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The "adequate records" standard requires that a taxpayer
maintain an account book, diary, log, statement of expense, trip
sheet, or other similar record that contains entries of
expenditures made at or near the time of the expenditure. In
addition, a taxpayer must supply documentary evidence, such as
receipts, paid bills, or similar evidence sufficient to support
an expenditure. See sec. 1.274-5T(c)(2)(i), (iii), Temporary
Income Tax Regs., 50 Fed. Reg. 46017, 46019 (Nov. 6, 1985).
Alternatively, taxpayers who are unable to satisfy the adequate
records requirement are still entitled to a deduction for
expenses that they can substantiate with other corroborative
evidence. See sec. 1.274-5T(c)(3), Temporary Income Tax Regs.,
50 Fed. Reg. 46020 (Nov. 6, 1985).
The only evidence offered to substantiate these expenses was
receipts for automobile repair bills totaling $2,708.48, a copy
of a $500 check dated January 8, 1995, with a notation on the
check indicating that it was used for car insurance on a "1986
Mercury Topez [sic]", and Mr. King's self-serving testimony.
Since Mr. King testified that the expenses he seeks to deduct
relate to the Hyundai, the check relating to the Mercury Topaz is
irrelevant.
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Last modified: May 25, 2011