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by petitioner). The parties also have stipulated that many of
the travel expenses were reimbursed by payment from petitioner’s
customers directly to Norman. Respondent argues: “[Petitioner]
is not entitled to a deduction for the travel expenses because
they were all reimbursed.” Petitioner agrees that travel
expenses were reimbursed to Norman, but claims that all such
reimbursements were included in petitioner’s gross income.
Petitioner points to a stipulated exhibit, a copy of a cash
receipts journal for petitioner prepared by Norman, which,
petitioner claims, supports its claim that all such reimbursement
were included in gross income. Petitioner has not, however, tied
the entries in the cash receipts journal to the line one amount,
$309,630.25, “Gross receipts or sales”, on the 1994 return.
Nevertheless, we find that all reimbursements were included in
gross income. We think that such finding is a fair inference
from the substantial amount of gross receipts or sales reported
on the 1994 tax return, the cash receipts journal, and is
implicit in Norman’s testimony that petitioner reported all
reimbursements. Respondent offered no proof to rebut that
inference.
Respondent also argues that petitioner has failed to
substantiate the business purpose of the travel expenses, as
required by section 274(d)(1). See sec. 1.274-5T(c)(2)(ii)(B),
Temporary Income Tax Regs., 50 Fed. Reg. 46018 (Nov. 6, 1985).
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