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OPINION
Schedule C Deductions
The Commissioner's determinations in a notice of deficiency
are presumed correct, and 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); Welch v. Helvering, supra.
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). In addition, section 6001 requires the
taxpayer to keep records sufficient to show whether or not the
person is liable for tax.
As in the prior cases, petitioner has taken the position
that the expenses relating to her tutoring activity were incurred
by her in connection with a trade or business and are deductible
pursuant to section 162. Respondent argues that petitioner's
tutoring activity does not constitute a trade or business because
petitioner did not engage in such activity with the requisite
profit objective. Consequently, according to respondent,
petitioner cannot rely upon section 162 to support her claimed
deductions.
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Last modified: May 25, 2011