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H. Other Expenses
With respect to the remaining expenses claimed on
petitioners’ Schedule C and disallowed by respondent, we hold
that petitioners have failed to substantiate these deductions.
The only other evidence in the record consists of miscellaneous
receipts, many of which provide no information regarding the
subject of the underlying transaction or the parties thereto.
Many others are from restaurants (e.g., McDonald’s, Taco Bell,
Sizzler), gas stations, and grocery stores. A significant
portion are obviously for nondeductible personal expenditures.
Moreover, to the extent that they might relate to the claimed
travel, meal, and vehicle expenses, the receipts fall far short
of the strict substantiation requirements of section 274. We
sustain respondent’s position as to all remaining expenses not
previously addressed.
III. Accuracy-Related Penalty
Subsection (a) of section 6662 imposes an accuracy-related
penalty in the amount of 20 percent of any underpayment that is
attributable to causes specified in subsection (b). Subsection
(b) of section 6662 then provides that among the causes
justifying imposition of the penalty are: (1) Negligence or
disregard of rules or regulations and (2) any substantial
understatement of income tax.
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