Edward and Ruth Kelly - Page 16

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            (life insurance agent commissions); Williams v. Commissioner, 64                              
            T.C. 1085 (1975) (real estate agent commissions); Bailey v.                                   
            Commissioner, 41 T.C. 663 (1964) (life insurance agent                                        
            commissions); Kobernat v. Commissioner, T.C. Memo. 1972-132                                   
            (stockbroker commissions).                                                                    
                  Costs incurred in the acquisition and disposition of a                                  
            capital asset are nondeductible capital expenditures.  Woodward                               
            v. Commissioner, 397 U.S. 572, 575 (1970).  Thus, for a taxpayer                              
            who is not a dealer, brokerage fees incurred to purchase                                      
            securities must be added to the cost basis of the securities, and                             
            brokerage fees incurred to sell securities must be offset against                             
            the sale price.  Sec. 1.263(a)-2(e), Income Tax Regs.                                         
            3.  Employee Business Expenses                                                                
                  Respondent disallowed petitioners' deductions for                                       
            unreimbursed entertainment expenses on the grounds, inter alia,                               
            that the deductions were not substantiated in accordance with                                 
            section 274(d).  Mr. Kelly argues that he adequately                                          
            substantiated his expenses for at least 1 of the years at issue                               
            and that the Court should use its discretion in estimating the                                
            amount of the deductible expenses for the other years.  We agree                              
            with respondent that petitioners are not entitled to any of the                               
            claimed deductions.                                                                           
                  Section 274(d) was intended to preclude discretionary                                   
            estimation of certain business expenses by the courts pursuant to                             

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