Scott Owen Schubert & Amy K. Moore - Page 7

                                        - 6 -                                         
               It is also well established that the taxpayer must keep                
          records sufficient to establish the amount of the items required            
          to be shown on his Federal income tax return.  See sec. 6001;               
          sec. 1.6001-1(a), (e), Income Tax Regs.  But if the taxpayer                
          establishes that he has incurred a deductible expense yet is                
          unable to substantiate the exact amount, the Court may estimate             
          the deductible amount in some circumstances (the Cohan rule).               
          See Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930).             
               A.  Claimed Business Expenses                                          
               Mr. Schubert testified that he reduced the total $15,900               
          claimed as businesses expenses to $11,508 because “I omitted a              
          lot of these extra –- the fluff”; i.e., the job search.  Mr.                
          Schubert did not explain the nature of their business expenses,4            
          and no receipts or other documents were submitted into evidence             
          to substantiate the expenditures.  Respondent’s determination is            
               B.  Vehicle Expenses                                                   
               Pursuant to section 274(d), the Court cannot estimate a                
          taxpayer’s expenses with respect to certain items.  See Sanford             

               4  Mr. Schubert briefly referred to the remaining $11,508 in           
          business expenses as a “home office expense”.  Whether the                  
          expenses are home office expenses under sec. 280A(c) is                     
          uncertain.  Nevertheless, the expenditures would not be                     
          deductible under sec. 280A(c) since Mr. Schubert has not shown              
          that a portion of their residence was exclusively used on a                 
          regular basis as their principal place of business and that the             
          exclusive use was for their employers’ convenience.  See sec.               

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next 

Last modified: March 27, 2008