Ronald and Nancy Sweet - Page 7




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          be of a common or frequent occurrence in the type of business               
          involved.  Deputy v. Du Pont, 308 U.S. 488, 495 (1940).  No                 
          deduction is allowed for personal, living, or family expenses.              
          Sec. 262(a).                                                                
               Generally, if a claimed business expense is deductible, but            
          the taxpayer is unable to substantiate it, the Court is permitted           
          to make as close an approximation as it can, bearing heavily                
          against the taxpayer whose inexactitude is of his or her own                
          making.  Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.               
          1930).  The estimate must have a reasonable evidentiary basis.              
          Vanicek v. Commissioner, 85 T.C. 731, 743 (1985).                           
               The issue is whether petitioners substantiated the amounts             
          purportedly paid to various subcontractors or workers during the            
          years in issue.                                                             
               Petitioners ask the Court to find they incurred ordinary and           
          necessary business expenses during the years in issue.  Although            
          they admit they do not have the records to substantiate every               
          dollar spent, they believe their testimony and other evidence               
          sufficiently establish that labor expenses were incurred during             
          the years in issue.  We agree with petitioners that it is                   
          plausible that petitioners hired workers to assist in the                   
          installation process; however, we have no basis for determining             
          how much was actually paid during the years in issue.  The Cohan            
          rule allows the Court to make as close an approximation as it can           






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