- 33 -
establishes that deductible expenses have been paid, but he is
unable to substantiate the precise amount, the court may estimate
the amount of such deduction bearing heavily against the
taxpayer. Cohan v. Commissioner, 39 F.2d 540, 543-44 (2d Cir.
1930). However, the court cannot make such an estimate unless
the taxpayer presents sufficient evidence to provide a reasonable
basis upon which to make the estimate. Vanicek v. Commissioner,
85 T.C. 731, 743 (1985).
The court’s ability to estimate reasonably the amount of a
deduction is curtailed in the case of certain classes of
expenses. Section 274(d) limits the Court’s estimating ability.
Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per
curiam 412 F.2d 201 (2d Cir. 1969); see Golden v. Commissioner,
T.C. Memo. 1993-602. Section 274(d) provides:
SEC. 274(d) Substantiation Required.--No deduction or
credit shall be allowed--
(1) under section 162 or 212 for any traveling
expense (including meals and lodging while away from
home),
(2) for any item with respect to an activity which
is of a type generally considered to constitute
entertainment, amusement, or recreation * * *
(3) for any expense for gifts, or
(4) with respect to any listed property (as
defined in section 280F(d)(4)),
unless the taxpayer substantiates by adequate records
or by sufficient evidence corroborating the taxpayer’s
own statement * * *. [Emphasis added.]
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011