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offset cost of goods sold and expenses from the Autos Oti-Juarez
operation against the income from Autos Oti-Juarez. Respondent
contends that petitioners have failed to substantiate the amounts
of the claimed items. Petitioners argue that the Mexican income
tax returns are sufficient evidence when coupled with
petitioner’s testimony to substantiate these amounts.
Petitioners bear the burden of proving that they are
entitled to the claimed cost of goods sold and deductions. Rule
142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992);
Rockwell v. Commissioner, 512 F.2d 882, 886 (9th Cir. 1975),
affg. T.C. Memo. 1972-133. Petitioners' Mexican tax returns are
not evidence of the amounts of these items. Cf. Wilkinson v.
Commissioner, 71 T.C. 633, 639 (1979). If petitioners can
establish that some expenditures have been made, absolute
certainty is not required, and the Court may approximate the
allowable expenditures. Cohan v. Commissioner, 39 F.2d 540, 543-
544 (2d Cir. 1930); see Cooper v. Commissioner, T.C. Memo. 1989-
82; Fazio v. Commissioner, T.C. Memo. 1982-177. However,
petitioners have offered nothing other than the amounts that they
claimed on their Mexican returns.
The revenue agent who conducted an audit of Autos Oti-Texas
testified that petitioner stated during the examination that cars
purchased in the United States were driven to Mexico. Petitioner
could not recall or even approximate how many cars were sold by
Autos Oti-Juarez during the years in issue. No records from
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