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2. Schedule C Business Expense Deductions
There is no dispute between the parties that petitioner was
an independent real estate sales agent during 1996. The income
and deductions attributable to petitioner’s activities as a real
estate agent are reported on the Schedule C included with
petitioners’ 1996 return. Some of the deductions claimed on the
Schedule C were disallowed for a variety of reasons, including
lack of substantiation.
As a general rule, taxpayers must keep sufficient records to
establish the amounts of their claimed deductions. Meneguzzo v.
Commissioner, 43 T.C. 824, 831 (1965); sec. 1.6001-1(a), Income
Tax Regs. In this case, petitioners claim that while they
maintained sufficient tax and business records, the records that
provide substantiation for the deductions here in dispute were in
the briefcase that was stolen from their car. Accepting
petitioners’ explanation on the matter, we address each of the
disallowed Schedule C deductions separately.
Deductions for otherwise deductible car and truck expenses
are subject to strict substantiation requirements. Sec. 274(d);
sec. 1.274-5T(b)(2) and (3), Temporary Income Tax Regs., 50 Fed.
Reg. 46014-46015 (Nov. 6, 1985). If records required to
substantiate a deduction for car expenses are lost through
circumstances beyond the taxpayer’s control (such as theft), the
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