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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
below:
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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