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B. Employee Business Expenses
Section 162(a) allows a taxpayer to deduct all the ordinary
and necessary expenses paid or incurred during the taxable year
in carrying on any trade or business, including the trade or
business of performing services as an employee. Primuth v.
Commissioner, 54 T.C. 374, 377-378 (1970). As noted, however,
section 262 prohibits a deduction for expenses that are personal
in nature. The statutory prohibition of section 262 regarding
the deductibility of personal expenses takes precedence over the
allowance provision of section 162, Sharon v. Commissioner, 66
T.C. 515, 522-525 (1976), affd. 591 F.2d 1273 (9th Cir. 1978),
and a taxpayer must demonstrate that the expenses at issue were
different from or in excess of what he would have spent for
personal purposes, Sutter v. Commissioner, 21 T.C. 170, 173-174
(1953).9
9 In addition to satisfying the criteria for deductibility
under sec. 162, certain categories of expenses, including
passenger automobiles, traveling, and meals and entertainment,
must also satisfy the strict substantiation requirements of sec.
274(d) before those expenses will be allowed as deductions. See
secs. 274(d), 280F(d)(4)(A)(i). Under these rules, a taxpayer
must substantiate the amount, time, place, and business purpose
of the expenditures and must provide adequate records or
sufficient evidence to corroborate his own statement. See sec.
274(d); sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed.
Reg. 46016 (Nov. 6, 1985). In order to meet the “adequate
records” requirements, a taxpayer is to maintain an account book,
diary, statement of expenses, or similar record and documentary
evidence (such as receipts, paid bills, or similar evidence)
(continued...)
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