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deficiency with the exception of the $905 automobile rental
expense deduction and the section 6651(a)(1) addition to tax.2
The determinations of the Commissioner in a notice of
deficiency are presumed correct, and the burden is on the
taxpayer to prove that the determinations are in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933). Moreover,
deductions are a matter of legislative grace, and the taxpayer
bears the burden of proving entitlement to any claimed deduction,
and that such deduction fits squarely within the ambit of the
statute providing the deduction. New Colonial Ice Co. v.
Helvering, 292 U.S. 435 (1934).
With respect to the $905 automobile rental expense, section
162(a) allows a deduction for all ordinary and necessary expenses
paid or incurred during the taxable year in carrying on any trade
or business. Such deductions include traveling expenses incurred
while away from home in the pursuit of a trade or business. Sec.
162(a)(2). Traveling expenses include travel fares. Sec. 1.162-
2(a), Income Tax Regs. If expenses for travel to and from a
destination are incurred for both business and other purposes,
such expenses are deductible only if the travel is primarily
related to the taxpayer's trade or business. Sec. 1.162-2(b)(1),
2
Based on the settlement agreed to, which is reflected in the
written stipulation filed at trial, a Rule 155 computation will
be necessary regardless of how the Court rules on the $905
expense item.
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Last modified: May 25, 2011