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U.S. 435 (1934). Taxpayers are required to maintain records that
are sufficient to enable the Commissioner to determine their
correct tax liability. See sec. 6001; Meneguzzo v. Commissioner,
43 T.C. 824, 831-832 (1965); sec. 1.6001-1(a), Income Tax Regs.
Moreover, a taxpayer who claims a deduction bears the burden of
substantiating the amount and purpose of the item claimed.
Hradesky v. Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam
540 F.2d 821 (5th Cir. 1976); sec. 1.6001-1(a), Income Tax Regs.
Under certain circumstances, however, if a taxpayer
establishes the entitlement to a deduction but does not establish
the amount of the deduction, we may estimate the amount
allowable, Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930), if the taxpayer provides some rational basis upon which an
estimate may be made, Vanicek v. Commissioner, 85 T.C. 731, 743
(1985). In estimating the amount allowable, we bear heavily upon
the taxpayers, whose inexactitude is of their own making. Cohan
v. Commissioner, supra at 543-544.
Respondent contends that petitioners are not entitled to any
deductions beyond the amounts allowed in the notice of deficiency
and in the stipulations. Petitioners, however, contend that they
are entitled to all of the deductions that they claimed on their
return. As all of their records were destroyed by fire,
petitioners seek to establish their entitlement to the disallowed
deductions through their testimony only.
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