- 67 -
case, on behalf of the corporation. See sec. 6001; sec. 1.6001-
1(a), Income Tax Regs. Moreover, they have failed to provide even
the minimal substantiation that would permit us to estimate the
allowable deduction under Cohan v. Commissioner, 39 F.2d 540, 543-
544 (2d Cir. 1930). Even under Cohan, there must be sufficient
evidence in the record to provide a basis upon which an estimate
may be made. Vanicek v. Commissioner, 85 T.C. 731, 742-743
(1985). Here, there is none. By failing to provide any
substantiation that would corroborate Dr. Derby's somewhat
uncertain testimony, the Derbys have failed to sustain their
burden of proof under Rule 142(a) as to either the existence or
deductibility of the alleged expenditures.
Moreover, assuming arguendo that Dr. Derby actually incurred
the alleged expenditures and that they were of a type that would
be currently deductible by the corporation, the evidence does not
establish whether Dr. Derby incurred them on behalf of the
corporation with an expectation of reimbursement or intended that
they constitute a capital contribution to the corporation. Dr.
Derby's oral testimony is consistent with either approach.40 The
Derbys' failure to prove the existence of a constructive loan
provides an additional basis for respondent's $3,665 adjustment.
40 Although Dr. Derby testified that he was reimbursed by
the corporation when the corporation was dissolved, that
"reimbursement" distribution is consistent with either a debt
repayment or a final cash distribution in connection with the
dissolution.
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