- 6 - 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 regulations. 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 Regs. 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 wasPage: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011