- 13 -
Respondent explained that his agent used a statistical
sampling technique to calculate the amount of the deduction to
disallow for the 1993 tax year. The agent analyzed a sampling of
cases to find the average time delay between expenditure and
reimbursement by calculating the average length of time a sample
case remained open. This was corroborated by reviewing the
frequency of bank deposits and comparing specific deposits to a
sampling of cases. By this type of methodology, respondent’s
agent estimated a 6-month period between expenditure and
reimbursement.
Although respondent’s determination involved estimates, it
is reasonably accurate under the circumstances because of
petitioner’s failure to maintain records that would identify the
amount of unreimbursed litigation costs for the fiscal year. In
that regard, petitioner bears the burden of showing that
respondent’s determination is in error. Petitioner has not
provided the Court with a method that is more reliable than
respondent’s. Petitioner’s failure to keep or present respondent
or the Court with adequate records showing the amounts involved
is of its own doing, and, accordingly, petitioner must bear those
consequences. See Silverton v. Commissioner, T.C. Memo. 1977-
198, affd. without published opinion 647 F.2d 172 (9th Cir.
1981). Accordingly, we sustain respondent’s determination as to
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011