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Section 163(a) generally permits taxpayers to deduct
interest paid or accrued within the taxable year on indebtedness.
Sec. 1.163-1(a), Income Tax Regs.; see also Eboli v.
Commissioner, 93 T.C. 123, 129 (1989).
Petitioner presented no documentation to substantiate the
interest deductions claimed, except for $1,010 which respondent
conceded for 1979. Petitioner testified that he tried to obtain
a copy of his cashed checks for 1979 and 1980 from his bank, but
the bank was no longer in existence. During these years
petitioner had outstanding a $25,000 loan on his sailboat and a
$7,000 loan on his car. It is thus reasonable to infer that
petitioner incurred interest expenses in excess of the amounts
allowed by respondent in the notice of deficiency. Using our
best estimate, we hold that petitioner may deduct interest of
$3,200 in 1979 and $3,200 in 1980. Cohan v. Commissioner,
supra.
Issue 2. Unreimbursed Business Expenses
Respondent determined that for 1979 and 1980, petitioner is
not entitled to deduct automobile expenses, travel and
entertainment expenses, and expenses incurred in connection with
his boat in excess of the amounts allowed in the notice of
deficiency.6
6 In the notice of deficiency, respondent allowed petitioner
to deduct the following amounts:
Item 1979 Amount Allowed 1980 Amount Allowed
(continued...)
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