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section 6001. Respondent acknowledges, however, that petitioner
drove a taxi cab during the year in issue and incurred some
amount of expenses.
Where a taxpayer establishes that he incurred a business
expense but cannot prove the amount of the expense, the Court may
approximate the amount allowable, bearing heavily against the
taxpayer whose inexactitude is of his own making. Cohan v.
Commissioner, 39 F.2d 540, 544 (2d Cir. 1930); King v.
Commissioner, T.C. Memo. 2006-112. To apply the Cohan rule, the
Court must have a reasonable basis for estimating the amount of
the expense. Vanicek v. Commissioner, 85 T.C. 731, 742-743
(1985); Keenan v. Commissioner, T.C. Memo. 2006-45.3
Based on petitioner’s credible testimony and respondent’s
acknowledgment that petitioner incurred expenses, we conclude it
is appropriate to apply the Cohan rule. We conclude that in 2002
petitioner leased a cab 4 days a week for 50 weeks at a cost of
$70 a day, for a total of $14,000. We also conclude that
petitioner spent $2,500 on gasoline for the year, representing an
3 The rule announced in Cohan v. Commissioner, 39 F.2d 540
(2d Cir. 1930), does not apply to expenses relating to listed
property, which generally includes any passenger automobile.
Secs. 274(d)(4), 280F(d)(4)(A)(i); Sanford v. Commissioner, 50
T.C. 823, 827-828 (1968), affd. per curiam 412 F.2d 201 (2d Cir.
1969); Seidel v. Commissioner, T.C. Memo. 2005-67. However, the
term “passenger automobile” does not include any vehicle used by
the taxpayer directly in the trade or business of transporting
persons for compensation or hire. Sec. 280F(d)(5)(B)(ii); sec.
1.280F-6(c)(3)(ii), Income Tax Regs. The cab that petitioner
leased therefore is not listed property.
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