-12-
agreement between the parties. Thus, if petitioner were required
to post a $1,000,000 bond by the Port lease, such a requirement
would have been included in the lease.
In addition, petitioners claimed at trial that the $1
million bond was obtained from State Farm. Inasmuch as
petitioners were able to produce a copy of the liability policy
obtained from State Farm, we fail to understand why petitioners
were unable to produce a copy of the alleged bond, if it existed,
from State Farm. See Wichita Terminal Elevator Co. v.
Commissioner, supra. Finally, petitioners failed to produce
documentary evidence of payment for the premium for the alleged
bond.
In view of the foregoing, respondent's determination
regarding the deduction for "Insurance" is sustained.
3. Legal Services
Petitioners claimed a deduction for "Legal Services" in the
amount of $1,300. Petitioners contend that this deduction
represents amounts paid in cash to Mr. Hughes for his services.
Respondent disallowed the deduction in its entirety for lack of
substantiation.
As a general rule, in the case of expenses that are not
subject to the substantiation requirements of section 274(d), if
the record provides sufficient evidence that a taxpayer has
incurred a deductible expense, but the taxpayer is unable to
adequately substantiate the amount of the deduction to which he
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