- 29 -
business, and its failure to substantiate that it had paid or
incurred any expenses. In their respective petitions, neither
the J. Shirleys nor Alexion Trust has averred any facts
supporting a claim to the deductions in question. The only
expense of which we have any knowledge is Alexion Trust’s claim
of a rental expense of $42,000 paid to Caralan Trust for property
used by the J. Shirleys as their personal residence. We fail to
understand the basis of that deduction to Alexion Trust. Indeed,
the J. Shirleys have shown us so little about the consulting
activities performed by the J. Shirleys that we are unable to
conclude that, in performing those activities, they incurred any
deductible expenses. While it is within the purview of this
Court to estimate the amount of allowable deductions where there
is evidence that deductible expenses were incurred, Cohan v.
Commissioner, 39 F.2d 540 (2d Cir. 1930), we must have some basis
on which an estimate may be made, Vanicek v. Commissioner,
85 T.C. 731, 742-743 (1985); see also Norgaard v. Commissioner,
939 F.2d 874, 879 (9th Cir. 1991). Because the record contains
no evidence upon which we could base such an estimate, we
conclude that the J. Shirleys have failed to prove that they are
entitled to claim any deductions under section 162(a) or any
other section.
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011