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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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Last modified: March 27, 2008