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carrying on a trade or business. Expenses that are personal in
nature are generally not allowed as deductions. Sec. 262(a).
A taxpayer is required to maintain records sufficient to
establish the amount of his income and deductions. Sec. 6001;
sec. 1.6001-1(a), (e), Income Tax Regs. A taxpayer must
substantiate his deductions by maintaining sufficient books and
records to be entitled to a deduction under section 162(a).
When a taxpayer establishes that he has incurred a
deductible expense but is unable to substantiate the exact
amount, we are permitted to estimate the deductible amount.
Cohan v. Commissioner, supra. We can estimate the amount of the
deductible expense only when the taxpayer provides evidence
sufficient to establish a rational basis upon which the estimate
can be made. Vanicek v. Commissioner, 85 T.C. 731, 743 (1985).
Section 274(d) supersedes the general rule of Cohan v.
Commissioner, supra, and prohibits the Court from estimating the
taxpayer’s expenses with respect to certain items. Sanford v.
Commissioner, 50 T.C. 823, 827 (1968), affd. per curiam 412 F.2d
201 (2d Cir. 1969). Section 274(d) imposes strict substantiation
requirements for listed property as defined in section
280F(d)(4), gifts, travel, entertainment, and meal expenses.
Sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014
(Nov. 6, 1985). To obtain a deduction for a listed property,
travel, meal, or entertainment expense, a taxpayer must
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Last modified: May 25, 2011