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were either personal in nature or inadequately substantiated.
At trial, in an attempt to substantiate his claimed
deductions, petitioner provided copies of canceled checks, drawn
on his personal account. Petitioner, however, failed to indicate
the precise nature of the expenses underlying many of the checks.
Thus, it was necessary for this Court to examine individually and
question petitioner regarding the item purchased by each
particular check.
OPINION
1. Schedule C Deductions
The issue here is whether petitioner may properly claim the
deductions in question. Deductions are a matter of legislative
grace, and petitioner bears the burden of proving entitlement to
any claimed deductions. Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992).
Generally, section 162(a) allows a deduction for "ordinary
and necessary" expenses incurred while carrying on a trade or
business. Respondent does not appear to question that
petitioner's real estate activities constitute a "trade or
business". Respondent, however, contends that petitioner has
failed to prove that the deductions claimed are "ordinary and
necessary" expenses arising from petitioner's real estate
activities. An ordinary and necessary expense is one which is
appropriate and helpful to the taxpayer's business and which
results from an activity which is a common and accepted practice.
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