- 42 -
travel, meals and entertainment, and computer expenses, such
evidence necessarily falls short of meeting the heightened
substantiation requisites of section 274. The dearth of relevant
testimony compounds these shortcomings, and the disallowed or
questionable nature of the alleged underlying businesses raises
yet another barrier.
In addition, with respect to the $42,570 claimed as other
interest, certain further rules come into play. The record
establishes that $42,569.95 was incurred as margin interest on
the E Trade account. However, because the Court has concluded
that activity in the E Trade account must be attributed to
Ms. Quinn, and because no claim or showing has been made that
Ms. Quinn conducted a securities trading business, the
limitations of section 163(d) with respect to investment interest
would be applicable. Moreover, since petitioners have offered no
substantiation concerning any offsetting investment income, the
Court is not in a position to evaluate petitioners’ situation
within the strictures of section 163(d) and thereby to conclude
that any amount would be allowable for deduction in 2000 or
available for carryover in future years.
To summarize, petitioners are not entitled to claimed
expenses except as allowed by respondent as miscellaneous
deductions on Schedule A.
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Last modified: November 10, 2007