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Deductions are a matter of legislative grace, and petitioner
bears the burden of proving entitlement to any claimed
deductions. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S.
79, 84 (1992). This is not a situation where respondent
determined that petitioner had omitted income, and it is evident
that the notice of deficiency was based upon an examination of
petitioner's returns. As such, we reject petitioner's claim that
the determination in the notice of deficiency was arbitrary.
(B) Respondent's actions in conducting the examination
We now turn to petitioner's claim that respondent engaged in
an unconstitutional prior restraint of speech in her attempt to
examine "confidential" details of petitioner's research in regard
to his works in progress. Petitioner appears to object to
respondent's request for information during the examination of
the returns. Respondent, in an attempt to ascertain the
correctness of a taxpayer's return, may examine any books,
papers, records, or other data which may be relevant or material
to such inquiry. Sec. 7602(a). Even if the "confidential"
materials in question were somehow not subject to examination,
petitioner must present other evidence sufficient to meet his
burden of proving entitlement to the deductions in question.
Coulter v. Commissioner, 82 T.C. 580, 581-582 (1984); Mayo v.
Commissioner, a Memorandum Opinion of this Court dated Oct. 30,
1951 (disallowing deductions for lack of substantiation where
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Last modified: May 25, 2011