-19-
subsequent to the years in issue, taxpayer argued that
approximately 70 percent of unidentified payments from business
checking account were deductible expenses; 40 percent of such
payments found deductible under Cohan rule).3
Applying the principles set forth in Cohan and in Lollis--
and making as close an approximation as we can, bearing down
heavily on petitioner--we find that petitioner spent $10,000,
$25,000, and $40,000 in cash, on deductible business expenses, in
1990, 1991, and 1992, respectively. These amounts, when added to
the expenses allowed by respondent, will reduce petitioner's net
business income to approximately 30 percent of his stipulated
gross receipts for each of the years 1990-92, plus the value of
the plumbing services petitioner has admitted he performed
personally in each of those years.4
In all other respects respondent's determinations of
deficiencies in petitioner's tax for 1989-92 are sustained.
3 Cf. United States v. Marabelles, 724 F.2d 1374, 1383 (9th
Cir. 1984) (Cohan rule inapplicable where a deduction was not
denied in its entirety; Commissioner had allowed all expenses
claimed on a return, and had given taxpayer the benefit of the
doubt with respect to all expenses written on taxpayer's business
checking account).
4 Mr. Sager's report sets forth the value of the plumbing
services petitioner told Mr. Sager he performed personally in
each year, and adds back those amounts to its estimates of
petitioner's profit. We regard this as an admission by
petitioner that his labor costs should be reduced by at least the
amounts indicated in Mr. Sager's report.
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