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substantiate by adequate records or sufficient evidence to
corroborate the taxpayer’s own testimony the amount of the
expense, the time and place of the use, the business purpose of
the use and, in the case of entertainment, the business
relationship to the taxpayer of each person entertained. Sec.
274(d); sec. 1.274-5T(b), Temporary Income Tax Regs., 50 Fed.
Reg. 46014 (Nov. 6, 1985). Section 274 requires that expenses
be recorded at or near the time when the expense is incurred.
Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg.
46016 (Nov. 6, 1985). Canceled checks will not ordinarily
constitute adequate documentary evidence because they do not
contain sufficient detail regarding the specific items
constituting the expenditures. Rice v. Commissioner, T.C. Memo.
1994-204. If a taxpayer is unable to fulfill the requirements of
section 274(d), he is not entitled to the deduction.
2. Advertising
Petitioner deducted $4,441 for advertising. Respondent
concedes that petitioner substantiated $201.87 for advertising.
At trial, petitioner testified that he sent Christmas cards to
his clients. Petitioner also testified that he included postage
in his computation of advertising expenses, such as amounts
arising from mailing his clients’ tax returns via Federal
Express. In addition, petitioner claims he purchased
personalized pens.
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