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not contend that petitioner was not "carrying on" this activity
or that section 183 is involved herein.
Depreciation
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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