Cedric K. and Madelyn D. Nunn - Page 18




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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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