- 4 - 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). Section 274(d) imposes stringent substantiation requirements for the deduction of travel and entertainment expenses. Taxpayers must substantiate by adequate records the following items in order to claim these deductions: The amount of such expense, the time and place of the travel or entertainment, the business purpose of the expense, and the business relationship to the taxpayer of persons entertained. Sec. 274(d); sec. 1.274- 5T(b)(2) and (3), Temporary Income Tax Regs., 50 Fed. Reg. 46014- 46015 (Nov. 6, 1985). To substantiate a travel or meals and entertainment deduction by means of adequate records, a taxpayer must maintain an account book, diary, log, statement of expense, trip sheet, and/or other documentary evidence which, in combination, are sufficient to establish each element of expenditure or use. Sec. 1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). Travel and meals and entertainment expenses cannot be estimated under Cohan. Shea v. Commissioner, 112 T.C. 183, 188 (1999); sec. 1.274-5T(a),Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011