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adequate records or the taxpayer's own detailed statement that is
corroborated by sufficient evidence. Section 274(d) also applies
to listed property, which includes any passenger automobile.
Secs. 274(d)(4), 280F(d)(4)(A)(i). At a minimum, the taxpayer
must substantiate: (1) The amount of the expense, (2) the time
and place such expense was incurred, (3) the business purpose of
the expense, and (4) the business relationship to the taxpayer of
persons entertained. Sec. 274(d).
The regulations further clarify the stringent substantiation
requirements of section 274. A taxpayer generally must
substantiate each expenditure by producing (1) adequate records
or (2) sufficient evidence to corroborate his or her own
statement. Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50
Fed. Reg. 46016-46017 (Nov. 6, 1985). The "adequate records"
standard requires that a taxpayer maintain an account book,
5(...continued)
or by sufficient evidence corroborating the taxpayer's
own statement (A) the amount of such expense or other
item, (B) the time and place of the travel,
entertainment, amusement, recreation, or use of the
facility or property, or the date and description of
the gift, (C) the business purpose of the expense or
other item, and (D) the business relationship to the
taxpayer of persons entertained, using the facility or
property, or receiving the gift. The Secretary may by
regulations provide that some or all of the
requirements of the preceding sentence shall not apply
in the case of an expense which does not exceed an
amount prescribed pursuant to such regulations. This
subsection shall not apply to any qualified nonpersonal
use vehicle (as defined in subsection (i)).
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Last modified: May 25, 2011