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bears heavily on the taxpayer. Ellis Banking Corp. v.
Commissioner, 688 F.2d 1376, 1383 (11th Cir. 1982), affg. in part
and remanding in part T.C. Memo. 1981-123; Cohan v. Commissioner,
39 F.2d 540, 544 (2d Cir. 1930).
Where taxpayers establish that they are entitled to
deductions for trade or business expenses but are unable to
adequately substantiate the exact amount of the expenses, we may
estimate the amount of the deductible expenses. Cohan v.
Commissioner, supra at 543-544. In order, however, for us to
estimate the amount of deductible expenses, taxpayers have an
obligation to provide some rational basis upon which reasonable
estimates may be made. Vanicek v. Commissioner, 85 T.C. 731, 743
(1985).
In this case, with regard to claimed wages of $24,556 for
1990 and $25,293 for 1991 that are still in dispute, both
petitioner and the warehouse foreman testified as to each of the
employees whose claimed wages are still in dispute. They
testified as to the employment relationship of each of these
employees with petitioner’s scrap metal recycling business during
1990 and 1991 and to the length of time employed. We find the
testimony of petitioner and of the foreman to be credible as to
these claimed employee wages. The wages paid to the employees
are also generally supported by the daily cash reports and
computer spreadsheets that are in evidence.
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