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As a general rule, if the trial record provides sufficient
evidence that the taxpayer has incurred a deductible expense, but
the taxpayer is unable to adequately substantiate the amount of
the deduction to which he or she is entitled, the Court may
estimate the amount of such expense and allow the deduction to
that extent. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d
Cir. 1930). With respect to travel and entertainment expenses
and listed property (as defined in section 280F(d)(4)), section
274(d) overrides this so-called Cohan doctrine, and requires
substantiation "by adequate records or by sufficient evidence
corroborating the taxpayer's own statements". Sec. 274(d). The
taxpayer must substantiate: (1) The amount of the claimed
expense; (2) the time and place the expense was incurred; and (3)
the business purpose of the expense. Sec. 274(d).
Petitioner claimed a computer expense in the amount of
$1,945 as a deduction pursuant to section 179. Petitioner
submitted receipts from Sam's Club and the Software Gallery to
substantiate part of the claimed expense. Computers and other
peripheral equipment are "listed property" and must meet the
strict substantiation requirements imposed by section 274(d).
Sec. 280F(d)(4)(A)(iv). Given that petitioner has failed to
demonstrate the business purpose for the computer expense in
accordance with section 274(d), the deduction is disallowed.
On Schedule C of his 1991 return, petitioner claimed an
automotive expense in the amount of $1,950. It is not clear
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