- 4 -
a deduction all the ordinary and necessary expenses paid or
incurred in carrying on any trade or business. Deductions are
strictly a matter of legislative grace. INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). Taxpayers must substantiate
claimed deductions. Hradesky v. Commissioner, 65 T.C. 87, 89
(1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976). Moreover,
taxpayers must keep sufficient records to establish the amounts
of the deductions. Meneguzzo v. Commissioner, 43 T.C. 824, 831
(1965); sec. 1.6001-1(a), Income Tax Regs. Generally, except as
otherwise provided by section 274(d), when evidence shows that a
taxpayer incurred a deductible expense, but the exact amount
cannot be determined, the Court may approximate the amount,
bearing heavily if it chooses against the taxpayer whose
inexactitude is of his own making. Cohan v. Commissioner, 39
F.2d 540, 543-544 (2d Cir. 1930). The Court, however, must have
some basis upon which an estimate can be made. Vanicek v.
Commissioner, 85 T.C. 731, 742-743 (1985). There are strict
substantiation requirements under section 274(d) for items such
as travel expenses and meals.
Respondent stated that up to the date of trial, petitioners
provided no substantiation. The day of trial, petitioner
provided evidence that $315 of dental expenses were paid.
Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011