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Meals and Entertainment Expenses
Petitioner claimed a deduction for meals and entertainment
expenses in the amount of $8,240, after accounting for the
section 274(n)(1) 80-percent limitation. In the statutory notice
of deficiency, respondent disallowed $5,804 of the claimed
deduction. Respondent argues that petitioner has failed to
substantiate his meals and entertainment expenses in excess of
the amount allowed in the statutory notice of deficiency.
Section 162(a) allows a deduction for the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. Section 274(d) provides that no
deduction shall be allowed with respect to any traveling expense,
including meals while away from home, or for any entertainment
expenses, unless the taxpayer meets strict substantiation
requirements. Sec. 274(d)(1) and (2). In particular, the
taxpayer must substantiate by adequate records or by sufficient
evidence corroborating the taxpayer's own statement the amount,
time, place, and business purpose of the expense. Sec. 274(d).
Petitioner submitted some receipts for the claimed meals and
entertainment expenses. He also submitted copies of his daily
planner along with weekly charts on which he listed the amount
and purpose of the expenses he allegedly paid during 1992 in the
course of his real estate activity.
Respondent's revenue agent, Marci Coopersmith, examined
petitioner's daily planner, weekly charts, and other receipts
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Last modified: May 25, 2011