John A. Walz, Jr. - Page 12

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               Deductions are strictly a matter of legislative grace.                 
          INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New                  
          Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).                    
          Taxpayers must substantiate claimed deductions.  Hradesky v.                
          Commissioner, 65 T.C. 87, 89 (1975), affd. per curium 540 F.2d              
          821 (5th Cir. 1976).  Moreover, taxpayers must keep sufficient              
          records to establish the amounts of the deductions.  Meneguzzo v.           
          Commissioner, 43 T.C. 824, 831 (1965); sec. 1.6001-1(a), Income             
          Tax Regs.  Generally, except as otherwise provided by section               
          274(d), when evidence shows that a taxpayer incurred a deductible           
          expense, but the exact amount cannot be determined, the Court may           
          approximate the amount, bearing heavily if it chooses against the           
          taxpayer whose inexactitude is of his own making.  Cohan v.                 
          Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930).  The Court,              
          however, must have some basis upon which an estimate can be made.           
          Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).                       
               Section 274(d) imposes stringent substantiation requirements           
          for the deduction of traveling expenses (including meals and                
          lodging while away from home), and certain listed property as               
          defined under section 280F(d)(4).  Listed property includes any             
          passenger automobile or other property used as a means of                   
          transportation.  Taxpayers must substantiate by adequate means              
          certain elements in order to claim deductions, such as the amount           
          of such expenditure, the date of the expenditure or use, the                






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