- 7 - Respondent determined that petitioner is liable for tax on the income to King of Construction. Respondent’s determination is presumed to be correct and petitioner bears the burden of proving otherwise. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). We sustain respondent’s determination and conclude that the amounts that Terminex paid are taxable to petitioner in 1994, 1995, and 1996. C. Whether Petitioner May Deduct Business Expenses of King of Construction Petitioner contends that King of Construction had business expenses for equipment, materials, and contract labor, but he offered no substantiation for any of those expenses. He testified that he had records showing costs for the work that he did in the years in issue but that he did not have them with him at trial. We may estimate the amount of a deductible expense if a taxpayer provides a sufficient evidentiary basis for us to make an estimate. See Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930), affg. in part and remanding in part 11 B.T.A. 743 (1928). Petitioner testified that most contractors, including himself, made a profit of 15 percent of gross receipts. He testified that he paid up to 80 percent of the gross receipts for expenses, but that for some jobs he paid less than 80 percent. Petitioner’s testimony is an inadequate basis for us to estimate the amounts of his business expenses. See Vanicek v.Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
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