Gerald L. and Joy M. Zeidler - Page 19

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               Petitioners offered at trial, to establish payment of the              
          above amounts, three checks totaling $4,702.  However, all three            
          checks bear notations that all or portions of the checks are for            
          taxes.  No credible documentary evidence was presented that would           
          satisfy the Court that petitioners paid any amounts to acquire              
          the property.  The court is satisfied, however, that petitioners            
          have record title to the property; that the property was held for           
          residential rental purposes; and that petitioners have been                 
          reporting the income and expenses for this property for Federal             
          income tax purposes.  When certain claimed expenses are not                 
          adequately substantiated, but the Court is satisfied from the               
          record that expenses were in fact incurred by the taxpayer, and a           
          basis upon which an estimate of the expenses can be made, this              
          Court may determine and allow the taxpayer a deduction for the              
          expense claimed.  Cohan v. Commissioner, 39 F.2d 540, 544 (2d               
          Cir. 1930).  The Court, accordingly, estimates that petitioners             
          paid $8,250 for the house and improvements and, assuming a useful           
          life of 27.5 years (which respondent does not dispute), allows              
          petitioners a depreciation deduction of $300 for each of the                
          years at issue.8                                                            

               For 1992, the rental activity of the Sister Bay property was           
          reported by JMZ Management, Inc., a corporation owned by                    
          petitioners, an S corporation under section 1361.  On their 1992            
          Federal income tax return, petitioners reported a loss of $3,567            
          from JMZ Management, Inc., which included a depreciation                    
          deduction of $1,920 claimed by JMZ Management, Inc., on Form                

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