Randall and Lynn Bishop - Page 8




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         Dugan v. Commissioner, supra (“Given that petitioner has failed              
         to demonstrate the business purpose for the computer expense in              
         accordance with section 274(d), the [section 179] deduction is               
         disallowed.”).                                                               
              C.  Office Expenses                                                     
              Petitioners claim a deduction for office expenses in the                
         amount of $8,762.                                                            
              Section 162(a) allows as a deduction “all the ordinary and              
         necessary expenses paid or incurred during the taxable year in               
         carrying on any trade or business”.  Office expenses of the type             
         claimed by petitioner, e.g., postage, if paid or incurred during             
         the taxable year in carrying on any trade or business, can                   
         qualify as deductible section 162(a) expenses.  See sec. 1.162-              
         1(a), Income Tax Regs.  The adequate-records-or-sufficient-                  
         corroborating-evidence standard of section 274(d) is not                     
         specifically applicable to such expenses.  Nevertheless, a                   
         taxpayer is required by section 6001 to keep records and to                  
         substantiate the amounts giving rise to claimed deductions, and,             
         if he does not, respondent cannot be considered arbitrary or                 
         unreasonable in denying the deductions.  Roberts v. Commissioner,            
         62 T.C. 834, 836-837 (1974); Cook v. Commissioner, T.C. Memo.                
         1991-590 (citing Hradesky v. Commissioner, 65 T.C. 87, 90 (1975),            
         affd. per curiam 540 F.2d 821 (5th Cir. 1976)); see sec. 1.6001-             
         1(a), Income Tax Regs.                                                       






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