Edward E. and Constance M. Thorpe - Page 13

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          lack of business purpose on the part of Mrs. Thorpe in attending            
          the various conferences.  On brief, respondent argues that Mrs.             
          Thorpe's presence at the conventions was primarily a personal               
          benefit to her rather than a business purpose that benefited                
          ETCO.  Respondent's argument regarding lack of substantiation was           
          not meaningfully addressed until the reply brief was filed.                 
          Respondent has isolated a small percentage of travel expenses               
          that has been attributed specifically to Mrs. Thorpe.  It would             
          be difficult to imagine how respondent could attribute an exact             
          amount of expenses to Mrs. Thorpe without any substantiation of             
          the expenses in the first place.  Further, where Mr. and Mrs.               
          Thorpe attended the conferences together, certain expenses, such            
          as meals and lodging, must have been substantiated for Mr. Thorpe           
          on the same documentation as would have been used for Mrs.                  
          Thorpe.  Respondent does not question the substantiation of Mr.             
          Thorpe's travel expenses.  Under these circumstances, we find               
          that respondent's argument regarding lack of substantiation is              
          without merit.                                                              
               With respect to the automobiles, the Mercury and the Lincoln           
          are listed property under section 280F(d)(4)(A)(i) because they             
          are passenger automobiles.  A taxpayer may not deduct automobile            
          expenses, unless he or she substantiates by adequate records or             
          by sufficient evidence corroborating the taxpayer's own statement           
          the amount, time and place, and business purpose of the expense.            
          Sec. 274(d)(4).                                                             

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