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Mr. Kong did not testify about any of the claimed
additional equipment, and petitioners failed to provide any
documents to establish that Sam Kong Fashions purchased any
additional equipment. We find that petitioners failed to prove
any entitlement to depreciation deductions in excess of those
shown on their returns.
4. Deductions Based on Respondent’s Statistics of
Income
As an alternative, petitioners contend that respondent’s
1994 and 1995 Statistics of Income, Corporation Income Tax
Returns, provide the ratios of net income to business receipts
that should be used to estimate the additional business expenses
of Sam Kong Fashions.
In a similar case we refused to use evidence of statistical
data to establish additional unreported business expenses.
Schachter v. Commissioner, T.C. Memo. 1998-260, affd. 225 F.3d
1031 (9th Cir. 2001). In Schachter, the taxpayer offered general
survey information that did not purport to represent data from
comparable companies and requested that the Court use this data
to calculate allowable business expenses. Id. The Court
rejected the taxpayer’s attempt to use the average profit margins
of other businesses, finding that the general survey information
failed to provide credible evidence of additional business
expenses. Id. The Court noted that once the Commissioner has
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