- 6 -
Helvering, 290 U.S. 111, 113 (1933)). To be an "ordinary"
expense, "the transaction which gives rise to it must be of
common or frequent occurrence in the type of business involved."
Deputy v. du Pont, 308 U.S. 488, 495 (citing Welch v. Helvering,
supra at 114). Whether an expense is "ordinary and necessary" is
generally a question of fact. Commissioner v. Heininger, 320
U.S. 467, 475 (1943); Walliser v. Commissioner, 72 T.C. 433, 437
(1979).
Section 6001 requires that a taxpayer liable for any tax
shall maintain such records, render such statements, make such
returns, and comply with such regulations as the Secretary may
from time to time prescribe. To be entitled to a deduction under
section 162(a), therefore, a taxpayer is required to substantiate
the deduction through the maintenance of books and records.
In the event that a taxpayer establishes that he or she has
incurred a deductible expense, but is unable to substantiate the
precise amount, we may estimate the amount of the deductible
expense. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). We cannot estimate deductible expenses, however, unless
the taxpayer presents evidence sufficient to provide some
rational basis upon which estimates may be made. Vanicek v.
Commissioner, 85 T.C. 731, 743 (1985).
If an expense item comes within the parameters of section
274(d), we cannot rely on Cohan v. Commissioner, supra, to
estimate the taxpayer's expenses with respect to that item.
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