-13-
previously claimed Schedule A unreimbursed employee business
expenses as Schedule C business expenses associated with
petitioner’s services as an “independent contractor”. Petitioners
also increased the amount of the deduction from $51,363.96 to
$57,348. The expenses claimed on Schedule C were:
Advertising $513
Bad debt 10,000
Car operating expenses 6,201
Depreciation (car) 2,850
Depreciation (house) 10,300
Employee benefits (life 1,424
insurance)
Interest (car) 1,660
Office expense 4,046
Supplies 9,023
Travel 7,465
Meals/entertainment 4,832
(less 20 percent of meals and
entertainment) (966)
Total $57,3487
Discussion
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 (1975), affd. per curiam 540 F.2d 821 (5th Cir.
7 The parties stipulated that petitioners are not
entitled to the $10,000 bad debt deduction.
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