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or the buildings thereon at the time he purchased the farms.
Petitioner also submitted real property tax assessments for the
farms for 1997 and/or 1998. The assessments do not separately
appraise the land and the improvements on the land. Therefore,
the assessments provide no evidence of the comparative values of
the land and the improvements.
If a claimed deduction is not adequately substantiated, we
are permitted to estimate expenses when we are convinced from the
record that the taxpayer has incurred such expenses. Cohan v.
Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930). However, we
require a basis upon which an estimate may be made. Vanicek v.
Commissioner, 85 T.C. 731, 743 (1985). Here we have no such
basis. The taxpayer must present credible evidence that provides
a rational basis for our estimate. Id. Cohan is inapplicable
“where the claimed but unsubstantiated deductions are of a sort
for which the taxpayer could have and should have maintained the
necessary records.” Lerch v. Commissioner, 877 F.2d 624, 628
(7th Cir. 1989), affg. T.C. Memo. 1987-295. Under such
circumstances the Tax Court is under no obligation to guess as to
the amounts of the expenses. Lutheran Mut. Life Ins. Co. v.
United States, 816 F.2d 376, 379 (8th Cir. 1987) (observing that
“given the lack of evidentiary support for taxpayer’s claimed
deductions, we cannot say that the trial court erred in declining
to uphold at least some deduction under Cohan”).
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