- 16 - 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 clearPage: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
Last modified: May 25, 2011