Linda D. Fason - Page 6

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          is determined not to rise to the level of fraud, respondent                 
          asserts that petitioner is liable for the accuracy-related                  
          penalty on account of negligence or disregard of rules or                   
               We agree with respondent that the substantiation offered by            
          petitioner not only falls short of establishing her entitlement             
          to the claimed deductions but also demonstrates sufficient                  
          fraudulent intent to warrant the civil fraud penalty.                       
          Disallowance of Deductions                                                  
               As a general rule, respondent’s determinations are presumed            
          correct, and the taxpayer bears the burden of proving that such             
          determinations are erroneous.  See Rule 142(a).  Deductions,                
          moreover, are a matter of “legislative grace”, and “a taxpayer              
          seeking a deduction must be able to point to an applicable                  
          statute and show that he comes within its terms.”  New Colonial             
          Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).  The burden of              
          proving entitlement to a deduction is therefore on the taxpayer,            
          see Rule 142(a), and every taxpayer is required to maintain                 
          adequate records to substantiate the existence and amount of any            
          deduction claimed; see sec. 6001; sec. 1.6001-1(a), Income Tax              
               Applying these principles to the matter at hand, we find               
          that petitioner here has failed to carry her burden of                      
          establishing that disallowance of the challenged deductions was             

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