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the common law rule of Cohan v. Commissioner, 39 F.2d 540 (2d
Cir. 1930). Sanford v. Commissioner, 50 T.C. 823, 828 (1968),
affd. per curiam 412 F.2d 201 (2d Cir. 1969); sec. 1.274-5(a),
Income Tax Regs. The section provides that no amount may be
deducted for entertainment expenses unless the taxpayer
substantiates, by adequate records or by sufficient evidence
corroborating his own statement: (1) The amount of the expense;
(2) the time and place of the entertainment; (3) the business
purpose of the entertainment; and (4) the business relationship
to the taxpayer of the persons entertained. Substantiated
expenses may be deducted only to the extent that they exceed
amounts for which the taxpayer was reimbursed. Register v.
Commissioner, T.C. Memo. 1988-390.
Mr. Kelly presented no testimony or documentation in support
of the claimed deductions for 1986, 1987, 1990, 1991, and 1992.
He submitted an expense diary, together with receipts, for 1989.
The total amount of expenses for which there are receipts is
$5,085.76. Mr. Kelly was reimbursed by Shearson Lehman for his
1989 expenses in the amount of $5,611.81. Accordingly,
petitioners have not substantiated any amount of unreimbursed
business expenses for this year. Sec. 1.274-5(c)(2), Income Tax
Regs.
Mr. Kelly may have maintained records of his business
entertainment expenses for other years. During the audit of
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