United States v. McFerrin (2009)

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Main Issue:

  • Substantiation / Oral testimony


  • District Court determined there were no records of the hours worked on any given project or supplies used that involved research
  • District Court unwilling to accept estimates given by employees years after the fact
  • Case was appealed to the Federal Court of Appeals and ultimately remanded back to the District Court


  • Appeals remanded the case back to the District Court indicating that the Cohan rule should be applied
  • Appeals noted that the District Court had not properly weighed the oral testimony and other evidence, including the institutional knowledge of the employees, in determining a fair estimate
  • After being remanded the case was settled out of court

Take-Away Point:

  • When applying the “Cohan” rule, testimony must be credible
  • Taxpayers without detailed time records are allowed reasonable estimates

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