Karen V. Hough - Page 5

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          There must be sufficient evidence in the record, however, to                
          permit us to conclude that a deductible expense was paid or                 
          incurred.  Williams v. United States, 245 F.2d 559, 560 (5th Cir.           
          1957).                                                                      
               One “contractor”,2 Mandy Babyak, who worked for petitioner’s           
          nursing business in 2000 testified regarding petitioner’s nursing           
          business expenses.  We found Ms. Babyak to be credible.  We shall           
          rely on Ms. Babyak’s testimony to estimate petitioner’s nursing             
          business expenses under the Cohan doctrine.                                 
          1.  Contractor Expenses                                                     
               Petitioner claimed $23,100 in expenses for subcontractors              
          for 1999.  For 1999, respondent allowed $575 in the notice of               
          deficiency and conceded an additional $8,550.77 on brief for a              
          total of $9,125.77.  This $9,125.77 represents checks paid to               
          Carol Blank, Robert Shearer, and Kim Atkins.  Petitioner has                
          failed to substantiate that any additional amounts were paid to             
          contractors in 1999.  Accordingly, respondent’s determination, as           
          modified by his concession, is sustained.                                   
               Petitioner claimed $49,836 in expenses for subcontractors              
          for 2000.  For 2000, respondent conceded on brief $58,528 in                
          contractor expenses.  This concession represents amounts paid by            



               2  We use the term “contractor” for convenience only.  We              
          make no findings whether the people who worked for petitioner’s             
          nursing business were independent contractors or employees.                 





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