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Helvering, 290 U.S. 111, 115 (1933). Section 162(a) allows
taxpayers a deduction for "all the ordinary and necessary
expenses paid or incurred during the taxable year in carrying on
any trade or business". In order to be deductible, however, the
expenses must be "directly connected with or pertaining to the
taxpayer's trade or business". Sec. 1.162-1(a), Income Tax Regs.
For convenience, we will combine our findings of fact and
opinion with respect to the items which remain in issue.
Charitable Contributions
Subject to limitation, section 170 permits a deduction for
charitable contributions paid within the taxable year. Sec.
170(a) and (b). Petitioners claimed charitable contributions on
their 1985 Federal income tax return in the amount of $6,364.
This amount consisted of noncash contributions of $4,184 and cash
contributions of $2,180. Respondent allowed the noncash
contributions in full, but denied $1,127 of the cash
contributions because of a lack of adequate substantiation.
At trial, petitioners produced four canceled checks totaling
$402.50. Three of these checks were made payable to a "Christmas
Bazaar". Petitioners failed to offer any testimony to
demonstrate that these expenditures were charitable
contributions. The fourth check was made payable to the Lupus
Foundation in the amount of $100. The Commissioner has
recognized the Lupus Foundation as a charitable organization
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