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Petitioner does not contend that the deposits of nontaxable
income into her checking accounts exceeded the $40,988.94 allowed
by respondent. Accordingly, respondent’s determination that
petitioner failed to report $8,133.31 of gross income from her
business during 1994 is sustained.
B. Business Deductions
Ordinarily, a taxpayer is permitted to deduct the ordinary
and necessary expenses that she pays or incurs during the
taxpayer year in carrying on a trade or business. See sec.
162(a). A taxpayer, however, is required to maintain records
sufficient to establish the amounts of her deductions. See sec.
6001; sec. 1.6001-1(a), Income Tax Regs.
When a taxpayer establishes that she paid or incurred a
deductible expense but does not establish the amount of the
deduction, we may estimate the amount allowable in certain
circumstances. See Cohan v. Commissioner, 39 F.2d 540, 543-544
(2d Cir. 1930). There must be sufficient evidence in the record,
however, to permit us to conclude that a deductible expense was
paid or incurred in at least the amount allowed. See Williams v.
United States, 245 F.2d 559, 560 (5th Cir. 1957). In estimating
the amount allowable, we bear heavily upon the taxpayer whose
inexactitude is of her own making. See Cohan v. Commissioner,
supra at 544.
In addition to satisfying the criteria for deductibility
under section 162, certain categories of expenses must also
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