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living, or family expenses.
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.
Sec. 280F(d)(4)(A)(i).
A taxpayer is required by section 274(d) to substantiate a
claimed expense by adequate records or other evidence
corroborating the taxpayer’s own statement establishing the
amount, time, place, and business purpose of the expense. Even
if such an expense would otherwise be deductible, the deduction
may still be denied if there is insufficient substantiation to
support it. Sec. 1.274-5T(a), Temporary Income Tax Regs., supra.
A. Travel Expenses and Meal and Entertainment Expenses
On his barber shop Schedule C, petitioner claimed business
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Last modified: May 25, 2011