- 4 -
We begin by noting that, as a general rule, the
Commissioner's determinations are presumed correct, and the
taxpayer bears the burden of proving otherwise. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Moreover,
deductions are strictly a matter of legislative grace, and the
taxpayer has the burden of establishing entitlement to any
deduction claimed on the return. Deputy v. du Pont, 308 U.S.
488, 493 (1940); New Colonial Ice Co. v. Helvering, 292 U.S. 435,
440 (1934).
The taxpayer's burden of establishing his entitlement to a
deduction includes the burden of substantiation. Hradesky v.
Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d
821 (5th Cir. 1976). The Court is not bound to accept
unverified, undocumented testimony of the taxpayer. Id.
Accordingly, section 6001 and the regulations promulgated
thereunder require the taxpayer to maintain records sufficient to
enable the Commissioner to determine the taxpayer's correct tax
liability. Meneguzzo v. Commissioner, 43 T.C. 824, 831-832
(1965); sec. 1.6001-1(a), Income Tax Regs.
As a general rule, the mere fact that a taxpayer cannot
prove the precise amount of an otherwise deductible item is
ordinarily not fatal because we may, if the trial record provides
sufficient evidence, estimate the amount of the deductible
expenses incurred. Cohan v. Commissioner, 39 F.2d 540 (2d Cir.
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011