- 6 -
petitioner’s records were lost through circumstances beyond her
control.
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). To apply the
Cohan rule, however, we must have a reasonable basis for
estimating the amount of the expense. Vanicek v. Commissioner,
85 T.C. 731, 742-743 (1985). We are not required to accept a
taxpayer’s unsubstantiated testimony that he is entitled to a
deduction. See Tokarski v. Commissioner, 87 T.C. 74, 77 (1986);
Hoang v. Commissioner, T.C. Memo. 2006-47.
A. Advertising
Petitioner claimed a $1,200 deduction for advertising which
respondent disallowed in full. Petitioner testified that she
incurred this expense in connection with two Internet Web sites
she maintained and brochures she distributed to potential
customers, but she provided no credible evidence to corroborate
the amount or purpose of the expense. See Tokarski v.
Commissioner, supra. Respondent’s determination on this issue
therefore is sustained.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: November 10, 2007