Perry H. Kay, Sr. - Page 6

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          expenditure must be “directly connected with or pertaining to the           
          taxpayer’s trade or business”.  Sec. 1.162-1(a), Income Tax Regs.           
               Generally, if a claimed business expense is deductible, but            
          the taxpayer is unable to fully 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, sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg.           
          46014 (Nov. 6, 1985), and requires strict substantiation of                 
          expenses for travel, meals and entertainment, and gifts, and 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.  Sec.              
          280F(d)(4)(A)(i) and (ii).                                                  
               A taxpayer is required by section 274(d) to substantiate a             
          claimed expense by adequate records or by sufficient evidence               
          corroborating the taxpayer’s own statement establishing the                 
          amount, time, place, and business purpose of the expense.  Sec.             
          274(d).  Even if such an expense would otherwise be deductible,             
          the deduction may still be denied if there is insufficient                  

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