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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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