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Deductions are a matter of legislative grace, and the
taxpayer bears the burden of proving that he or she is entitled
to any deduction claimed. New Colonial Ice Co. v. Helvering, 292
U.S. 435, 440 (1934); Welch v. Helvering, 290 U.S. 111 (1933).
Taxpayers must substantiate the amount of any deductions claimed.
Hradesky v. Commissioner, 65 T.C. 87, 89 (1975), affd. per curiam
540 F.2d 821 (5th Cir. 1976). Taxpayers are required to keep
sufficient records to enable the Commissioner to determine their
correct tax liability. Sec. 6001. Entertainment expenses,
moreover, must satisfy more stringent substantiation
requirements. Sec. 274(d).
At trial, petitioner offered evidence substantiating
expenses for 1993 and 1994 in the amounts of $709.39 and $882.64,
respectively, for "small tools", which were deducted on Schedules
C for her consulting activities. No other substantiation was
introduced into evidence for other expenses associated with
petitioner's consulting activity. Therefore, petitioner is not
entitled to expenses in excess of the above-mentioned expenses
for small tools and those expenses allowed by respondent in the
notices of deficiency.
With respect to petitioner's wholesale activity, petitioner
offered evidence substantiating advertising expenses of $326,
which were deducted on her Schedule C in 1994. No other evidence
was introduced in regard to other expenses reported by petitioner
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