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Taxpayers may meet their burden even without proof of
precise numbers. If a taxpayer claims a business expense, but
cannot fully substantiate it, we may approximate the allowable
amount. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). For this rule to apply, the taxpayer must provide at
least some reasonable evidence from which to estimate a
deductible amount. Vanicek v. Commissioner, 85 T.C. 731, 742-743
(1985). We need not apply the Cohan rule at all if the evidence
is insufficient to identify the nature or estimate the extent of
the expenses. See Williams v. United States, 245 F.2d 559, 560
(5th Cir. 1957). Because the evidence Mr. Obot provided lacks
credibility, we will not use the Cohan rule in recalculating his
deductions. See Lerch v. Commissioner, 877 F.2d 624, 628-629
(7th Cir. 1989) (no obligation to apply Cohan rule where taxpayer
fails to cooperate with Commissioner and Tax Court), affg. T.C.
Memo 1987-295.
With these general thoughts in mind, we now look to each of
the disputed deductions.
Schedule A
The disputed Schedule A deductions are taxes that Mr. Obot
paid. The first group are excise taxes of $1,021 charged on his
personal utility, telephone, gasoline, and sewer bills. Excise
taxes on personal bills are not deductible, Fife v. Commissioner,
73 T.C. 621, 623-624 (1980), and we disallow them.
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