Alonzo Bradley and Emma J. Bradley - Page 7

                                         -7-                                          
               In order to substantiate a deduction by means of adequate              
          records, a taxpayer must maintain a diary, a log, or a similar              
          record, and documentary evidence that, in combination, are                  
          sufficient to establish each element of each expenditure or use.            
          Sec. 1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg.            
          46017 (Nov. 6, 1985).  To be adequate, a record must generally be           
          written.  Each element of an expenditure or use that must be                
          substantiated should be recorded at or near the time of that                
          expenditure or use.  Sec. 1.274-5T(c)(2)(ii)(A), Temporary Income           
          Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985).                               
               Thus, under section 274(d) no deduction may be allowed for             
          expenses incurred for use of a passenger automobile on the basis            
          of any approximation or the unsupported testimony of the                    
          taxpayer.  Golden v. Commissioner, T.C. Memo. 1993-602.                     
               The prerequisites to deductibility of vehicle expenses                 
          incurred by an employee, therefore, are, first, that the expenses           
          be nonreimbursable outlays, and, second, that the expenses be               
          substantiated in accordance with the requirements of section 274.           
               For the 1991 taxable year, Mr. Bradley claimed a deduction             
          for actual vehicle expenses of $9,143.  He could have been                  
          reimbursed by his employer in the amount of $2,691.36 (9,968                
          business miles multiplied by 27 cents per mile).  Thus, any                 
          vehicle expenses in excess of $2,691.36 are nonreimbursable and             
          potentially deductible.  However, Mr. Bradley substantiated the             
          amount of his vehicle expenses by presenting invoices and                   
          canceled checks only in the amount of $3,567.74.  Assuming,                 



Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011