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1. Passenger Automobile Expenses
To substantiate the adequate records requirement for a
passenger automobile, “a taxpayer shall maintain an account book,
diary, log, statement of expense, trip sheets, or similar record
* * * which, in combination, are sufficient to establish each
element of an expenditure”. Sec. 1.274-5T(c)(2)(i), Temporary
Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985).3 Based on a
reconstructed log provided by Mr. Brown, respondent allowed a
total of 7,562 business miles on a leased 1997 Acura, and
accordingly allowed a deduction for a percentage of the vehicle’s
lease payment, insurance, and gasoline expenses. Mr. Brown did
not provide any additional account book, diary, log, statement of
expense, trip sheets, or similar record for the remaining amounts
of his vehicle expenses at trial. Mr. Brown testified to these
expenses with estimations.
We are generally permitted to approximate the amount of an
expense if it is deductible but unsubstantiated, bearing heavily
against the taxpayer whose inexactitude is of his or her own
making. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). The estimate, however, must have a reasonable evidentiary
basis. Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985). No
deduction for expenses under section 274(d), however, may be
3 Temporary regulations are entitled to the same weight
as final regulations. Peterson Marital Trust v. Commissioner,
102 T.C. 790, 797 (1994), affd. 78 F.3d 795 (2d Cir. 1996).
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Last modified: May 25, 2011