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allowance would amount to unguided largesse. Williams v. United
States, 245 F.2d 559, 560 (5th Cir. 1957).
Expenditures for items that are capital in nature are not
deductible by the taxpayer. Sec. 263. However, the cost of
capital expenditures may be recoverable through depreciation or
amortization. Business expenses, like other deductions claimed
on a tax return, must be substantiated by the taxpayer, who bears
the burden of proof. Rule 142(a). In order to be deductible,
business expenses must be those incurred by the taxpayer in his
trade or business, and not expenses of another individual or
entity. Bistrup v. Commissioner, T.C. Memo. 1980-402.
The underlying issues involving the cost of goods sold and
business expense deductions claimed by petitioner fall within one
or more of the three areas mentioned above.
A. Cost of Goods Sold
As reflected in our findings of fact, we conclude that
petitioner overstated cost of goods sold by $33,242.12 for 1973.
His taxable income should be increased by that amount.
Petitioner has conceded the adjustment of $32,704.82 in cost of
goods sold for 1974, and $57,154.81 of $68,815.64 claimed for
1977. We sustain respondent's determination with respect to the
remaining amount ($11,660.83) for 1977.
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