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Section 274(d) supersedes the general rule of Cohan v.
Commissioner, supra, and prohibits the Court from estimating the
taxpayer’s expenses with respect to certain items. Sanford v.
Commissioner, 50 T.C. 823, 827-828 (1968), affd. per curiam 412
F.2d 201 (2d Cir. 1969). Section 274(d) imposes strict
substantiation requirements for, inter alia, traveling expenses
(including meals) and expenses with respect to listed property.
Listed property is defined in section 280F(d)(4) to include
computers and passenger automobiles.
To obtain deductions for a listed property, travel, meal, or
entertainment expense, a taxpayer must substantiate by adequate
records or sufficient evidence to corroborate the taxpayer’s own
testimony the amount of the expense, the time and place of the
use, the business purpose of the use, and, in the case of meals
and entertainment, the business relationship to the taxpayer of
each person entertained. Sec. 274(d); sec. 1.274-5T(b),
Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
Section 274 requires that expense be recorded at or near the time
when the expense is incurred. Sec. 1.274-5T(c)(1), Temporary
Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).
When a taxpayer’s records have been lost or destroyed
through circumstances beyond his control, he is entitled to
substantiate a deduction by reconstruction of his expenditures
through other credible evidence. Smith v. Commissioner, T.C.
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Last modified: March 27, 2008