Preston L. and Ruby M. Payton - Page 4

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          Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).                    
          Taxpayers must substantiate any deductions claimed.  Hradesky v.            
          Commissioner, 65 T.C. 87 (1975), affd. per curiam 540 F.2d 821              
          (5th Cir. 1976).  Section 6001 imposes upon every person liable             
          for any tax a duty to maintain records that are sufficient to               
          enable the Commissioner to determine the taxpayer's correct tax             
          liability.  Sec. 1.6001-1(a), Income Tax Regs.                              
               Section 162(a) allows a deduction for the ordinary and                 
          necessary expenses paid or incurred during the taxable year in              
          carrying on a trade or business.  Only ordinary and necessary               
          business expenditures directly connected with or pertaining to              
          the taxpayer's trade or business are deductible from gross                  
          income.  Sec. 1.162-1(a), Income Tax Reg.  Whether an expenditure           
          is ordinary and necessary is a question of fact.  Commissioner v.           
          Heininger, 320 U.S. 467, 475 (1943).                                        
               When a taxpayer fails to keep records, but a court is                  
          convinced that deductible expenditures were incurred, the court             
          may make as close an approximation as it can, "bearing heavily if           
          it chooses upon the taxpayer whose inexactitude is of his own               
          making."  Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir. 1930).           
          We cannot estimate deductible expenses, however, unless the                 
          taxpayer presents evidence sufficient to provide some rational              
          basis upon which an estimate may be made.  Vanicek v.                       
          Commissioner, 85 T.C. 731 (1985).                                           





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