- 8 -
of the persons entertained. Under the regulations, to meet the
"adequate records" requirement of section 274(d), a taxpayer
"shall maintain an account book, diary, statement of expense or
similar record * * * and documentary evidence * * * which, in
combination, are sufficient to establish each element of an
expenditure". Sec. 1.274-5(c)(2)(i), Income Tax Regs.; emphasis
added. The elements to be proven with respect to each travel
expense are the amount, time, place, and business purpose of the
travel. Sec. 1.274-5(b)(2), Income Tax Regs. Similarly, the
elements to be proven with respect to entertainment expenses are
the amount, time, place, business purpose, and the business
relationship of the person or persons entertained. Sec. 1.274-
5(b)(3), Income Tax Regs. The record-keeping requirements of
section 274(d) contemplate that a record "made at or near the
time of the expenditure, supported by sufficient documentary
evidence, has a high degree of credibility not present with
respect to a statement prepared subsequent thereto when generally
there is a lack of accurate recall." Sec. 1.274-5(c)(1), Income
Tax Regs. The substantiation requirements of section 274(d) are
designed to encourage taxpayers to maintain records, together
with documentary evidence substantiating each element of the
expense sought to be deducted. Sec. 1.274-5(c)(1), Income Tax
Regs. Similarly, with respect to local transportation expenses,
section 274(d) was amended, effective for taxable years beginning
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011