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Petitioners have not met the generally applicable
substantiation requirements of section 274. Petitioners have not
presented documentary evidence such as receipts, paid bills, or
other direct evidence of the required elements. Petitioners
failed to present any independent corroboration of Dr. Rinker’s
statements which would substantiate the required elements of Dr.
her business travel deductions. Petitioners have therefore
failed to substantiate the claimed deductions with either
“adequate records” or “sufficient evidence corroborating the
taxpayer’s own statement.” However, petitioners argue that
because Mr. Hertz lost their tax records for 1999, they should be
allowed to substantiate Dr. Rinker’s business travel expenses
under section 1.274-5T(c)(5), Temporary Income Tax Regs., supra.
We agree.
Section 1.274-5T(c)(5), Temporary Income Tax Regs., supra,
provides taxpayers with a method of substantiating their section
274 deductions when their records have been lost because of
circumstances beyond their control. Where a taxpayer establishes
that the failure to produce adequate records is due to the loss
of those records through circumstances beyond the taxpayer’s
control, the taxpayer may substantiate a deduction by reasonable
reconstruction of his expenditures or use. Id. If documentation
is unavailable, the Court may, although it is not required to do
so, accept the taxpayer’s testimony to substantiate the
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