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income from his job as a teacher. On his 1992 and 1993 Schedules
C, Profit or Loss From Business, petitioner reported total gross
receipts of $3 and $5, respectively, from his law practice, and
claimed business expenses of $29,351 and $28,587, respectively.
Respondent disallowed the Schedules C expenses because
petitioner had not established that the expenses were ordinary
and necessary business expenses and that they were paid or
incurred. Respondent's alternative position was that
petitioner's activity was "not engaged in for profit" within the
meaning of section 183. Respondent also reduced petitioner's
taxable income by $8,556 for 1992 and $8,242 for 1993, because
petitioner's verified itemized deductions exceeded his standard
deductions as shown on his returns. Finally, respondent
determined that petitioner was liable for the accuracy-related
penalties due to negligence.
The Commissioner's determinations are presumed correct, and
the taxpayer bears the burden to prove that those determinations
are erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933). Deductions are strictly a matter of legislative
grace, and the taxpayer bears the burden to prove that he is
entitled to the deductions claimed. INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). Included within this burden
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