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question for the purposes of computing their alternative minimum
tax liability.
At trial, petitioners also argued that the amount received
from NUS was a fellowship. Petitioners suggest that since the
amounts were received pursuant to a fellowship, the "receipts are
not called wages, and are not subject to the Federal Insurance
Contributions Act (FICA), the Federal Unemployment Tax Act
(FUTA), and the Collection of Income Tax at Source on Wages."
Petitioners conclude that the amount received from NUS was
properly reportable as self-employment income, and, therefore,
petitioner was not an employee of NUS.
OPINION
We begin by noting that respondent's determinations are
presumed correct, and petitioners bear the burden of proving that
those determinations are erroneous. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Moreover, deductions are a
matter of legislative grace, and petitioner bears the burden of
proving that he is entitled to any deductions claimed. INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992).
Work-related expenses incurred by an independent contractor
are deductible "above the line" under section 62(a)(1), whereas
unreimbursed expenses incurred by an employee are deductible
"below the line" as itemized deductions. Hathaway v.
Commissioner, T.C. Memo. 1996-389. Section 56(b)(1)(A)(i)
provides that, for the purposes of calculating a taxpayer's
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