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the time and place of the expense, the business purpose of the
expense, and the business relationship to the taxpayer of the
persons involved in the expense. Sec. 274(d). Expenses subject
to strict substantiation may not be estimated under the Cohan
rule. Sanford v. Commissioner, 50 T.C. at 827.
Cellular Phone Expenses
Petitioners claimed $880 of cellular phone expenses for
2003. Cellular phones are included in the definition of “listed
property” for purposes of section 274(d)(4) and are thus subject
to the strict substantiation requirements. Sec.
280F(d)(4)(A)(v); Gaylord v. Commissioner, T.C. Memo. 2003-273.
A taxpayer must establish the amount of business use and the
amount of total use for the property to substantiate the amount
of expenses for listed property. Nitschke v. Commissioner, T.C.
Memo. 2000-230; sec. 1.274-5T(b)(6)(i)(B), Temporary Income Tax
Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).
Petitioners introduced their cellular phone records at trial
and acknowledged which calls were personal. Mr. Soholt testified
that he used his cellular phone to call home to check his voice
mail, speak to his wife, and also to call MetLife message centers
as well as make other business calls. Mrs. Soholt used her
cellular phone when she was on reserve status so that she could
respond to NWA within the required 20-minute period.
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Last modified: November 10, 2007