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Petitioners offered no coherent substantiation for office and
supplies expenses for 1993. Petitioners offered no evidence to
substantiate expenditures for business interest, commissions and
fees, telephone expenses, and expenses for professional journals
in 1993 and no substantiation for various Schedule C deductions
for 1994.
Petitioners are entitled to deduct various Schedule C
expenses of $1,246 for 1993 but may deduct no amount for 1994.
Issue 6. Section 274 Expenses
Certain business deductions described in section 274 are
subject to rules of substantiation that supersede the doctrine in
Cohan v. Commissioner, supra. See sec. 1.274-5T(c)(2), Temporary
Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). Section
274(d) provides that no deduction shall be allowed with respect
to: (a) Any traveling expense, including meals and lodging away
from home; (b) any item related to an activity of a type
considered to be entertainment, amusement, or recreation; or (c)
the use of any “listed property”, as defined in section
280F(d)(4),8 unless the taxpayer substantiates certain elements.
For an expense described in one of the above categories, the
taxpayer must substantiate by adequate records or sufficient
evidence to corroborate the taxpayer’s own testimony: (1) The
8 “Listed property” includes any passenger automobile. Sec.
280F(d)(4)(A)(i).
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