- 20 -
proximately from the taxpayer’s trade or business. Peters, Gamm,
West & Vincent, Inc. v. Commissioner, T.C. Memo. 1996-186.
Deductions are a matter of legislative grace, and petitioner
bears the burden of proving that he is entitled to the deductions
claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S.
79, 84 (1992). At trial, petitioner presented testimony
substantiating legal expenses in connection with his ownership of
the restaurants of $1,464, $8,006, $8,267, and, $3,000 for the
tax years 1987, 1988, 1989, and 1990. Petitioner incurred the
legal expenses defending his business from creditors' suits.
Accordingly, petitioner is entitled to deduct legal expenses in
the above-listed amounts.
We reach a different result with respect to the $3,524 in
medical expenses that petitioner claimed on his 1990 return for
amounts paid on behalf of his mother. Since we have determined
that petitioner's mother is not a dependent of petitioner,
petitioner is not entitled to deduct medical expenses paid on her
behalf. Sec. 213(a). Therefore, we sustain respondent's
determination with respect to this issue.
Issue 7. Fraud Additions to Tax and Penalty
Finally, we consider whether any part of the underpayment of
tax required to be shown on petitioner's returns was due to
fraud. Respondent determined that the underpayment of tax was
due to fraud under the statute applicable for each taxable year:
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011