- 17 - need not report on his tax return certain expenses “for which he is required to account and does account to his employer”). The latter condition (reporting) is not met here. (2) Discussion Article XIII requires the return of any reimbursements or advances to the extent such payments exceed the amount to which the person paid is entitled. We assume that some accounting is required to implement that provision (which we assume would satisfy the specification requirement of section 1.62-2(e)(3), Income Tax Regs.). Nevertheless, we believe that the facts establish that no accounting was made here, so that the actual substantiation requirement of section 1.62-2(e)(3), Income Tax Regs., is not met. At best, the facts establish only that petitioner told Mr. Maitland that he would settle for $2 million based, in part, on his legal fees. That is not substantiation at all. During his testimony, petitioner stated several times that, in negotiating with Nomura, he justified his claim for $2 million on the basis, in part, of his legal fees, which he estimated to be in excess of $600,000. He testified that, at the second settlement meeting, he told Mr. Maitland: “I expended a little over $600,000 at that point [in legal fees], and that’s how I was getting my number.” He also testified that neither he nor his attorneys ever documented, to Nomura, legal fees in that amount.Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011