- 7 -
1985). In order to substantiate a deduction by means of adequate
records, a taxpayer must maintain a diary, a log, or a similar
record, and documentary evidence which, in combination, are
sufficient to establish each element of each expenditure or use.
Sec. 1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg.
46017 (Nov. 6, 1985). To be adequate, a record generally must be
written. Furthermore, each element of an expenditure or use that
must be substantiated should be recorded at or near the time of
that expenditure or use. Sec. 1.274-5T(c)(2)(ii)(A), Temporary
Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). Thus, under
section 274(d), as it applies to listed property, no deduction
may be allowed for expenses incurred for use of a passenger
automobile or any other property used as a means of
transportation on the basis of any approximation or unsupported
testimony of the taxpayer. See, e.g., Golden v. Commissioner,
T.C. Memo. 1993-602.
We must now determine whether petitioner is entitled to
deduct expenses allegedly incurred in his business activity of
negotiating oil and gas leases. Petitioner provided no written
substantiation for any of these expenses; however, this was not
due to his own inexactitude. To explain his lack of
substantiation, petitioner testified that all of his records had
been destroyed in a fire.
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