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accept them under the Cohan rule is unavailing. We do not accept
petitioner’s estimates under the Cohan rule for two reasons.
First, to qualify for the Cohan rule, a taxpayer must show that
some expenditure in fact occurred and only its precise amount
lacks direct proof. See Cohan v. Commissioner, supra at 543-544
(Board of Tax Appeals’s disallowance of any deduction for
entertainment expenditure inconsistent with its finding that
expenditure was made); see also Portillo v. Commissioner, 932
F.2d 1128, 1134-1135 (5th Cir. 1991)(court has discretion to
estimate allowable deductions if there is sufficient evidence to
support the contention that expenses were in fact incurred),
affg. in part, revg. and remanding in part T.C. Memo. 1990-68;
Vanicek v. Commissioner, 85 T.C. 731, 743 (1985). Here, we are
not persuaded that the claimed expenditures occurred. Two of the
yachts at issue were fully completed when delivered to
petitioner. The remaining vessel, the Sir Winston, was nearly
complete but required finishing work and replacement of the
steering mechanism, expenditures which we are satisfied have been
accounted for.13 Thus, we are not persuaded in these
13 Respondent has shown that certain expenditures made by
petitioner with respect to the Sir Winston were caused by him to
be paid and deducted by his S corporation engaged in condominium
development and that petitioner deducted significant amounts for
repairs to the Sir Winston in the year when petitioner took
delivery. On balance, we are satisfied that the expenditures
required to finish the Sir Winston have been accounted for and do
not provide a basis for invoking the Cohan rule.
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