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821 (5th Cir. 1976). Moreover, taxpayers must keep sufficient
records to establish the amounts of the deductions. Meneguzzo v.
Commissioner, 43 T.C. 824, 831 (1965); sec. 1.6001-1(a), Income
Tax Regs. Section 7491 does not change a taxpayer’s obligation
to substantiate deductions. Higbee v. Commissioner, 116 T.C. 438
(2001).
Generally, except as otherwise provided by section 274(d),
when evidence shows that a taxpayer incurred a deductible
expense, but the exact amount cannot be determined, the Court may
approximate the amount bearing heavily if it chooses against the
taxpayer whose inexactitude is of his own making. Cohan v.
Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930). The Court,
however, must have some basis upon which an estimate can be made.
Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).
Section 274(d) imposes stringent substantiation requirements
for the deduction of travel expenses, automobile expenses, and
entertainment expenses. Taxpayers must substantiate by adequate
records certain items in order to claim deductions, such as the
amount and place of each separate expenditure, the property’s
business and total usage, the date of the expenditure or use, and
the business purpose for an expenditure or use. Sec. 274(d);
sec. 1.274-5T(b), Temporary Income Tax Regs., 50 Fed. Reg. 46014
(Nov. 6, 1985). To substantiate a deduction by means of adequate
records, a taxpayer must maintain an account, book, diary, log,
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Last modified: May 25, 2011