Tax Court Corner: Significance of the ‘Cohan Rule’

Typically, when a taxpayer is audited by the IRS, the burden of proof falls on the taxpayer. In order to prove income and expenses, the US Tax Court has ruled that the taxpayer must keep “contemporaneous” records, per Reg. § 1.6001-1. But what if the taxpayer has some sort of accident, an act of God, or something else happens where they can’t produce contemporaneous records?

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