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and entertainment on CTC's disbursements journals.
Significantly, the cash expenses claimed on the returns cannot be
reconciled with the diaries and are in substantially greater
amounts than the expenses recorded in the diaries. For the years
1973 through 1976 the amounts of the cash expenses claimed were
estimates that the return preparer, Mr. Giffin, derived from the
number of checks that petitioner wrote to cash and the number of
days that he was out of the country, based on his diaries. No
evidence was presented concerning any specific cash expenditures
from 1973 through 1976. Moreover, estimated expenses for travel
and entertainment expenses are not allowable because section 274
expressly overrides the Cohan rule, Cohan v. Commissioner, 39
F.2d 540 (2d Cir. 1930); see Sanford v. Commissioner, 50 T.C. at
827.
For the years 1977 through 1981 it is unclear how the cash
expenses were determined. Aside from testimony that the return
preparers reviewed the cash expenses claimed on the returns,
there is no evidence of business purpose or that any cash
expenses claimed in 1977 through 1981 were incurred for CTC's
business. Nor, as noted previously, is any check, receipt or
document underlying the cash expenses claimed in 1978 through
1981 in evidence.28 For 1977 the workpapers show only a list of
28 In this regard, the Court in its order dated Oct. 9, 1992,
specifically stated that Exhs. 3195 through 3215, which include documentation
for claimed travel and entertainment expenses in 1978 through 1981, would not
be received in evidence.
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