Alvin S. Kanofsky - Page 8

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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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