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Where a taxpayer claims a business expense, but cannot fully
substantiate it, the Court may approximate the allowable amount.
Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930).
However, the taxpayer must provide reasonable evidence from which
to estimate the deductible amount. Vanicek v. Commissioner,
85 T.C. 731, 742-743 (1985). If the evidence presented by the
taxpayer is not sufficient to identify the nature of or estimate
the extent of the expense, then the taxpayer is not entitled to
the benefits of the Cohan rule. See Williams v. United States,
245 F.2d 559, 560 (5th Cir. 1957). Furthermore, where the
taxpayer fails to cooperate with the Commissioner and this Court,
we have no obligation to apply the Cohan rule. Lerch v.
Commissioner, 877 F.2d 624, 628-629 (7th Cir. 1989), affg. T.C.
Memo. 1987-295.
Petitioner claimed Form 1040, Schedule C deductions for
expenses of Nature’s Herb & Tea Garden. Accompanying
petitioner’s 1999 return was a list of expenses, listing only the
total amounts allegedly incurred; i.e., $642 of office expense
and $15,384 for supplies. Petitioner did not provide any
evidence to substantiate these claimed expenses. Petitioner’s
list of expenses is not sufficient to substantiate such expenses
or to enable us to apply the Cohan rule and estimate a deductible
amount. The adjustments disallowing Schedule C expenses are
sustained.
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