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Section 162 generally allows a deduction for ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. Generally, no deduction is
allowed for personal, living, or family expenses, nor is
deduction proper for expenditures that are properly categorized
as capital expenditures. See secs. 262 and 263. The taxpayer
bears the burden of proving that he or she is entitled to the
deduction. See Rule 142(a); Welch v. Helvering, 290 U.S. 111
(1933).6
When a taxpayer establishes that he or she has incurred
deductible expenses but is unable to substantiate the exact
amounts, we can estimate the deductible amount, but only if the
taxpayer presents sufficient evidence to establish a rational
basis for making the estimate. See Cohan v. Commissioner, supra
at 543-544; Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).
In estimating the amount allowable, we bear heavily upon the
taxpayer where the inexactitude of the record is of his or her
own making. See Cohan v. Commissioner, supra at 544.
It is well established that the Tax Court may permit a
taxpayer to substantiate deductions through secondary evidence
where the underlying documents have been unintentionally lost or
destroyed. Boyd v. Commissioner, 122 T.C. 305, 320-321 (2004);
6 Petitioners do not contend, nor have they shown, that
sec. 7491(a), which shifts the burden of proof to the
Commissioner in some circumstances, applies to this case.
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