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the gift; (3) the business purpose of the expense; and (4) the
business relationship to the taxpayer of the persons entertained
or receiving the gift. The substantiation requirements of
section 274(d) are designed to encourage taxpayers to maintain
records and documentary evidence to substantiate each element of
the expense sought to be deducted. Sec. 1.274-5T(c)(1),
Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).
The term “listed property” is defined in section 280F(d)(4) and
includes any passenger vehicle, any other property used as a
means of transportation, and computers. Sec. 280F(d)(4)(A)(i),
(ii), (iv).
Under section 274(d), substantiation by means of adequate
records requires a taxpayer to maintain a diary, a log, or a
similar record, and documentary evidence that, in combination,
are sufficient to establish each element of each expenditure or
use. Sec. 1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed.
Reg. 46017 (Nov. 6, 1985). To be adequate, a record must
generally be written, and each element of an expenditure or use
that must be substantiated should be recorded at or near the time
of that expenditure or use. Sec. 1.274-5T(c)(2)(ii)(A),
Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985).
The primary evidence that petitioners paid or incurred the
expenses related to their real estate activity consists of
petitioner’s testimony and spreadsheets that she compiled for
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