Barry L. Morris - Page 6

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          or customary within a particular trade, business, or industry and           
          is necessary if it is appropriate and helpful for the development           
          of the business.  Commissioner v. Heininger, 320 U.S. 467, 471              
          (1943); Deputy v. du Pont, 308 U.S. 488, 495 (1940).  In                    
          contrast, “personal, living, or family expenses” are generally              
          nondeductible.  See sec. 262(a).                                            
               Certain business expenses described in section 274(d) are              
          subject to strict substantiation rules that supersede the Cohan             
          doctrine.  Sanford v. Commissioner, 50 T.C. 823, 827-828 (1968),            
          affd. 412 F.2d 201 (2d Cir. 1969); sec. 1.274-5T(a), Temporary              
          Income Tax Regs., supra.  Section 274(d) applies to:  (1) Any               
          traveling expense, including meals and lodging away from home;              
          (2) entertainment, amusement, and recreational expenses; (3) any            
          expense for gifts; or (4) the use of “listed property”, as                  
          defined in section 280F(d)(4), including passenger automobiles.             
          To deduct such expenses, 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, which includes mileage in the case of automobiles; (2) the             
          time and place of the travel, entertainment, or use; (3) its                
          business purpose; and in the case of entertainment, (4) the                 
          business relationship to the taxpayer of each expenditure or use.           
          Sec. 274(d) (flush language).                                               

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