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and rental expenses of $9,330 on Schedule E, Supplemental Income
and Loss. Respondent disallowed $13,529 of the business expenses
and $7,292 of the rental expenses.1
Section 162(a) allows a deduction for the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. Section 212(2) allows a
deduction for the ordinary and necessary expenses paid during the
taxable year for the management, conservation, or maintenance of
property held for the production of income. Section 262 provides
that no deduction is allowed for personal, living, or family
expenses.
Taxpayers generally must keep sufficient records to
establish the amounts of claimed deductions. See sec. 6001;
Meneguzzo v. Commissioner, 43 T.C. 824, 831-832 (1965). With
certain exceptions, in the event that a taxpayer establishes that
a deductible expense has been paid but is unable to substantiate
the precise amount, we may estimate the amount of the deductible
expense, bearing heavily against the taxpayer whose inexactitude
in substantiating the amounts of the expenses is of his own
making. See Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). We cannot estimate deductible expenses, however, unless
the taxpayer presents evidence sufficient to provide some basis
1Petitioners concede several individual business and rental
expense deductions which we need not list in detail.
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