John D. Shea - Page 8




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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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