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Ordinarily, a taxpayer is permitted to deduct the ordinary
and necessary expenses that he pays or incurs during the taxable
year in carrying on a trade or business. Sec. 162(a). A
taxpayer, however, is required to maintain records sufficient to
establish the amounts of his deductions. Sec. 6001; sec. 1.6001-
1(a), Income Tax Regs.
When a taxpayer establishes that he paid or incurred a
deductible expense but does not establish the amount of the
deduction, we may estimate the amount allowable in certain
circumstances. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d
Cir. 1930); Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).
There must be sufficient evidence in the record, however, to
permit us to conclude that a deductible expense was paid or
incurred in at least the amount allowed. Williams v. United
States, 245 F.2d 559, 560 (5th Cir. 1957).
In addition to satisfying the criteria for deductibility
under section 162, certain categories of expenses must also
satisfy the strict substantiation requirements of section 274(d)
in order for a deduction to be allowed. We may not use the Cohan
doctrine to estimate expenses covered by section 274(d). See
Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per
11(...continued)
commenced after July 22, 1998).
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