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diary, log, statement of expense, or other similar record in
which entries of expenditures are recorded at or near the time of
the expenditure. In addition, a taxpayer must supply documentary
evidence, such as receipts or paid bills. Sec. 1.274-5T(c)(2)(i)
to (iii), Temporary Income Tax Regs., 50 Fed. Reg. 46017-46020
(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. Sec. 1.274-5T(c)(3), Temporary Income
Tax Regs., 50 Fed. Reg. 46020-46021 (Nov. 6, 1985).
For expenses other than those covered by the provisions of
section 274(d), if the taxpayer failed to keep adequate records
but the Court is convinced that deductible expenditures were
incurred, the Court "should 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). However, we must have some
rational basis on which an estimate may be made. Vanicek v.
Commissioner, 85 T.C. 731, 742-743 (1985).
Petitioner deducted Schedule C business expenses totaling
$162,278 in 1990, $192,516 in 1991, and $211,709 in 1992.6 These
deductions fall into two categories. One category must meet the
6See appendix.
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