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For all these reasons, we find that none of decedent's
investment income was used to pay decedent's share of the
expenses of any family business other than the family farm.
F. Decedent Gave Her Investment Income to Children As
Asserted by Respondent on Brief, Except to Limited
Extent Income Was Used To Pay Decedent's Share of
Expenses of Family Farm
On the basis of our conclusions set forth above and our
review of the entire record, we find that decedent made gifts of
her $913,200 in investment income to the children as asserted by
respondent on brief, with one exception.
Contrary to petitioner's position, we have found that most
of decedent's investment income was not expended on the family
farm. Contrary to respondent's position, however, we find that
at least some of decedent's income was used to pay family farm
expenses; we also find that at least some of those expenses were
properly attributable to decedent. Because the evidence has not
established the precise amount of decedent's farm expenses, we
believe we should estimate that amount, and reduce decedent's
gifts correspondingly, under the principle set forth in Cohan v.
Commissioner, 39 F.2d 540 (2d Cir. 1930). See Pascarelli v.
Commissioner, 55 T.C. 1082, 1087-1088, 1096 (1971), in which we
applied the Cohan principle to estimate an amount of transferred
funds that did not constitute a gift, because it was used by the
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