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with a subpoena, but was informed that Mr. Ortega had sold the
business and left the country.
Discussion
Respondent contends that petitioners failed to report
$14,288 in income, while petitioners contend that they received a
lesser amount. Petitioner acknowledges that he received income
from Ortega in 1994, but not $14,288. Petitioner introduced
credible testimony and documents which persuade us that the
amount of income reported on Form 1099-MISC received by
respondent was incorrect. We agree with the amount that
petitioners reported on Schedule C attached to the amended
return; i.e., $10,300 in gross receipts. Therefore, petitioner
received $10,300 as nonemployee compensation from Ortega in 1994.
Section 162(a) provides that there shall be allowed as a
deduction all the ordinary and necessary expenses paid or
incurred during the taxable year in carrying on any trade or
business. Taxpayers must keep sufficient records to establish
deduction amounts. See sec. 6001; Meneguzzo v. Commissioner, 43
T.C. 824, 831-832 (1965). To be entitled to a deduction under
section 162(a), a taxpayer is required to substantiate the
deduction through the maintenance of books and records. In the
event that a taxpayer establishes that he or she has incurred a
deductible expense but is unable to substantiate the precise
amount, we may estimate the amount of the deductible expense.
See Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930).
We cannot estimate deductible expenses, however, unless the
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