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V. Whether Petitioner May Deduct Business Expenses in Excess of
Those Allowed by Respondent
A. Business Expenses in 1989
Petitioner maintains that, if we find that she was engaged
in providing escort services, respondent has failed to allow her
a sufficient deduction for the amounts she was required to pay to
the women she arranged to engage in those services. Petitioner
strenuously denies that she was engaged in providing escort
services. Nevertheless, she argues in the alternative that if we
find she was engaged in such a business, we should allow her to
deduct 50 to 60 percent of the gross receipts in recognition of
the fact that she was required to pay the women who actually
rendered the services.
Under certain circumstances, where a taxpayer establishes
his entitlement to a deduction, but does not establish the amount
of the deduction, we are permitted to estimate the amount
allowable. Cohan v. Commissioner, supra. In so doing, we bear
heavily against the taxpayer, who is responsible for the
uncertainty. Id. at 543-544. In this case, respondent has
allowed a deduction equal to 31.64 percent of the amount
determined as escort income in 1989 as specific expenses of
petitioner’s escort business. Petitioner has failed to establish
that she is entitled to larger deductions than those allowed by
respondent. We therefore hold that she may deduct, as business
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