-34-
(1960). Second, the taxpayer must substantiate, by adequate
records or other sufficient evidence corroborating his or her own
statement, each of the following elements: (1) The amount of
each expenditure; (2) the time and place the expenditure was
incurred; (3) the business purpose of the expenditure; and (4) in
the case of entertainment expenses, the business relationship to
the taxpayer of the person entertained. See sec. 274(d);
Meridian Wood Prods. Co. v. United States, 725 F.2d 1183,
188-1191 (9th Cir. 1984); Johnston v. Commissioner, T.C. Memo.
1980-477, affd. 696 F.2d 1003 (9th Cir. 1982). In the case of
meals incurred while not traveling, substantiation by sufficient
evidence requires that the taxpayer establish the cost, amount,
time, place, and date of the expenditure by “direct evidence”
(e.g., a detailed writing); the taxpayer may establish business
purpose or business relationship by “circumstantial evidence”
corroborating the taxpayer’s own statement. Sec.
1.274-5T(c)(3)(i), Temporary Income Tax Regs., 49 Fed. Reg. 42704
(Oct. 24, 1984).
1. 1997
Of the Schedule C expenses disallowed for 1997, petitioners
challenge only the expenses for travel (to the extent of $5,978)
and other ($18,719).
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