Paul M. and June S. Sengpiehl - Page 5

                                          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 individual                 






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