J. David Golub - Page 26




                                        - 26 -                                         

          III.  Schedule C Deductions                                                  
               Income tax deductions are a matter of legislative grace, and            
          the burden of clearly showing the right to the claimed deduction             
          is on the taxpayer.  See INDOPCO, Inc. v. Commissioner, 503 U.S.             
          79, 84 (1992).  Moreover, deductions are strictly construed and              
          allowed only “‘as there is a clear provision therefor.’”   Id.               
          (quoting New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440                
          (1934)).  Taxpayers must substantiate any deductions claimed.                
          See Hradesky v. Commissioner, 65 T.C. 87 (1975), affd. per curiam            
          540 F.2d 821 (5th Cir. 1976).  Section 6001 provides that a                  
          taxpayer must keep records that suffice to establish the amount              
          of the claimed deductions.                                                   
               Section 162(a) allows a deduction for all ordinary and                  
          necessary business expenses paid or incurred during the taxable              
          year in carrying on a trade or business.  In the instant case,               
          petitioner claimed Schedule C deductions of $27,732 and $35,718,             
          respectively, on his 1991 and 1992 Federal income tax returns.               
          At trial, however, he failed to produce any records to support               
          these deductions.  Moreover, his income tax returns give us ample            


               10(...continued)                                                        
          1.111-1(b)(2)(ii)(b), Income Tax Regs.  Under these regulations,             
          the $1,753 recovery exclusion might have been reduced for 1991 if            
          carryovers from 1989 and 1990 had been given effect.  However, we            
          have sustained respondent’s disallowance of such carryovers and              
          thus they do not affect the amount of the recovery exclusion in              
          this instance.                                                               




Page:  Previous  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  Next

Last modified: May 25, 2011