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underlying documentation. Petitioner concedes that it had
unreported service income, but denies that its failure to report
it was negligent.
When a taxpayer contests the Commissioner's determination,
the burden of proof is ordinarily on the taxpayer to show that
the Commissioner's determination is in error. Rule 142(a). The
taxpayer's burden of proof includes the burden of substantiation.
Nevertheless, where the taxpayer is unable to substantiate
expenses through adequate records or other proof, the Court may
estimate the deductible amount, if some deductible amount is
suggested by other evidence, under the so-called Cohan rule,
bearing heavily, if the Court chooses, upon the taxpayer whose
inexactitude is of its own making. Cohan v. Commissioner, 39
F.2d 540 (2d Cir. 1930). The Cohan rule does not apply to
travel, entertainment, gifts, and listed property. Sec. 274(d).
Petitioner's net operating loss deductions for 1989 and
1990, for present purposes, consist of four parts: (1) NII's
depreciation deductions, (2) NII's interest deductions, (3) NII's
other deductions, and (4) losses incurred by NII's subsidiaries.
Our determination of petitioner's unadjusted basis in the Burke
Property will determine not only the depreciation deductions for
the net operating losses in prior years, but will also establish
petitioner's entitlement to these deductions in the current
years. Furthermore, our resolution of the deductibility of the
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