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Certain business deductions described in section 274 are
subject to rules of substantiation that supersede the doctrine in
Cohan v. Commissioner, supra. See sec. 1.274-5T(c)(2), Temporary
Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6, 1985). Section
274(d) provides that no deduction shall be allowed with respect
to: (a) Any traveling expense, including meals and lodging away
from home; (b) any item related to an activity of a type
considered to be entertainment, amusement, or recreation; or (c)
the use of any “listed property”, as defined in section
280F(d)(4),1 unless the taxpayer substantiates certain elements.
For an expense described in one of the above categories, the
taxpayer must substantiate by adequate records or sufficient
evidence to corroborate the taxpayer’s own testimony: (1) The
amount of the expenditure or use based on the appropriate measure
(mileage may be used in the case of automobiles); (2) the time
and place of the expenditure or use; (3) the business purpose of
the expenditure or use; and in the case of entertainment, (4) the
business relationship to the taxpayer of each expenditure or use.
See sec. 274(d).
To meet the adequate records requirements of section 274(d),
a taxpayer must maintain some form of records and documentary
1“Listed property” includes any “passenger automobile”.
Sec. 280F(d)(4)(A)(i). A passenger automobile includes any truck
rated at 6,000 pounds gross vehicle weight or less. Sec.
280F(d)(5)(A).
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Last modified: November 10, 2007