Christopher D. and Kristie M. Farran - Page 13
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304 (citing Tokarski v. Commissioner, 87 T.C. 74, 77 (1986)),
affd. without published opinion 956 F.2d 1166 (9th Cir. 1992).
Unreimbursed Employee Business Expenses
We shall now consider whether petitioners are entitled to
deduct the claimed expenses, beginning with the unreimbursed
employee business expenses petitioners claimed on Schedule A.
In general, all ordinary and necessary expenses paid or
incurred in carrying on a trade or business during the taxable
year are deductible, but personal, living, or family expenses are
not deductible. Secs. 162(a), 262. Services performed by an
employee constitute a trade or business. O’Malley v.
Commissioner, 91 T.C. 352, 363-364 (1988); sec. 1.162-17(a),
Income Tax Regs.
If a taxpayer establishes that he or she paid or incurred a
deductible business expense but does not establish the amount of
the deduction, we may approximate the amount of the allowable
deduction, bearing heavily against the taxpayer whose
inexactitude is of his or her own making. Cohan v. Commissioner,
39 F.2d 540, 543-544 (2d Cir. 1930). For the Cohan rule to
apply, however, a basis must exist on which this Court can make
an approximation. Vanicek v. Commissioner, 85 T.C. 731, 742-743
(1985). Without such a basis, any allowance would amount to
unguided largesse. Williams v. United States, 245 F.2d 559, 560
(5th Cir. 1957).
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Last modified: November 10, 2007