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Loan Association, 403 U.S. 345, 352 (1971); FMR Corp. & Subs. v.
Commissioner, 110 T.C. 402, 414 (1998).
Section 274(d) imposes strict substantiation requirements
for listed property as defined in section 280F(d)(4), gifts,
travel, entertainment, and meal expenses. Sec. 1.274-5T(a),
Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
Listed property includes passenger automobiles and any other
property used as a means of transportation. Sec.
280F(d)(4)(A)(i) and (ii). To obtain a deduction for a listed
property, travel, meal, or entertainment expense, a taxpayer must
substantiate by adequate records or sufficient evidence to
corroborate the taxpayer’s own testimony the amount of the
expense, the time and place of the use, the business purpose of
the use, and, in the case of entertainment, the business
relationship to the taxpayer of each person entertained. Sec.
274(d); sec. 1.274-5T(b), Temporary Income Tax Regs., 50 Fed.
Reg. 46014 (Nov. 6, 1985).
According to respondent, petitioners have not demonstrated
that WTS was a separate business activity in the years at issue.
Respondent therefore contends that none of petitioners’ claimed
deductions were paid or incurred in carrying on a trade or
business. Respondent notes that WTS and the corporation had
similar names and shared office space, that WTS had only one
client, and that WTS had no gross income, whereas the corporation
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