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Exploring and (Re)Defining the Boundaries of the Cohan Rule

Soled, Jay A., Exploring and (Re)Defining the Boundaries of the Cohan Rule (August 1, 2007). Temple Law Review, Vol. 79, p. 939, 2007. Available for download at SSRN:

Year in and year out, courts repeatedly adjudicate taxpayer substantiation issues. These are cases in which taxpayers make assertions relating items such as business deductions, the amount of basis their assets have, the value of their charitable contributions, and the like, but they lack direct evidence to support their claims. And with respect to virtually all of these cases, judges routinely make estimates, relying upon the seminal Cohan v. Commissioner decision. Since the introduction of the income tax, this persistent pattern — taxpayers making assertions, the IRS challenging these assertions, and the courts resorting to estimates — has become an all-too-familiar fixture of tax litigation.”

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