- 5 -
places the burden of proof on the Commissioner. Sec. 7491(a)(1);
Rule 142(a)(2). Section 7491(a)(1) applies only if the taxpayer
complies with substantiation requirements, maintains all required
records, and cooperates with the Commissioner’s requests for
witnesses, information, documents, meetings, and interviews.
Sec. 7491(a)(2). The record shows that petitioner did not comply
with the substantiation requirements or cooperate with requests
for documentation, all of which would have facilitated trial of
this case.
Section 6001 and the regulations promulgated thereunder
require taxpayers to maintain records sufficient to permit
verification of income and expenses. As a general rule, if the
trial record provides sufficient evidence that the taxpayer has
incurred a deductible expense, but the taxpayer is unable to
adequately substantiate the precise amount of the deduction to
which he or she is otherwise entitled, the Court may estimate the
amount of the deductible expense and allow a deduction to that
extent. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). Such an estimate is made bearing heavily against the
taxpayer whose inexactitude in substantiating the amount of the
expense is of his own making. Id. at 544. However, in order for
the Court to estimate the amount of an expense, the Court must
have some basis upon which an estimate may be made. Vanicek v.
Commissioner, 85 T.C. 731, 742-743 (1985).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011