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business expense must be substantiated, and the taxpayer is
required to maintain records sufficient to establish that he or
she is entitled to the claimed deduction. Sec. 6001; Hradesky v.
Commissioner, 65 T.C. 87, 89-90 (1975), affd. per curiam 540 F.2d
821 (5th Cir. 1976); sec. 1.6001-1(a), Income Tax Regs. In some
circumstances, if a taxpayer establishes that he or she incurred
a deductible expense but cannot substantiate it in full, the
Court may approximate the amount of an allowable deduction. See
Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930) (the
Cohan rule). The approximation, however, must have some
evidentiary basis. Vanicek v. Commissioner, 85 T.C. 731, 742-743
(1985). With respect to certain business and other expenses
specified in section 274(d), more stringent substantiation
requirements apply. Those requirements supersede the application
of the Cohan rule. See sec. 1.274-5T(a), Temporary Income Tax
Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
C. Discussion
1. 1996-98
During the trial, petitioner tried to place in evidence a
number of documents in support of his argument that he incurred
deductible business expenses during the years at issue. Most of
those documents were not admitted into evidence, either because
they constituted inadmissable hearsay, or because their admission
into evidence would have violated the Court’s standing pretrial
order dated October 8, 2004, and, in particular, the so-called
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