- 9 -
That leaves only an additional $114, but the Obots never
described what kind of tax, if any, it was or to whom it was
paid--and so we disallow it too.
Schedule C
Mr. Obot’s Schedule C deductions come from his grocery
store. Under section 162, all ordinary and necessary expenses
paid or incurred during the taxable year in carrying on a trade
or business are deductible, but a taxpayer must of course have
sufficient records to substantiate them. Sec. 1.6001-1(a),
Income Tax Regs.
As already described, Mr. Obot did not have credible
records. Therefore, we decline to use the Cohan rule to estimate
expenses that are based on incredible testimony and doctored
documents. See Williams v. United States, 245 F.2d at 560. With
the exception of the $100 advertising expense that the
Commissioner has already conceded, we do not allow any of Mr.
Obot’s claimed Schedule C deductions.
Schedule E
Most of the expenses Mr. Obot claimed on Schedule E arise
from his rental real estate. During the trial, Mr. Obot promised
that he would have a witness appear who would substantiate both
the repair expenses and the management fees. This witness never
appeared. Thus, we presume that had he appeared, his testimony
would have been unfavorable. See Wichita Terminal Elevator Co.
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