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Commissioner, supra, provided there is sufficient evidence in the
record to provide a rational basis for an estimate, Vanicek v.
Commissioner, 85 T.C. 731, 743 (1985).
In Cohan v. Commissioner, supra at 540, the Court recognized
that the expenses of an impresario in entertaining actors and
crew members were legitimate and deductible. The taxpayer,
however, did not produce any of the receipts substantiating such
expenses. The Court directed the Board of Tax Appeals to
estimate such expenses "bearing heavily if it chooses upon the
taxpayer whose inexactitude is of his own making".
Although Cohan is a case of substantiation, we, as well as
other courts, including the Court of Appeals for the Eleventh
Circuit, to which this case would be appealable, have extended
the Cohan principle to cases where all the expenditures have been
substantiated. See Ellis Banking Corp. v. Commissioner, 688 F.2d
1376, 1383 (11th Cir. 1982), affg. in part and remanding in part
on this issue T.C. Memo. 1981-123; Gill v. Commissioner, supra;
Boomershine v. Commissioner, supra; Rolland v. Commissioner,
supra. In these cases, the courts relied on Cohan to support the
propriety of estimating the portions of expenses that were
reasonably deductible.
Since the advertising purpose of the race car expenditures
was to sell and lease aircraft, a rational estimate of the
amounts reasonably deductible on the Icarus consolidated return
for each fiscal year is the portion that bears the same ratio to
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