- 5 -
Where a taxpayer has established that he has incurred a
trade or business expense, failure to prove the exact amount of
the otherwise deductible item may not be dispositive. Generally,
unless precluded by section 274, the Court may estimate the
amount of such an expense and allow the deduction to that extent.
Finley v. Commissioner, 255 F.2d 128, 133 (10th Cir. 1958), affg.
27 T.C. 413 (1956); Cohan v. Commissioner, 39 F.2d 540, 543-544
(2d Cir. 1930). In order for the Court to estimate the amount of
an expense, however, there must be some basis upon which an
estimate may be made. Vanicek v. Commissioner, 85 T.C. 731, 742-
743 (1985). Without such a basis, an allowance would amount to
unguided largesse. Williams v. United States, 245 F.2d 559, 560
(5th Cir. 1957).
In this case, where petitioner presented no evidence in
support of his claimed business expenses, there is an
insufficient basis upon which to estimate whether, and to what
extent, he incurred business expenses.
3. Addition to Tax Under Section 6651(a)(1)
Respondent bears the burden of production with respect to an
addition to tax. Sec. 7491(c). In order to meet this burden,
respondent must produce evidence sufficient to establish that it
is appropriate to impose the addition to tax. Higbee v.
Commissioner, supra at 446-447. The parties agree that
petitioner’s tax return was not filed until April 28, 2001.
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011