- 4 -
total of $11,666.64 in the taxable year 1994. Also during 1994,
petitioners received $160 of interest income from Mellon Bank and
$67 of interest income from PNC.
Petitioners timely filed their joint 1994 Federal income tax
return. On December 6, 1996, petitioners filed a Form 1040X,
Amended U.S. Individual Income Tax Return, for the taxable year
1994.4
OPINION
Schedule C Deductions
The first deduction at issue involves what petitioners
claimed was a robbery loss of $9,540. The claimed $9,540 loss
actually arose from a cash deposit that Mr. King made to his
lottery account with PNC that was not properly credited to his
account.
Deductions are a matter of legislative grace, and the burden
of showing the right to deductions is on the taxpayer. See Rule
142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992).
4We note that petitioners had confusing and inconsistent
positions regarding the amounts and their sources of gross income
in their initial income tax return and their amended tax return.
For instance, in their initial income tax return, under Schedule
C, petitioners indicated that they had $30,000 of gross receipts
from the sale of cigarettes, lottery (tickets), and newspapers.
Yet, petitioners indicated that their cost of goods sold was
zero. Furthermore, in their amended return, on Schedule C,
petitioners reported that Schedule C gross income was generated
from "other income", which consisted entirely of $48,460 in
lottery commissions. See appendix.
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