- 6 -
amount shown was (a) for purchases, and (b) paid, the amount is
not deductible." We note that the ending inventory reflected in
the cost of goods sold computation is the amount that petitioner
paid to the publishing company to have his book printed. We
assume from this that, as of the end of 1992, with the possible
exception of the complimentary copies that the printer provided
to petitioner, all of the copies of petitioner's book remained in
inventory. With respect to the expenses that were adjusted,
respondent explained: "Since you did not establish that the
business expense shown on your tax return was paid or incurred
during the taxable year and that the expense was ordinary and
necessary to your business, we have disallowed the amount shown."
Discussion
Respondent's determinations, having been made in a notice of
deficiency, are presumed correct, and petitioners bear the burden
of proving such determinations to be erroneous. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Furthermore,
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); INDOPCO, Inc. v. Commissioner,
503 U.S. 79, 84 (1992); 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). If
certain claimed deductions are not adequately substantiated, we
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