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petitioners' 1993 Federal income tax in the amount of $3,538 and
an accuracy-related penalty under section 6662(a) in the amount
of $708. The issues for decision are: (1) Whether petitioners
are entitled to deduct certain claimed Schedule C expenses; (2)
whether petitioners underreported capital gain income on Schedule
D by the amount of $22,116; and (3) whether petitioners are
liable for the accuracy-related penalty under section 6662(a).
For clarity and convenience, we have combined the findings
of fact and discussion of pertinent legal issues. Some of the
facts have been stipulated and are so found. The stipulation of
facts and the attached exhibits are incorporated herein by this
reference. Petitioners resided in Avon, Connecticut, at the time
the petition was filed.
We begin by noting that petitioners bear the burden of
proving that respondent's determination is erroneous. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Moreover,
deductions are a matter of legislative grace, and petitioners
bear the burden of proving that they are entitled to any
deductions claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79,
84 (1992).
1. Schedule C Deductions
Petitioner Terry Dilozir (petitioner) was self-employed as a
real estate agent during the year in issue. Petitioner worked in
1(...continued)
Procedure.
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