- 31 -
computers and passenger automobiles. To deduct such expenses,
the taxpayer must substantiate by adequate records or sufficient
evidence to corroborate the taxpayer’s own testimony: (1) The
amount of the expenditure or use, which includes mileage in the
case of automobiles; (2) the time and place of the travel,
entertainment, or use; (3) its business purpose; and in the case
of entertainment, (4) the business relationship to the taxpayer
of each expenditure or use. Sec. 274(d)(4).
To satisfy the adequate records requirement of section 274,
a taxpayer must maintain records and documentary evidence that in
combination are sufficient to establish each element of an
expenditure or use. Sec. 1.274-5T(c)(2), Temporary Income Tax
Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). Although a
contemporaneous log is not required, corroborative evidence to
support a taxpayer’s reconstruction of the elements of the
expenditure or use must have “a high degree of probative value to
elevate such statement” to the level of credibility of a
contemporaneous record. Sec. 1.274-5T(c)(1), Temporary Income
Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
In lieu of substantiating the actual amount of any
expenditure relating to the business use of a passenger
automobile, a taxpayer may use a standard mileage rate as
established by the IRS. See sec. 1.274-5(j)(2), Income Tax Regs.
The standard mileage rate is to be multiplied by the number of
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Next
Last modified: November 10, 2007