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Commissioner, 65 T.C. 87, 89-90 (1975), affd. 540 F.2d 812 (5th
Cir. 1976); sec. 1.6001-1(a), Income Tax Regs.
When a taxpayer adequately establishes that he paid or
incurred a deductible expense but does not establish the precise
amount, we may in some circumstances estimate the allowable
deduction, bearing heavily against the taxpayer whose
inexactitude is of his own making. Cohan v. Commissioner, 39
F.2d 540, 544 (2d Cir. 1930).
We can estimate the amount of the deductible expense only
when the taxpayer produces evidence sufficient to establish a
rational basis upon which the estimate can be made. Vanicek v.
Commissioner, 85 T.C. 731, 743 (1985).
Petitioner claims deductions for (1) compensation paid to
his crew and (2) business transportation expenses. He asks the
Court to accept his testimony as to the amounts paid and the
expenses incurred, and to estimate the deductions allowable. We
discuss these expenses in turn.
A. Compensation Expense Deductions
Petitioner asserts that he hired several people in 2001 to
help him install tile. Petitioner dealt primarily in cash. He
paid his helpers in cash. He did not issue or file Forms 1099-
MISC. He explained that he did not have a bank account for the
business because checks made out in the name of a company were
difficult to cash.
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