- 42 -
entitled to a section 162(a) deduction, a taxpayer must provide
evidence to establish a sufficient connection between the
deduction and his trade or business. Gorman v. Commissioner,
T.C. Memo. 1986-344.
Certain expenses that otherwise qualify for deduction under
section 162(a) require enhanced, more specified substantiation
under section 274. These include travel, food, and entertainment
expenses. For these items, taxpayers must show that an expense
was “directly related” to the business activity, and must provide
the business purpose, amount, and time and place of the
expenditure. Sec. 274(a); sec. 1.274-5T(b)(2), Temporary Income
Tax Regs. 50 Fed. Reg. 46014 (Nov. 6, 1985). In order to
substantiate these types of deductions by means of adequate
records, a taxpayer must 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).
If the allowance of a deduction claimed on a return is
challenged by respondent, respondent is not obliged to concede
the taxpayer’s entitlement to the deduction until adequate
substantiation for the deduction has been provided by the
Page: Previous 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 Next
Last modified: November 10, 2007