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he was entitled to deduct the full amount of the labor costs he
claimed on his returns for each of the years in issue.6
C. Depreciation Expenses
At trial, petitioner provided no evidence regarding the
depreciation deductions. It is unclear from the record what
property petitioner depreciated in 1993 and 1995. Accordingly,
there is no rational basis to approximate these expenses, and we
sustain respondent’s determination as to the depreciation
deductions.
D. Legal Expenses
Respondent allowed $100 of legal expenses each year.
Petitioner testified that he paid $100 of legal expenses.
Therefore, we sustain respondent’s determination as to the legal
expenses.
E. Insurance, Office, Repairs, Supplies, and Utility
Expenses
The parties agree that petitioner’s records were destroyed
due to circumstances beyond his control. Petitioner credibly
testified as to his insurance, office, repairs, supplies, and
utility expenses during the years in issue. Under the
circumstances, petitioner’s uncontradicted testimony warrants
6 Our finding would entitle petitioner to a $194,000
deduction per year (one laborer being paid $7 per hour, working
40 hours a week, for 50 weeks equals $14,000 per year, and six
carpenters paid $15 per hour, working 40 hours a week, for 50
weeks equals $180,000 per year). Petitioner claimed less than
this amount each of the years in issue.
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