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Petitioners’ documentation does not establish the portion of the
mileage each day attributable to personal travel and is simply a
notation of the total daily odometer readings. Moreover,
petitioners’ log does not sufficiently describe the business
purpose of each meeting. Often, just a name or group is
identified. We therefore find that petitioners are not entitled
to any automobile expense deduction for 2003.
Hospitality Expenses
Petitioners claimed $1,411 of hospitality expenses for 2003.
Mr. Soholt testified he incurred these expenses when he treated
clients or potential clients to meals or coffee during their
meetings.
Entertainment expenses such as entertaining clients or
prospective clients at restaurants and coffee shops are subject
to the strict substantiation requirements. See sec. 274(d)(2);
Gaylord v. Commissioner, T.C. Memo. 2003-273; sec. 1.274-2(a),
Income Tax Regs. The taxpayer must show the expense was directly
related to the active conduct of the taxpayer’s trade or business
as well as substantiate the amount, time and place, business
purpose, and business relationship to the taxpayer of the persons
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