- 33 -
prescribe.”40 The regulations provide that “any person subject
to tax * * * shall keep such permanent books of account or
records, * * * as are sufficient to establish the amount of * * *
deductions”. Sec. 1.6001-1(a), Income Tax Regs.
In the event that a taxpayer establishes that a deductible
expense has been paid, but he is unable to substantiate the
precise amount, the Court may estimate the amount of such
deduction bearing heavily against the taxpayer.41 Cohan v.
Commissioner, 39 F.2d 540, 543-44 (2d Cir. 1930). However, the
Court cannot make such an estimate unless the taxpayer presents
sufficient evidence to provide a reasonable basis upon which the
estimate is made. Vanicek v. Commissioner, 85 T.C. 731, 743
(1985).
(i). Deductibility of Petitioner’s Alleged
Expenses
(A). Newark T&B Expenses
Petitioner claims that no expenses relating to Newark T&B
were claimed as deductions. Petitioner’s argument centers on the
real property he bought to conduct Newark T&B’s business
40Strict substantiation is required for specific classes of
expenses, including “listed property” described in sec.
280F(d)(4). See sec. 274(d).
41The Court’s ability to reasonably estimate the amount of a
deduction is curtailed in the case of certain classes of
expenses. Sec. 274(d) limits the Court’s estimating ability.
Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per
curiam 412 F.2d 201 (2d Cir. 1969); see Golden v. Commissioner,
T.C. Memo. 1993-602.
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