- 12 - B. Business Expense Deductions Respondent disallowed certain deductions petitioners claimed on Schedule C, specifically: $3,463 for meals and entertainment expenses; $12,347 for travel expenses; $7,862 for supplies; and $17,199 for car and truck expenses. Respondent disallowed each of these deductions in full but allowed the remaining $26,403 petitioners claimed as business expenses. As a general rule, section 162(a) authorizes a deduction for “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business”. Taxpayers are required to maintain records sufficient to substantiate each claimed deduction. Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975), affd. 540 F.2d 821 (5th Cir. 1976); sec. 1.6001-1(a), Income Tax Regs. When a taxpayer adequately establishes that he paid or incurred a deductible expense but does not establish the precise amount, we may in some circumstances estimate the allowable deduction, bearing heavily against the taxpayer whose inexactitude is of his own making. Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir. 1930). We can estimate the amount of the deductible expense only when the taxpayer produces evidence sufficient to establish a rational basis upon which the estimate can be made. Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 NextLast modified: March 27, 2008