Floyd L. Garrett and Dorothy G. Garrett - Page 14

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          issue, and the fact that FGI and TTI issued corporate checks to             
          pay for the muscle cars prior to 1989, we are inclined to believe           
          that Mr. Garrett's wholly owned companies, FGI and TTI, were the            
          source of funds for the acquisition and renovation of the muscle            
          cars sold in 1989.5  We find that petitioners do not satisfy                
          their burden of proving that they paid for the muscle car                   
          collection.  We, therefore, sustain respondent's determination              
          that petitioners are not entitled to any basis in the automobiles           
          sold in 1989.6                                                              
          Issue Two:  Disallowed Corporate Deductions                                 

               5The pattern of improper deductions taken by the                       
          corporations during the years in issue suggests that similar                
          deductions were taken in prior years.  Any deductions taken by              
          Mr. Garrett's S corporations would have reduced the profits                 
          reflected and, thus, reduced the taxable income of petitioners.             
          If this is what occurred, petitioners would receive a double tax            
          benefit if they were now allowed a basis with respect to                    
          previously deducted amounts.  See Hughes & Luce, L.L.P. v.                  
          Commissioner, T.C. Memo 1994-559, affd. on other grounds 70 F.3d            
          16 (5th Cir. 1995).                                                         
               6Petitioners urge us to apply Cohan v. Commissioner, 39 F.2d           
          540 (2d Cir. 1930), affg. in part and remanding in part 11 B.T.A.           
          743 (1928).  Under the so-called Cohan rule, where the taxpayer             
          is unable to substantiate expenses through adequate records or              
          other proof, we may estimate the deductible amount, if some                 
          deductible amount is suggested by other evidence, bearing                   
          heavily, if we choose, upon the taxpayer whose inexactitude is of           
          his own making.  Id. at 543-544.  However, in order for us to               
          estimate the amount of an expense, we must have some basis upon             
          which an estimate may be made.  Vanicek v. Commissioner, 85 T.C.            
          731, 742-743 (1985).  There must be sufficient evidence assuring            
          this Court that some amount was in fact spent or incurred by the            
          taxpayer for the stated purpose.  Without such confirmation,                
          "relief to the taxpayer would be unguided largesse."  Williams v.           
          United States, 245 F.2d 559, 560 (5th Cir. 1957).                           

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