Dane Marie Smiley and Richard Dean Smiley - Page 5




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          With respect to the utility expenses, petitioner produced                   
          telephone bills in the name of his mother (Helen Smiley) for                
          telephone service at Detroit Lakes from February through July               
          1995.  There is no information as to who paid these expenses or             
          when they were paid.  There is no documentation concerning the              
          other expenses claimed.                                                     
               Respondent disallowed the expenses for lack of                         
          substantiation and also contends that the claimed expenses were             
          not incurred in an activity entered into for profit.                        
                                     Discussion                                       
               Section 162(a) allows deductions for ordinary and necessary            
          expenses paid or incurred in carrying on a trade or business.               
          Under section 274(d), however, a taxpayer may not deduct the use            
          of a passenger vehicle and lodging and meal expenses unless he or           
          she substantiates the amount of the expense, the time and place             
          of the travel, and the business purpose of the travel with                  
          adequate records or sufficient evidence corroborating his or her            
          statement.  See Miner v. Commissioner, T.C. Memo. 1999-358.                 
          Generally, "to meet the 'adequate records' requirements of                  
          section 274(d), a taxpayer shall maintain an account book, diary,           
          log, statement of expense, trip sheets, or similar record".  Sec.           
          1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017           










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