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Petitioner stored her business and tax records in a shed
behind the carport at her home. In the fall of 1995, a
combination of excessive rain and a leak in the carport caused
the destruction of petitioner's 1994 tax records and other
personal items in the shed. After the incident, petitioner
notified her insurance representative and her landlord about the
damage. In January 1997, after the issuance of the notice of
deficiency, petitioner began reconstructing her 1994 tax records.
Respondent determined that petitioner was not entitled to
deduct any of the claimed Schedule C expenses. Respondent does
not dispute that petitioner's records were destroyed because of a
casualty beyond petitioner's control. Further, respondent does
not appear to dispute that petitioner reasonably reconstructed
her records for 1994. Rather, respondent contends that
petitioner's expenses were not ordinary and necessary business
expenses.
Discussion
1. General
Section 162(a) provides that there shall be allowed as a
deduction all the ordinary and necessary expenses paid or
incurred during the taxable year in carrying on any trade or
business. "Necessary" has been interpreted to mean that the
expense must be appropriate or helpful to the taxpayer's trade or
business. Commissioner v. Tellier, 383 U.S. 687, 689 (1966);
Joseph v. Commissioner, T.C. Memo. 1997-447 (citing Welch v.
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