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required to be shown on the tax return. If the books and records
are not adequate to establish the amounts of deductions or
credits, but we are persuaded that petitioner is entitled to
deduct more than respondent allowed, then we are required to make
some estimate of how much more should be allowed, “bearing
heavily if * * * [we choose] upon the taxpayer whose inexactitude
is of his own making.” Cohan v. Commissioner, 39 F.2d at 543-
544.
Respondent allows or concedes $15,517 ($5,517 allowed in the
notice of deficiency; $10,000 conceded at trial) of the claimed
$101,517 rent expenses deduction. The only evidence suggesting a
greater deduction is the lease, which required petitioner to pay
a total of $60,000 to Steve and Andy during petitioner’s fiscal
1990. Weighing against petitioner are the following: (1)
Petitioner has not directed us to, and we have not found, any
evidence in the record that petitioner actually made the payments
that the lease required. Also, the lessors, Steve and Andy, were
petitioner’s sole shareholders, and transactions between related
parties are subject to close scrutiny. See Maxwell v.
Commissioner, 95 T.C. 107, 116 (1990), and cases cited therein.
(2) Steve stated that he and Andy received the same amount of
rent income from petitioner. Steve reported only $10,000 of rent
income from petitioner on his 1990 tax return. (3) Steve said
that the rent arrangement he and Andy had with petitioner was
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