Patrick F. and Arlene G. Sheehy - Page 4

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          for research or experimentation undertaken directly by him but              
          also to expenditures paid or incurred for research or                       
          experimentation carried on in his behalf by another person or               
          organization".                                                              
               Deductions are a matter of legislative grace, and the                  
          taxpayer has the burden of demonstrating that he is entitled to a           
          deduction.  New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440            
          (1934).  The burden of proof remains on the taxpayer even when              
          the case is submitted fully stipulated.  Borchers v.                        
          Commissioner, 95 T.C. 82, 91 (1990), affd. 943 F.2d 22 (8th Cir.            
          1991).  Petitioners have adequately substantiated that they paid            
          $50,000 to RCC in 1992.  To be entitled to the deduction,                   
          however, they must demonstrate that the amount was actually spent           
          for research or experimentation conducted by them or on their               
          behalf in connection with their trade or business.  See Grindle             
          v. Commissioner, T.C. Memo. 1993-297.                                       
               Petitioners' evidence consists of two documents.  First, on            
          the Schedule C of their 1992 Federal income tax return, they list           
          RCC as petitioner's business.  They describe its function as                
          "Manufacturing Recyclable containers" and indicate that                     
          petitioner "materially participated".  Plainly, petitioners'                
          Schedule C is self-serving, and hardly represents convincing                
          evidence on their behalf.                                                   







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