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carrying on a trade or business. Generally, no deduction is
allowed for personal, living, or family expenses. See sec. 262.
The taxpayer must show that any claimed business expenses were
incurred primarily for business rather than social reasons. See
Rule 142(a); Walliser v. Commissioner, 72 T.C. 433, 437 (1979).
To show that the expense was not for personal reasons, the
taxpayer must show that the expense was incurred primarily to
benefit his business, and there must have been a proximate
relationship between the claimed expense and the business. See
Walliser v. Commissioner, supra.
Where a taxpayer has established that he has incurred a
trade or business expense, failure to prove the exact amount of
the otherwise deductible item may not always be fatal.
Generally, unless precluded by section 274(d), the Court may
estimate the amount of such an expense and allow the deduction to
that extent. See Finley v. Commissioner, 255 F.2d 128, 133 (10th
Cir. 1958), affg. 27 T.C. 413 (1956); Cohan v. Commissioner, 39
F.2d 540, 543-544 (2d Cir. 1930). In order for the Court to
estimate the amount of an expense, however, the Court must have
some basis upon which an estimate can be made. Vanicek v.
Commissioner, 85 T.C. 731, 742-743 (1985). Without such a basis,
an 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