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When a taxpayer establishes that he has incurred a
deductible expense but is unable to substantiate the exact
amount, we are generally permitted to estimate the deductible
amount. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). To apply the Cohan rule, however, the Court must have a
reasonable basis upon which an estimate can be made. Vanicek v.
Commissioner, 85 T.C. 731, 742-743 (1985). Based on all of the
facts and circumstances, we do not accept petitioners’ testimony
as a reasonable basis for estimating additional deductions. We
therefore limit additional deductions to those that petitioners
specifically documented.
For tax year 2002, petitioners provided a letter from Turner
Construction (Paul Robinson’s employer) confirming a $50
contribution made to the University of Maryland College Park
Foundation under the company’s gift-matching program,6 and a
receipt for a $7 donation to Habitat for Humanity. Based on this
substantiation, respondent’s determination on this issue is
sustained except that petitioners are entitled to an additional
$57 deduction above the $1,500 allowed by respondent for 2002.
For tax year 2003, petitioners provided a receipt for a $52
contribution to the Leukemia and Lymphoma Society. They also
6 Petitioners also provided a letter from the University of
Maryland dated May 15, 2003, acknowledging a $25 contribution
made by petitioners in 2002, but the letter from Turner dated
June 24, 2003, acknowledging $50 in contributions appears to be
inclusive of that amount.
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Last modified: November 10, 2007