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entertainment expenses as required by section 274(d). Petitioner
contends that documents substantiating the rest of his expenses
are in the possession of Mr. Kolter, who will not return them.
Petitioner further contends that he testified against Mr. Kolter
and that Mr. Kolter has been incarcerated for fraud.
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. Section 274(d), relating to
travel, meal, entertainment, and gift expenses, requires a
taxpayer to substantiate
by adequate records or by sufficient evidence
corroborating the taxpayer’s own statement[,] (A) the
amount of such expense or other item, (B) the time and
place of the travel, entertainment, amusement,
recreation, or use of the facility or property, or the
date and description of the gift, (C) the business
purpose of the expense or other item, and (D) the
business relationship to the taxpayer of persons
entertained, using the facility or property, or
receiving the gift. * * *
Section 1.274-5(c)(5), Income Tax Regs., states:
Where the taxpayer establishes that the failure to
produce adequate records is due to the loss of such
records through circumstances beyond the taxpayer’s
control, such as destruction by fire, flood,
earthquake, or other casualty, the taxpayer shall have
the right to substantiate a deduction by reasonable
reconstruction of his expenditures.
Mr. Kolter’s representation of petitioner related to Quantum
(i.e., 1992) but not Equator (i.e., 1993 and 1994). Petitioner’s
failure to produce adequate records relating to 1992 is due to
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Last modified: May 25, 2011