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carrying on a trade or business. Generally, a taxpayer must
establish that deductions taken pursuant to section 162 are
ordinary and necessary business expenses and must maintain
records sufficient to substantiate the amounts of the deductions
claimed. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. Under
section 6001, a taxpayer bears the sole responsibility for
maintaining his business records.
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, however, must have a reasonable evidentiary basis.
Vanicek v. Commissioner, 85 T.C. 731, 743 (1985). Without such a
basis, such an allowance would amount to unguided largesse.
Williams v. United States, 245 F.2d 559, 560 (5th Cir. 1957).
The record does not contain any documents or reasonable
evidence substantiating petitioner's claimed expenses.
Therefore, the Court concludes that petitioner is not entitled to
deduct any Schedule C expenses for 1998, 1999, or 2000 in excess
of amounts allowed by respondent.
C. Addition to Tax for Failure To Timely File a Tax Return
Under section 7491(c), the Commissioner has the burden of
production in any court proceeding with respect to the liability
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Last modified: May 25, 2011