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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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