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Randall did not keep a regular set of books reflecting the
income and expenses associated with his financial planning
business. To substantiate the office expenses and meals and
entertainment here in issue, petitioners refer us to (1) various
entries in a diary, Randall’s “daily planner”, (2) his
NationsBank VISA card summary statement for 1994, and (3) various
receipts relating to meals and entertainment expenses and office
expenses. We must decide whether and to what extent that
evidence is adequate to substantiate the business expense
deductions that remain in issue.
With respect to the items of office expense set out on
petitioners’ substantiation schedule, with four exceptions,
petitioners’ evidence fails to satisfy one or more of the
elements necessary to establish deductibility as ordinary and
necessary business expenses under section 162. For example, a
number of items are listed in Randall’s daily planner, indicating
a business purpose, but do not appear in the NationsBank VISA
card summary or relate to one of the receipts in evidence. In
other words, there is no proof of payment. For other items,
there is proof of payment, but the items are not listed in the
daily planner resulting in a failure to establish a relationship
to Randall’s business.
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