Julie Pusateri - Page 4

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          $100 for utilities on the residential property in San Diego and             
          depreciation of $1,280 on equipment and furniture, for a total              
          deduction of $1,680.                                                        
               Respondent disallowed, for lack of substantiation, all of              
          petitioner's expenses claimed on the Schedule C-1 and some of the           
          expenses claimed on the Schedule C-2.  Respondent disallowed all            
          expenses claimed on the Schedule E and allocated the $8,320 of              
          Schedule E income to petitioner's Schedule C-1.                             
               Deductions are a matter of legislative grace.  A taxpayer              
          who seeks a deduction must be able to show that the taxpayer                
          comes within the express provisions of the statute.  New Colonial           
          Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).  Petitioner has             
          the burden of proving that respondent's determinations are                  
          incorrect in all respects.  Rule 142(a); Welch v. Helvering, 290            
          U.S. 111, 115 (1933).                                                       
               We first turn to the expenses deducted on the Schedule C-1             
          and the Schedule C-2.  The parties agreed, by written and oral              
          stipulation, that petitioner substantiated the amounts set forth            
                                   Schedule C-1                                       
                                        Expenses       Expenses                       
                                        Claimed        Substantiated                  
          Car                           $ 5,272        $4,060                         
          Rent-vehicles, machinery                                                    
               and equipment            1,600                                         
          Rent-other business property   6,720                                        
          Supplies                      1,530          1,000                          
          Meals and entertainment       246                                           
          Utilities                     1,220                                         

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