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the same time, Mr. Kerrigan also began doing work as a consultant
for the Times Journal Co., the Government Computer News, and
Atex.3
As a consultant, Mr. Kerrigan was responsible for his own
expenses. He claimed deductions for expenses incurred in his
consulting business on his separate Schedule C of petitioners'
1985 Federal income tax return.
Mrs. Kerrigan listed her occupation on the couple's 1985
return as an "independent sales agent". During 1985, Mrs.
Kerrigan worked as an independent realtor associated with Moussa
Mooadel Realtors, Inc., in Bethesda, Maryland. She specialized
in the sale of expensive houses in the suburbs of Maryland. Mrs.
Kerrigan reported her real estate agent income and expenses on a
separate Schedule C.
On February 25, 1992, respondent issued a notice of
deficiency, which made numerous adjustments involving the
disallowance of deductions claimed by petitioners. These
deductions were disallowed because petitioners failed to provide
adequate substantiation.
Deductions from gross income are a matter of legislative
grace, and taxpayers bear the burden of proving that they are
entitled to any deductions claimed. Rule 142(a); Welch v.
3In September 1985, Mr. Kerrigan accepted a position with
the Times Journal Co. as a publisher of what is now called the
Defense News.
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