- 17 -
expenses, trip sheet, or similar record, and documentary evidence
which, in combination, are sufficient to establish each element
of each expense or use. Sec. 1.274-5T(c)(2)(i), Temporary Income
Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). Thus, no deduction
for expenses under section 274(d) may be allowed on the basis of
any approximation or the unsupported testimony of the taxpayer.
See, e.g., Murata v. Commissioner, T.C. Memo. 1996-321; Golden v.
Commissioner, T.C. Memo. 1993-602.
When a taxpayer’s records have been destroyed or lost
because of circumstances beyond his control, however, he is
generally allowed to substantiate the deductions by a reasonable
reconstruction of the expenditures or uses. Sec. 1.274-5T(c)(5),
Temporary Income Tax Regs., 50 Fed. Reg. 46022 (Nov. 6, 1987).
If no other documentation is available, we may, although we are
not required to do so, accept the taxpayer’s testimony to
substantiate the deduction. See Boyd v. Commissioner, 122 T.C.
305, 320 (2004); Watson v. Commissioner, T.C. Memo. 1988-29.
Having observed petitioners’ demeanors at trial, we find their
testimony not to be forthright and credible regarding the
substantiation of the deductions.
At trial, the Court advised petitioners on several occasions
that the purpose of the trial was for petitioners to substantiate
the deductions by placing facts on the record that the Court can
look to in rendering its decision. Other than the parties’
stipulations, petitioners failed to introduce further probative
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011