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year in carrying on any trade or business. No deduction is
allowed for personal, living, or family expenses. See sec. 262.
In some circumstances, if a taxpayer is unable to
substantiate a claimed business expense, the Court is permitted
to make as close an approximation as it can. See Cohan v.
Commissioner, 39 F.2d 540 (2d Cir. 1930). The estimate, however,
must have a reasonable evidentiary basis. See Vanicek v.
Commissioner, 85 T.C. 731, 743 (1985). Section 274(d) requires
strict substantiation of certain expenses including those
incurred with respect to vehicle, travel, meals, gifts, and
entertainment.
Under section 274(d), a taxpayer must maintain adequate
records or provide sufficient evidence corroborating his own
statement to support a deduction. See Lukes v. Commissioner,
T.C. Memo. 1988-116. The regulations require substantiation by
documents showing the amount paid, the time and place of the
vehicle use, travel, meals, or entertainment, and the business
purpose of the expense. See sec. 1.274-5T(a)(1), (b)(2),
Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
In order to substantiate a deduction by means of adequate
records, a taxpayer must maintain a diary, a log, or a similar
record, and documentary evidence which, in combination, are
sufficient to establish each element of each expenditure or use.
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Last modified: May 25, 2011