Basavaraj A. Hooli and Vindodini B. Hooli - Page 6




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               However, certain business deductions described in section              
          274 are subject to rules of substantiation that supersede the               
          Cohan doctrine.  Section 274(d) provides that no deduction shall            
          be allowed with respect to:  (a) Any traveling expense, including           
          meals and lodging away from home; (b) any item with respect to an           
          activity of a type generally considered to be entertainment,                
          amusement, or recreation; or (c) the use of any “listed                     
          property”, as defined in section 280F(d)(4) unless the taxpayer             
          substantiates certain elements.  Passenger automobiles are listed           
          property under section 280F(d)(4)(A)(i).                                    
               Under section 274, a taxpayer must substantiate the amount,            
          time, and business purpose of the expenditures and must provide             
          adequate records or sufficient evidence to corroborate his own              
          statement.  See sec. 1.274-5T(c)(1), Temporary Income Tax Regs.,            
          50 Fed. Reg. 46016 (Nov. 6, 1985).  Adequate records are defined            
          as an account book, diary, log, statement of expense, trip sheet,           
          or similar record.  See sec. 1.274-5T(c)(2), Temporary Income Tax           
          Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985).                                   
               When a taxpayer’s records have been destroyed or lost due to           
          circumstances beyond his control, such as destruction by fire,              
          flood, earthquake, or other casualty, the taxpayer has the right            
          to substantiate his deductions by reasonable reconstruction of              
          his expenditures.  See sec. 1.274-5T(c)(5), Temporary Income Tax            
          Regs., 50 Fed. Reg. 46022 (Nov. 6, 1985).  A taxpayer in this               
          situation may reconstruct his expenses through other credible               





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