Rahim A. and Lisa R. Munshi - Page 5

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            not contend that petitioner was not "carrying on" this activity                           
            or that section 183 is involved herein.                                                   
                  On the Schedule C attached to petitioner's 1991 return,                             
            petitioner claimed a deduction in the amount of $3,200 for                                
            depreciation.  This deduction pertains to the computer and other                          
            equipment allegedly purchased for $10,000.  Respondent disallowed                         
            this entire amount.                                                                       
                  A taxpayer may deduct ordinary and necessary expenses paid                          
            or incurred during the taxable year in carrying on a trade or                             
            business.  Sec. 162(a).  Deductions are a matter of legislative                           
            grace, and the taxpayer bears the burden of proving that he is                            
            entitled to any claimed deductions.  Rule 142(a); New Colonial                            
            Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); Welch v.                                  
            Helvering, 290 U.S. 111, 115 (1933).  This includes the burden of                         
            substantiating the amount and purpose of the item claimed.                                
            Hradesky v. Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam                         
            540 F.2d 821 (5th Cir. 1976); sec. 1.6001-1(a), Income Tax Regs.                          
            However, if certain claimed deductions are not adequately                                 
            substantiated, we are permitted to estimate them, provided we are                         
            convinced from the record that the taxpayer has incurred such                             
            expenses, and we have a basis upon which to make an estimate.                             
            Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930); Vanicek v.                             
            Commissioner, 85 T.C. 731, 735 (1985).                                                    

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