4
annual mileage. For the taxable year at issue, petitioner
multiplied the standard mileage rate of 27.5 cents by 82 percent
of his annual mileage, and claimed this amount as vehicle
expense. Petitioner filed a Schedule C, reporting income and
deducting expenses incurred in the brokerage business, but did
not deduct any automobile expense.
In the notice of deficiency, respondent disallowed $6,663 of
petitioners' claimed employee business expenses for lack of
substantiation. The disallowed expenses include $5,913 for
vehicle expense, $150 for parking fees, tolls, and local
transportation, and $600 for other business expenses. In her
brief, respondent concedes the $150 deduction for parking fees,
tolls, and local transportation.
Respondent's determinations are presumed correct, and
petitioners have the burden of proving them erroneous. Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933). Deductions
against income are allowed as a matter of legislative grace. New
Colonial Ice Co. v. Commissioner, 292 U.S. 435, 440 (1934).
Taxpayers must maintain adequate records to substantiate the
amount of any deductions. Sec. 6001; sec. 1.6001-1(a), Income
Tax Regs.
Generally, when evidence shows that petitioners incurred a
deductible expense, but the exact amount cannot be determined,
the Court may approximate the amount. Cohan v. Commissioner, 39
F.2d 540 (2d Cir. 1930). An exception to the Cohan rule is
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011