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Petitioners argue that the expenses incurred in making these
purchases are deductible under section 179.
A taxpayer may elect to expense, rather than capitalize,
certain property used in a trade or business. Sec. 179(a), (c).
The election must be made on the taxpayer’s first income tax
return for the taxable year to which the election applies. Sec.
179(c)(1)(B); sec. 1.179-5(a), Income Tax Regs. Petitioners did
not elect to expense the computer equipment on their 1996 return.
Therefore, they are not entitled to a deduction for the equipment
under section 179. Furthermore, we find that petitioners are not
entitled to any other deduction for the equipment because
petitioners have not substantiated the business versus personal
usage of the computer equipment, as required under section
274(d), discussed supra. For the same reason, petitioners are
not entitled to deductions for the rental of a scan converter and
other computer equipment, or for their subscription to Compuserve
online service. See sec. 274(d).
Travel expenses and professional licenses
Mr. Brayshaw testified that he incurred numerous deductible
expenses in business-related travel. He provided receipts as
substantiation. The receipts, standing alone, do not provide the
level of substantiation which is required under section 274(d).
However, Mr. Brayshaw was able to explain certain of the receipts
at trial in great enough detail to provide adequate
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