- 17 -
or the unsupported testimony of the taxpayer. E.g., Golden v.
Commissioner, T.C. Memo. 1993-602. In other words, in the
absence of adequate records or sufficient evidence corroborating
the taxpayer’s own statement, any deduction that is subject to
the stringent substantiation requirements of section 274(d) is
proscribed. These stringent substantiation requirements are
designed to encourage taxpayers to maintain records, together
with documentary evidence substantiating each element of the
expense to be deducted. Sec. 1.274-5T(c)(1), Temporary Income
Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985).
In addition to the strict substantiation requirements of
section 274(d), a deduction for foreign travel is subject to the
allocation requirements of section 274(c). E.g., Shackelford v.
Commissioner, T.C. Memo. 1995-484; Hilton v. Commissioner, T.C.
Memo. 1990-11. Thus, section 274(c) generally requires the
proration of foreign travel expenses between business and
nonbusiness expenses.
With the foregoing general principles in mind, we turn now
to the specific Schedule C deductions in issue.
2. Depreciation, Office Furnishings, EDI Fee, etc.
On his Schedule C for 1999, petitioner claimed a deduction
for “EDI fee, advertising, telephone, etc.” in the amount of
$9,113; of this amount, respondent allowed $1,489 and disallowed
the balance. On his Schedule C for 2000, petitioner claimed a
deduction for used file cabinets, chairs, and tables in the
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011