Gregory C. and Phyllis Lam - Page 4

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          depreciation expense of $2,810, and other expenses of $1,586.  On           
          the Schedule C pertaining to petitioner’s construction business,            
          petitioner reported gross income of $1,000 and a net loss of                
          $10,763.  Respondent disallowed deductions claimed on that                  
          Schedule C for car and truck expenses of $1,356, depreciation               
          expense of $1,501, insurance expense of $1,422, and other                   
          expenses of $5,326.                                                         
               Respondent contends that the documents offered by petitioner           
          provide insufficient evidence to support the claimed deductions.            
          We agree.  Section 7491 is inapplicable here because petitioners            
          have not complied with the requisite substantiation requirements.           
          Sec. 7491(a)(2)(A).                                                         
               Section 162(a) allows a deduction for ordinary and necessary           
          expenses paid or incurred during the taxable year in carrying on            
          a trade or business.  Taxpayers, however, must maintain                     
          sufficient records to establish the amount of claimed deductions.           
          Sec. 6001; sec. 1.6001-1(a), Income Tax Regs.                               
               Section 274(d)(4) imposes stringent substantiation                     
          requirements for the deduction of certain listed property defined           
          under section 280F(d)(4).  Listed property includes, inter alia,            
          automobiles and computers.  Sec. 280F(d)(4)(A).  To deduct                  
          expenses for such listed property, including depreciation,                  
          taxpayers must substantiate by adequate records the following               
          items:  The amount of each separate expenditure, the listed                 

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