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insistence that all of the traveling expenses were exclusively
for a business purpose, the strict substantiation requirements of
section 274(d) cannot be ignored. In addition, petitioner
admitted at trial that her two minor children accompanied her on
a claimed business trip to Hawaii. Section 274(m)(3) provides
that, in general, no deduction is permitted for any traveling
expenses paid for dependents accompanying a taxpayer on business
travel. Accordingly, respondent’s determination disallowing the
claimed deduction for traveling expenses is sustained.
Meals and Entertainment
Petitioners claimed a Schedule C deduction of $1,940 for
meals and entertainment.9 The spreadsheet petitioners provided
for these expenses listed the dates and locations of the meals,
along with the clients’ names and a very brief description of
each client (i.e., “prospective investor” or “investment
opportunity”). To support the amounts on the spreadsheet,
petitioners included a number of monthly credit card statements
and a few receipts. As for many of their other claimed Schedule
C expenses, no receipts or other documentary evidence was
provided for those expenses paid in cash.
Pursuant to section 274(d), a taxpayer, with respect to
meals and entertainment, must substantiate the amount, time,
9Petitioners claimed meal expenses totaled $3,881, which
they reduced by 50 percent as required by sec. 274(n).
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Last modified: November 10, 2007