- 3 -
stated the reason they filed the amended return was because their
original "Schedule C was prepared so incompletely that [they] had
to prepare [a] new Schedule C." On a revised Schedule C
submitted with their amended return, petitioners claimed expenses
in the amount of $42,014 from petitioner's activity as a
limousine driver. On a revised Form 1040 also submitted with
their amended return, petitioners reported taxable interest
income in the amount of $375.
In the notice of deficiency, respondent disallowed $9,817 of
the claimed $41,155 in Schedule C expenses from petitioner's
activity as a limousine driver because petitioners failed to
establish that the business expense shown on their return was
paid or incurred or was ordinary and necessary to petitioner's
business. Respondent also increased petitioners' taxable
interest income in the amount of $277, made computational
adjustments to petitioners' self-employment tax and self-
employment tax deduction, and imposed an accuracy-related penalty
under section 6662(a).
Deductions are strictly a matter of legislative grace.
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).
Taxpayers must substantiate any deductions claimed. Hradesky v.
Commissioner, 65 T.C. 87 (1975), affd. per curiam 540 F.2d 821
(5th Cir. 1976).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011