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Petitioner argues that he should be allowed to deduct
certain expenses to which section 274(d) applies because the
records he produced at trial satisfy the substantiation
requirements of section 1.274-5T(c)(5), Temporary Income Tax
Regs., 50 Fed. Reg. 46022 (Nov. 6, 1985), which allow a taxpayer
to reconstruct reasonably his business expenses when original
documents are lost or destroyed through no fault of the taxpayer.
Respondent argues that petitioner failed to present credible
evidence to substantiate that he incurred business expenses and
that petitioner has not provided the Court with a sufficient
basis on which to make a Cohan estimation. Respondent also
argues that petitioner has not met the heightened substantiation
requirements imposed by section 274(d) for those deductions to
which section 274(d) applies.
At trial, petitioner produced the following: photocopies of
checks drafted on the RBS account for 2000, 2001, and 2002; a
copy of a rental receipt for Western Springs Rec Center for 2001;
an itemized hotel receipt dated May 28, 2000, in the amount of
$1,654.86; itemized hotel receipts dated July 31, 2002, in the
aggregate amount of $2,215.18; an itemized American Express bill;
and, an itemized cellular phone bill.
Upon review of the canceled checks provided by petitioner,
it is impossible to determine whether the checks were written for
petitioner’s personal expenses. We find petitioner’s testimony
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