Joellen Miller Murata - Page 8

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            job search expenses; and $3,417.69 related to a "not-for-profit"                           
            rental.3  In the notice of deficiency, respondent disallowed the                           
            entire amount for lack of substantiation.                                                  
            General Legal Principles                                                                   
                  We begin by noting that, as a general rule, the                                      
            Commissioner's determinations are presumed correct, and that the                           
            taxpayer bears the burden of proving that those determinations                             
            are erroneous.  Rule 142(a); Welch v. Helvering, 290 U.S. 111,                             
            115 (1933).  Moreover, deductions are a matter of legislative                              
            grace, and the taxpayer bears the burden of proving that he or                             
            she is entitled to any deduction claimed.  Rule 142(a); New                                
            Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).  This                             
            includes the burden of substantiation.  Hradesky v. Commissioner,                          
            65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d 821 (5th Cir.                             
            1976).                                                                                     
                  Section 162(a) provides that "There shall be allowed as a                            
            deduction all the ordinary and necessary expenses paid or                                  
            incurred during the taxable year in carrying on any trade or                               
            business".                                                                                 
                  Section 6001 and the regulations promulgated thereunder                              
            require taxpayers to maintain records sufficient to permit                                 
            verification of income and expenses.  As a general rule, if the                            

            3  The $.77 discrepancy between the miscellaneous income                                   
            item and the "not-for-profit" rental deduction was not addressed                           
            in the record.                                                                             




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