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payments for: (1) Wages of temporary employees, (2) meals
provided to Hamalee's employees on its premises, and (3) fuel and
tolls. Petitioners generally rely on the testimony of Ms. Chong
to support their allegations of these unreported expenditures and
the amounts thereof. Hamalee has no records to support these
purported expenditures, and petitioners ask the Court to estimate
the expenditures' dollar amounts.
We decline petitioners' invitation to estimate the amount of
Hamalee's claimed expenditures. Although petitioners are correct
in that we may estimate the amount of unsubstantiated expenses
when we have a basis to do so, Cohan v. Commissioner, 39 F.2d 540
(2d Cir. 1930), we do not have a sufficient basis to make an
estimate here. See Vanicek v. Commissioner, 85 T.C. 731, 742-743
(1985). In fact, the record does not even persuade us that
Hamalee incurred the claimed expenditures, or, if it had, that
these expenditures were ordinary and necessary business expenses
under section 162. Whereas petitioners would have us find, based
solely on the testimony of Ms. Chong, that Hamalee incurred the
purported expenditures in the amounts that she so claimed, we
refuse to do so. Ms. Chong's testimony on this issue is
unsupported by the record, and we find it to be somewhat
incredible. We will not rely on it. LaBow v. Commissioner,
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