8
amounts of $343, $2,014, and $2,186 for the tax years 1987, 1988,
and 1989, respectively.
OPINION
Respondent's determinations are presumed correct, and
petitioners have the burden of proving them erroneous. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Further,
deductions are a matter of legislative grace, and petitioners
must prove entitlement to any deductions claimed. INDOPCO, Inc.
v. Commissioner, 503 U.S. 79, 84 (1992). Taxpayers must maintain
adequate records to substantiate the amount of any deductions
claimed. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs.
Under section 512(a), each petitioner's UBTI from its
"instant bingo" activity is computed as the gross income derived
therefrom, less the deductions allowed by Chapter 1 which are
directly connected with carrying on this activity, subject to the
modifications contained in section 512(b). As relevant here,
section 512(b) provides that any deduction allowed under section
170 shall be allowed in computing UBTI, but such deduction is
limited to 10 percent of UBTI computed without regard to such
deduction. Sec. 512(b)(10).
Section 162 allows a deduction for all ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. Section 170 allows a deduction
for any charitable contribution or gift, as defined therein, paid
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