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concluding that any amount of the $250,000 loan was paid into the
Atherton project. Any interest reserve in that loan has likewise
not been shown to be deductible.
With respect to the $350,000 loan, petitioners on brief
indicate that $212,000 of this loan was used to pay off the
remaining amount of the $250,000 loan. For the reasons mentioned
above, that portion of the loan would not be deductible. With
respect to the remaining portion of that loan, $138,000, there is
no documentary evidence showing that amount represents deductible
expenses paid into the Atherton project. Petitioners rely on a
letter from Mr. Assaad to Mr. Waters and a handwritten note from
another representative of Pacific. However, those items indicate
only that the remaining amount of the $250,000 loan was increased
to $350,000. They do not take the further step of substantiating
the increase as deductible expenses.
We are mindful that there must be sufficient evidence
contained in the record to provide a basis for us to make an
estimate and to conclude that a deductible expense was incurred
in at least the amount to be allowed. Pratt v. Commissioner,
T.C. Memo. 2002-279. We are not required to guess with respect
to the amount of deductible expenses. Norgaard v. Commissioner,
939 F.2d 874, 879 (9th Cir. 1991), affg. in part and revg. in
part T.C. Memo. 1989-390; Williams v. United States, 245 F.2d
559, 560 (5th Cir. 1957). In the instant case, we bear heavily
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