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See sec. 262(a).
Generally, if a claimed business expense is deductible, but
the taxpayer is unable to substantiate it, the Court is permitted
to make as close an approximation as it can, bearing heavily
against the taxpayer whose inexactitude is of his or her own
making. See Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). The estimate must have a reasonable evidentiary basis.
See Vanicek v. Commissioner, 85 T.C. 731, 743 (1985).
Section 274 supersedes the doctrine in Cohan v.
Commissioner, supra, see sec. 1.274-5T(a), Temporary Income Tax
Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985), and requires strict
substantiation of expenses for travel, meals and entertainment,
and gifts, and with respect to any listed property as defined in
section 280F(d)(4), see sec. 274(d). Listed property includes
any passenger automobile or any other property used as a means of
transportation. See sec. 280F(d)(4)(A)(i) and (ii).
A taxpayer is required by section 274(d) to substantiate a
claimed expense by adequate records or by sufficient evidence
corroborating the taxpayer’s own statement establishing the
amount, time, place, and business purpose of the expense. See
sec. 274(d). Even if such an expense would otherwise be
deductible, the deduction may still be denied if there is
insufficient substantiation to support it. See sec. 1.274-5T(a),
Temporary Income Tax Regs., supra.
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