- 15 -
* * * * * * *
(2). Limitations.--Paragraph (1) shall apply
with respect to an issue only if--
(A) the taxpayer has complied with the
requirements under this title to substantiate
any item;
(B) the taxpayer has maintained all
records required under this title and has
cooperated with reasonable requests by the
Secretary for witnesses, information,
documents, meetings, and interviews * * *
One of the issues to be decided in this case is whether
petitioners have adequately substantiated those expenses claimed
on their returns and disallowed by respondent. The legislative
history of section 7491 explicates:
Nothing in the provision shall be construed to
override any requirement under the Code or regulations
to substantiate any item. Accordingly, taxpayers must
meet applicable substantiation requirements, whether
generally imposed or imposed with respect to specific
items, such as charitable contributions or meals,
entertainment, travel, and certain other expenses.
Substantiation requirements include any requirement of
the Code or regulations that the taxpayer establish an
item to the satisfaction of the Secretary. Taxpayers
who fail to substantiate any item in accordance with
the legal requirement of substantiation will not have
satisfied the legal conditions that are prerequisite to
claiming the item on the taxpayer’s tax return and will
accordingly be unable to avail themselves of this
provision regarding the burden of proof. Thus, if a
taxpayer required to substantiate an item fails to do
so in the manner required (or destroys the
substantiation), this burden of proof provision is
inapplicable. [H. Conf. Rept. 105-599, supra at 241,
1998-3 C.B. at 995; fn. refs. omitted; emphasis added.]
As we find infra, petitioners failed to adequately substantiate
those deductions claimed on their returns.
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011