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the amount of the expense. M&L did not file Federal income tax
returns for the years in issue. Moreover, petitioner did not
present sufficient evidence to establish his basis in M&L or
estimate the amount of M&L's losses. Under such circumstances, a
deduction based on the Cohan rule would be "'unguided largesse.'"
Epp v. Commissioner, 78 T.C. 801, 807 (1982) (quoting Williams v.
United States, 245 F.2d 559, 560 (5th Cir. 1957). Accordingly,
we conclude that petitioner has failed to meet his burden of
proof and hold that he is not entitled to claim losses relating
to M&L.
III. Self-Employment Tax
Section 1401(a) imposes a tax on the self-employment income
of every individual. Self-employment income consists of the net
earnings from a trade or business carried on by an individual
through a sole proprietorship or as a partner. Sec. 1.1401-1(c),
Income Tax Regs.
Respondent determined that during the years in issue M&L
paid petitioner $477,071.27 that is subject to self-employment
tax. We conclude that $216,000 of the $477,071.27 received is
appropriately characterized as either interest or dividends
(i.e., the total amount of $6,000 monthly payments) and $36,000
is appropriately characterized as salary (i.e., the total amount
of $1,000 monthly payments which petitioner used to lease a
Cadillac). Therefore, $252,000 (i.e., $216,000 + $36,000) is not
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