- 10 - Additional Schedule C Deductions Deductions are a matter of legislative grace, and taxpayers bear the burden of proving that they are entitled to any deductions claimed. Rule 142(a); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Taxpayers are required to maintain records that are sufficient to substantiate claimed deductions. Sec. 6001. Section 162 generally allows a deduction for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Such expenses must be directly connected with or pertain to the taxpayer's trade or business. Sec. 1.162-1(a), Income Tax Regs. The determination of whether an expenditure satisfies the requirements of section 162 is a question of fact. Commissioner v. Heininger, 320 U.S. 467, 475 (1943). Petitioner claims that she is entitled to a deduction in the amount of $52,999.50, which she originally reported as cost of goods sold on her Schedule C, and which was disallowed by respondent. The $52,999.50 amount represented the sum of checks drawn on petitioner's business bank account. These checks were made payable to her husband, Mr. Maynard, and consisted of six checks for $3,500, six checks for $5,000, a check for $1,983, and a check for $16.50. The checks were deposited into the trust account of Maynard & McDonald. Petitioner alleges that these amounts were paid to Mr. Maynard for consulting services he provided for her business. Petitioner testified that Mr. Maynard advised her with respect to equipment,Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011