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“coyotes” who transported the laborers from Mexico, and
unsubstantiated trucking expenses, they are undermined by
evidence that payments to “coyotes” and trucking expenses for
which no receipts were obtained were recouped by deductions from
wages paid to the employees. Finally, the amounts claimed are
simply not credible. Petitioners seek to increase the deductions
for labor costs by nearly doubling them for 1985 (adding $346,172
to $356,607.96 claimed on the original return) and adding an
additional two-thirds of the amount claimed for 1986 (adding
$325,229 to $482,581.18 claimed on the return). We are not
persuaded that they had that much cash available, after diverting
cash to their loan business and other personal uses, unless they
had substantial amounts of unreported cash income as well.
Nonetheless, in view of the nature of petitioners’ business
during the years in issue and their use of imported labor and
payments of those laborers in cash, it is likely that some
expenses that would be deductible were paid in cash. Under these
circumstances, we must weigh heavily against petitioners, whose
inexactitude is of their own making. We also bear in mind that
petitioners had some cash sales in undetermined amounts during
the years in issue that were not included in respondent’s
computation of unreported income. Cohan v. Commissioner, 39 F.2d
540 (2d Cir. 1930). However, the Court must have some basis on
which an estimate may be made. Williams v. United States, 245
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