Anand K. Verma - Page 12




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          expenditures, nor did he testify as to the amount he may have               
          paid for the advertisements and insurance.                                  
               We are unable to estimate an amount for the advertisements             
          and insurance because petitioner failed to provide evidence upon            
          which we can make a rational estimate.  See Vanicek v.                      
          Commissioner, supra at 743.  We hold for respondent as to these             
          expenses.                                                                   
               3.  Utilities                                                          
               Petitioner deducted amounts for Internet and telephone                 
          expenses.  Petitioner produced bills from U.S. Billing, Inc., and           
          Sprint.  The telephone bills do not indicate the purpose of the             
          various calls, nor did petitioner testify as to whether each call           
          was personal or business.                                                   
               We are not convinced the utility expenses were incurred in             
          the normal course of petitioner’s trade or business.  Further, we           
          are unable to estimate an amount for the utilities because                  
          petitioner failed to provide evidence upon which we can make a              
          rational estimate.  See id.  Therefore, petitioner cannot deduct            
          utilities in excess of the amount allowed by respondent.                    
               4.  Taxes and Licenses                                                 
               Petitioner deducted $85 in 1996 in licensing and taxes                 
          related to the incorporation of Export.  Fees paid to a State for           
          incorporation are organization costs, which are generally                   
          considered capital expenditures.  See FMR Corp. & Subs. v.                  






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