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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 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
substantiation to support it. Sec. 1.274-5T(a), Temporary Income
Tax Regs., supra.
At trial, petitioners failed to substantiate any of the
amounts claimed on the Schedules C that were disallowed in the
notice of deficiency. The Court provided petitioners ample time
to present evidence establishing the correctness of amounts
claimed on the Schedules C. However, petitioners presented
absolutely no evidence to establish that any of their documents
corresponded directly to amounts claimed on the Schedules C. In
addition, Mr. Nunn presented false invoices and testimony lacking
credibility and truthfulness. Therefore, the Court was unable to
apply the Cohan doctrine to the applicable items because there
was no reasonable evidentiary basis to form an estimate of
whether any of those items were allowable.
Instead of providing evidence in an attempt to substantiate
the amounts reported, petitioners chose to rely primarily on
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