James M. and Ruth J. Riley - Page 25

                                       - 24 -                                         
               not made at or near the time of the expenditure or use                 
               must have a high degree of probative value to elevate                  
               such statement and evidence to the level of credibility                
               reflected by a record made at or near the time of the                  
               expenditure or use supported by sufficient documentary                 
               evidence.  The substantiation requirements of section                  
               274(d) are designed to encourage taxpayers to maintain                 
               the records, together with documentary evidence, as                    
               provided in paragraph (c)(2) of this section [1.274-5T,                
               Temporary Income Tax Regs.].                                           
          Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg.               
          46016-46017 (Nov. 6, 1985).                                                 
               Respondent concedes that petitioners have substantiated the            
          following travel expenses for fuel, food, and lodging:                      

               Item                       2001         2002       2003                
               Fuel                    $303.75      $168.22     $264.84               
               Food                    87.39        82.73       120.17                
               Motel                   -0-           689.05     -0-                   
               Total travel            391.14       940.00      385.01                
               2.   Alternative Substantiation Methods                                
               Petitioners assert that they are entitled to use the per               
          diem rates to substantiate their travel expenses.  Section 274(d)           
          permits the Secretary to provide by regulations that some or all            
          of the substantiation requirements do not apply in the case of an           
          expense that does not exceed an amount prescribed by the                    
          regulations.  Pursuant to section 1.274-5(g), Income Tax Regs.,             
          the Commissioner is authorized to prescribe rules in                        
          pronouncements of general applicability under which allowances              
          for certain types of ordinary and necessary expenses for                    

Page:  Previous  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  Next

Last modified: May 25, 2011