5 In the notice of deficiency, respondent disallowed $3,357 of petitioners' home office deduction. The balance was allowed based upon business usage of the two enclosed porches or 7.15 percent of their home. Respondent allowed petitioners additional itemized deductions for the portion of the disallowed home office expense which represents mortgage interest and real estate taxes in the amount of $2,459. Respondent disallowed petitioners' other expenses in the amount of $5,518 because petitioners had not shown that this amount was for ordinary and necessary business expenses. Respondent further disallowed petitioners' dependency exemption deduction claimed with respect to their son Jeffrey because he filed a joint return for the year in issue. As a computational result of respondent's other adjustments, respondent disallowed petitioners' claimed earned income credit. Respondent's determinations are presumed correct, and petitioners bear 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). Schedule C Deductions A. Home Office Expenses Section 280A generally prohibits deduction of otherwise allowable expenses with respect to the use of an individualPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
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