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“ordinary” the transaction which gives rise to the expense must
be of a common or frequent occurrence in the type of business
involved. Deputy v. Du Pont, 308 U.S. 488, 495 (1940). No
deduction is allowed for personal, living, or family expenses.
Sec. 262(a).
Generally, if a claimed business expense is deductible, but
the taxpayer is unable to substantiate it, the Court is permitted
to make as close an approximation as it can, bearing heavily
against the taxpayer whose inexactitude is of his or her own
making. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). The estimate must have a reasonable evidentiary basis.
Vanicek v. Commissioner, 85 T.C. 731, 743 (1985). However,
section 274 supersedes the doctrine of Cohan v. Commissioner,
supra, see sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed.
Reg. 46014 (Nov. 6, 1985), and requires strict substantiation of
expenses with respect to any listed property as defined in
section 280F(d)(4). Sec. 274(d). Listed property includes any
passenger automobile or any other property used as a means of
transportation, and computers. Sec. 280F(d)(4)(A)(i), (ii),
(iv).
Actual expenses related to the business use of an automobile
are deductible under section 274, if substantiated.
Alternatively, self-employed individuals may use the standard
mileage rate by multiplying the number of miles driven for
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