantiation. In order to constitute an adequate record (within the meaning of section 274(d) and this paragraph (c)(2)(ii)), which substantiates business/ investment use of listed property (as defined in § 1.280F-6T(d)(3)), the record must contain sufficient information as to each element of every business/investment use....

Conclusion of Law

Mr. Zablocki has shown no right to relief from the Department's determination because he failed to substantiate any of his claimed Schedule C expenses and real estate cost basis items disallowed by the Department.


At the hearing, Mr. Zablocki presented only his own testimony and one exhibit to support his claim that the Department improperly assessed him. His exhibit consisted of three parts: a two-page list of his claimed construction costs for his home at 8730 W. Hawthorne Lane in Franklin, WI, totaling $122,810.00; a handwritten ledger listing his gas purchases from November 2, 1993 through July 29, 1995; and his appointment calendars for 1992, 1993, and 1994.

A taxpayer's self-serving testimony as to entitlement to claimed deductions must generally be substantiated by other proof. See, Treas. Reg. §1.274-5T, supra. Nothing presented by Mr. Zablocki satisfies this substantiation requirement. The listing of his claimed residence construction costs was simply a compilation made by him from his best recollection; he presented no receipts or other substantiation for these items.(3) His handwritten gas purchase ledger showed no business purpose or any breakdown of business destinations and mileage. See, I.R.C. § 274(d)(1) and Treas. Reg. § 1.274-5T(c)(2)(ii)(B) and (C). His appointment calendars were similarly deficient, showing only occasional destinations and client names but no business purpose or mileage.

Mr. Zablocki also claimed that he filed timely amended returns properly reporting a number of the disputed items, but he produced no proof that he had done so and no copies of the alleged amended returns.

In summary, Mr. Zablocki failed completely to present clear and satisfactory evidence to overcome the presumptive correctness of the Department's assessment. See, Woller v. Department of Taxation, 35 Wis. 2d 227 (1976).


The Department's motion to dismiss is granted, pursuant to Wis. Stat. § 805.17(1), and its action on the petitioner's petition for redetermination is thereby affirmed on the merits.

Dated at Madison, Wisconsin, this 18th day of December, 2000.



Mark E. Musolf, Chairperson


Don M. Millis, Commissioner


Thomas M. Boykoff, Commissioner


1 Only a majority of the Tax Appeals Commission may grant a dispositive motion. Wis. Stat. 73.01(4)(b).

2 All facts pertain to the period under review unless stated otherwise.

3 Some of the items were previously allowed by the Department and are not in dispute.