Doug,a self-employed consultant,has been a firm believer in maintaining a paperless office.Unfortunately,he recently lost all of his business records in a ransomware attack,and his backup system was also compromised.Which of the following tax doctrines and cases should Doug investigate to better understand substantiation requirements for business expenses?

Question

Quizplus · Accepted Answer

Doug should investigate the Cohan rule, which allows for an estimate of business expenses as long as they are documented and reasonable. This may provide a way for him to reconstruct some of his lost records and substantiate his expenses for tax purposes. The other options do not relate to the substantiation of expenses. The tax benefit rule deals with the tax treatment of refunds or recoveries of previously deducted amounts. The Corn Products doctrine relates to the allocation of costs between business and personal use of assets. The Arkansas Best doctrine deals with whether payments to shareholders can be deducted as compensation expenses.

Doug,a Self-Employed Consultant,has Been a Firm Believer in Maintaining a Paperless