National Industrial Investors, Inc. - Page 29

                                               - 29 -                                                  

            provide adequate records or corroborate testimony with other                               
                  Petitioner proved that the business purpose behind Byrne's                           
            use of the Malibu and Cougar automobiles was to find a section                             
            1031 exchange property, and to inspect the Burke Property.  Byrne                          
            also recorded in mileage logs the time, place, distance, and                               
            business reason for his drives in the Malibu.  The logs                                    
            substantiate 10,305 miles in 1989 and 7,523 miles in 1990.                                 
            Respondent did not argue that the mileage rates were incorrect.                            
            Petitioner is therefore entitled to deduct 22.5 cents per mile                             
            for 1989 and 26 cents per mile for 1990.                                                   
                  Petitioner sought to deduct the insurance and repair costs                           
            attributable to the Cougar for 1990.  Generally, when a taxpayer                           
            deducts the actual cost of operating an automobile, he is                                  
            required to allocate that cost between business and personal use,                          
            and to substantiate that allocation. Henry Schwartz Corp. v.                               
            Commissioner, 60 T.C. 728 (1973); sec. 1.274-5T(b)(6)(i),                                  
            Temporary Income Tax Regs., 50 Fed. Reg. 46006, 46014 (Nov. 6,                             
            1985).  In the past, if the taxpayer provided the Court with a                             
            basis upon which to estimate an allocation, the Court has                                  
            estimated it under the Cohan rule.  Sapp v. Commissioner, 36 T.C.                          
            852 (1961), affd. 309 F.2d 143 (5th Cir. 1962).  Now, however,                             
            section 274(d) prohibits such an estimation. Sec. 1.274-5(a)                               
            Income Tax Regs.  Because petitioner has not proven the total                              

Page:  Previous  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  Next

Last modified: May 25, 2011