- 9 - Insurance Co. Respondent allowed petitioners a deduction for $7,500 (as a personal interest expense) of the $15,000 claimed. Petitioners presented no documentation at trial to substantiate their claim for the investment interest expense deduction. Preparation of Tax Returns Petitioners' tax returns for each of the years under consideration were prepared by their accountant, Donald Fenton. Mr. Fenton prepared the returns by entering the information provided to him by petitioners. Mr. Fenton did not receive documentation to verify or substantiate the deductions claimed by petitioners; he took the list of expenses they provided to him at face value. Mr. Fenton was not aware that some of the employee business expenses claimed by petitioners were, in actuality, reimbursed by Dr. Novick's employer. OPINION Deductions are a matter of legislative grace. New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Taxpayers bear the burden of establishing that they are entitled to the claimed deductions. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 114 (1933). This includes the burden of substantiating the amount and purpose of the item claimed. Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 90 (1979), affd. per curiam 540 F.2d 821 (5th Cir. 1976); sec. 1.6001-1(a), Income Tax Regs.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
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