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During the years at issue Shearson Lehman had a policy of
reimbursing employee travel and entertainment expenses, subject
to certain documentation and other requirements. Mr. Kelly
received reimbursements from his employer, and claimed deductions
for unreimbursed entertainment expenses, in the amounts set forth
below:
Amount Deducted for
Year Amount Reimbursed Unreimbursed Expenses
1986 $4,415.00 $25,200
1987 3,965.00 125,299
1989 5,611.81 22,480
1990 2,397.70 212,440
1991 6,562.81 21,400
1992 6,426.42 22,385
1As reduced by 2 percent of adjusted gross income.
2As reduced by 20 percent.
Petitioners have no documents in their possession supporting the
claimed unreimbursed entertainment expenses for taxable years
1986, 1987, 1990, 1991, and 1992. Mr. Kelly used to have an
expense diary for 1986, which he produced to respondent's agent
in the course of the audit. The agent informed Mr. Kelly that
the diary was of no value in substantiating the claimed
deductions. Mr. Kelly subsequently lost the diary in the course
of an office move. Petitioners did introduce in evidence an
expense diary for 1989 together with receipts. The diary lists
total expenses of $5,702.41. There are receipts to confirm
$5,085.76 of the claimed expenses, and for some claimed expenses
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