Christopher D. and Kristie M. Farran - Page 22




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          5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6,           
          1985).  Adequate records include the maintenance of an account              
          book, diary, log, statement of expense, trip sheets, and/or other           
          documentary evidence, which, in combination, are sufficient to              
          establish each element of expenditure or use.  Sec. 1.274-                  
          5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov.           
          6, 1985).                                                                   
               Taxpayers may use a standard mileage rate established by the           
          Internal Revenue Service in lieu of substantiating the actual               
          amount of the expenditure.  See sec. 1.274-5(j)(2), Income Tax              
          Regs.  The standard mileage rate is generally multiplied by the             
          number of business miles traveled.  See Rev. Proc. 2002-61, 2002-           
          2 C.B. 616 (in effect for transportation expenses incurred during           
          2003).  The use of the standard mileage rate establishes only the           
          amount deemed expended with respect to the business use of a                
          passenger automobile.  Sec. 1.274-5(j)(2), Income Tax Regs.  The            
          taxpayer must still establish the actual mileage, the time, and             
          the business purpose of each use.  Nicely v. Commissioner, T.C.             
          Memo. 2006-172; sec. 1.274-5(j)(2), Income Tax Regs.                        
               Petitioners introduced a transcript from Dakota County                 
          Technical College indicating that Mr. Farran took a variety of              
          courses in 2003, including hydraulics, industrial electronics,              
          and motor controls.  Mr. Farran testified that he did not receive           
          a degree from Dakota County Technical College but testified that            







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