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our task of finding the facts has been laborious and sometimes
frustrating. We have plodded through 1,917 pages of testimony
from 32 witnesses. The stipulations of fact contain 1,191
paragraphs, and there are over 1,800 exhibits of documentary
evidence in the record. There are some factual inconsistencies
and contradictions which the parties have exploited to their
advantage in 933 pages of briefs. Nevertheless, we have done the
best we can to reconcile conflicting portions of the record,
although we acknowledge that perfect harmony has not been
attainable.
Before considering the substantive issues involved in these
cases, we will address some preliminary issues relating to
procedural and evidentiary matters.
I. Preliminary Issues
A. Burden of Proof
As a general rule, the Commissioner's determinations are
presumed correct, and the taxpayer bears the burden of proving
that those determinations are erroneous. Rule 142(a); United
States v. Janis, 428 U.S. 433, 440-441 (1976); Welch v.
Helvering, 290 U.S. 111, 115 (1933). In addition, deductions are
a matter of legislative grace, and the taxpayer bears the burden
of proving that he 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.
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