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The regulations provide a limited exception to the
substantiation requirements of section 274(d). Under section
1.274-5(c)(5), Income Tax Regs.:
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
a right to substantiate a deduction by reasonable
reconstruction of his expenditures.
Petitioner testified that he kept records of his flights between
California and Idaho, but that those records have been lost.
Petitioner did not present any evidence as to how the loss of the
records occurred, or that the loss was due to “circumstances
beyond * * * [his] control”. The limited exception does not
apply to the loss of petitioner’s records.
2. Miscellaneous Business Expense Deductions
Petitioner also claimed miscellaneous business deductions of
$5,290 and $4,988 on his 1992 and 1993 returns, respectively.
According to petitioner’s testimony, the business expenditures
were for union dues, tools, work clothing, and boots. Respondent
denied the miscellaneous business deductions on the grounds that
petitioner failed to establish that he incurred the expenses
claimed as deductions, and that he failed to maintain adequate
records to establish the specific amounts of the deductions as
required by section 6001.
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