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regulations state: “it is to the advantage of taxpayers who may
be called upon to substantiate expense account information to
maintain as adequate and detailed records of * * * business
expenses as practical since the burden of proof is upon the
taxpayer”. Sec. 1.162-17(d)(2), Income Tax Regs. The
regulations further suggest that the taxpayer keep a diary or
contemporaneous record of expenditures. Petitioner did neither.
Although he claimed $1,500 in expenses for business meetings,
petitioner offered no testimony or written documentation
substantiating these expenses. Therefore, the Court sustains
respondent on this issue.
As to the deduction for telephone expenses, petitioner’s
testimony was vague with respect to his cellular phone bills and
offered only minimal written documentation.10 Cellular phones
are classified as “listed property” and thus subject to strict
substantiation requirements. Secs. 274(d)(4), 280F(d)(4)(A)(v).
Therefore, in order to deduct use of a cellular phone as a
business expense, the taxpayer must produce adequate records or
other evidence showing (1) the amount of the expenses; (2) the
time and place of the use; (3) the business purpose; and (4) the
business relationship to the property. Petitioner failed to meet
any of these requirements; therefore, the Court holds for
10 Petitioner’s production of a single cellular telephone
bill resulted in respondent's conceding $579.44 of petitioner’s
miscellaneous Schedule C deduction.
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Last modified: May 25, 2011