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sec. 1.6001-1(a), Income Tax Regs. 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)(4) imposes stringent substantiation
requirements for the deduction of certain listed property as
defined under section 280F(d)(4). Listed property, as defined in
section 280F(d)(4), includes any passenger automobile or any
other property used as a means of transportation. Taxpayers must
substantiate by adequate records the following items in order to
deduct any car and truck expenses (including depreciation): The
amount of each separate expenditure, the listed 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)(6), Temporary Income Tax Regs., 50 Fed. Reg.
46016 (Nov. 6, 1985). To substantiate a deduction by means of
adequate records, a taxpayer must maintain an account book,
diary, log, statement of expense, trip sheets, and/or other
documentary evidence, which, in combination, are sufficient to
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Last modified: May 25, 2011