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expenses subject to section 274, if a claimed business expense is
deductible, but the taxpayer is unable to substantiate it
adequately, the Court is permitted to make as close an
approximation as possible, bearing heavily on the taxpayer whose
inexactitude is of his own making. See Cohan v. Commissioner, 39
F.2d 540, 543 (2d Cir. 1930). The estimate, however, must have a
credible evidentiary basis. See Norgaard v. Commissioner, supra
at 879; Vanicek v. Commissioner, 85 T.C. 731, 743 (1985).
The record in this case provides no credible evidentiary
basis to support petitioners' claimed deductions in excess of the
$15,535 allowed by respondent. Although petitioners introduced
into evidence copies of numerous checks and receipts, these
documents cannot be readily correlated to the deductions
petitioners claimed on their Schedule C for tax year 1994. For
example, the documents purport to establish, among other things,
that during 1994 Transnet paid $18,150 to Richard Hartman and
$3,500 to Son Dang as compensation for computer programming
services. Petitioners’ Schedule C for tax year 1994, however,
reports no deduction for wages paid, nor did Transnet issue Forms
1099 to Son Dang or Richard Hartman in 1994.13
13 The evidence with regard to Richard Hartman is
particularly inscrutable. The documents introduced by
petitioners include invoices issued by Advanced Consulting
Experts to Intel, listing Richard Hartman as contractor, and
bearing notations that expense reimbursements are to be made
directly to Hartman. Nowhere on these invoices is there any
mention of Transnet or petitioners. The copies of the checks to
Hartman that petitioners have introduced into evidence do not
show that they have been canceled by the bank and appear to have
(continued...)
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