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the taxpayers of the person being entertained. Sec. 274(d).
Unsupported, self-serving testimony and vague approximations by
taxpayers regarding expenditures for meals and entertainment
generally will not constitute sufficient substantiation. Geiger
v. Commissioner, 440 F.2d 688, 689-690 (9th Cir. 1971), affg. per
curiam T.C. Memo. 1969-159.
Under certain circumstances, when taxpayers establish that
they have incurred a trade or business expense but do not
substantiate the amount of the expense, this Court may estimate
the amount of deductible business expenses (the Cohan rule).
Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930), affg.
in part and remanding in part 11 B.T.A. 743 (1928). The estimate
must, however, have some reasonable evidentiary basis. Vanicek
v. Commissioner, 85 T.C. 731, 743 (1985). Where, however,
section 274(d) (regarding meal, entertainment, and travel
expenses) applies, the Cohan rule is inapplicable. Sanford v.
Commissioner, 50 T.C. 823, 827-828 (1968), affd. per curiam 412
F.2d 201 (2d Cir. 1969).
With respect to dues for club memberships, taxpayers must
establish that the club was used primarily for the furtherance of
the taxpayers' trade or business and that the dues were directly
related to the active conduct of the taxpayers' trade or
business. Sec. 274(a)(2)(C).
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