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Deductions are strictly a matter of legislative grace;
petitioners bear the burden of proving that they are entitled to
any deductions claimed. INDOPCO, Inc. v. Commissioner, 503 U.S.
79, 84 (1992).
Section 162(a) allows a deduction for ordinary and necessary
expenses paid or incurred during the taxable year in carrying on
a trade or business. Taxpayers must maintain records sufficient
to establish the amount of their income and deductions. Sec.
6001; sec. 1.6001-1(a), (e), Income Tax Regs.
Dr. Beck has offered no credible evidence to establish that
he is entitled to deduct claimed Schedule C expenses greater than
the amounts that respondent has determined to be allowable.7
Consequently, we sustain respondent’s determinations disallowing
the claimed deductions.
7 Dr. Beck claimed that his accounting records were stored
in a “black box” at his office and that this box was mistakenly
removed and disposed of by office cleaning people in February
1995. Dr. Beck’s contention is not credible in light of his
deemed stipulations of fact. The deemed stipulations indicate
that according to the office cleaning people involved in the
incident and the police officer who filed a report of the
incident, the dimensions of the discarded box were approximately
9 by 12 by 4 inches. The deemed stipulations also indicate that
Dr. Beck’s 1995 business and accounting records took up several
five-drawer filing cabinets. In any event, Dr. Beck has not
attempted to substantiate his claimed deductions by
reconstructing any expenditures through other credible evidence.
Cf. Watson v. Commissioner, T.C. Memo. 1988-29.
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