- 27 -
v. Commissioner, 94 T.C. 126, 142 (1990), affd. 992 F.2d 1132
(11th Cir. 1993); Douglas v. Commissioner, 86 T.C. 758, 763
(1986); Purcell v. Commissioner, 86 T.C. 228, 240 (1986), affd.
826 F.2d 470 (6th Cir. 1987).
Mrs. Kelly took the position that both the employee business
expense deductions and the ordinary loss deductions were not only
plainly without merit, but "phony". She argued that in view of
Shearson Lehman's reimbursement policy, "If * * * the claimed
unreimbursed expenses had a factual basis, there is no logical
explanation why they were not reimbursed. * * * The logical
inference from the failure to seek reimbursement or, if it was
sought, to obtain it, is that the claimed expenses were never
incurred or were not business-related." An alternative
explanation, however, is that the expenses were not reimbursed
by Mr. Kelly's employer, or that Mr. Kelly did not seek
reimbursement, for the same reason that the deductions were
disallowed by respondent, a failure to substantiate.8 Failure to
substantiate adequately does not, by itself, prove that the
expenses were fictitious or were nondeductible personal expenses.
8It is not uncommon for employees to refrain from pursuing
claims for reimbursement to which they would be entitled under
the employer's policy, believing it impolitic to do so in view of
the nature or amount of the relevant expenses. There is nothing
in the record that would rule this out as another possible
explanation for why Mr. Kelly might not have obtained
reimbursement in spite of having genuinely incurred business-
related expenses.
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