- 9 -
pyrite. See sec. 1.183-2(b)(2), Income Tax Regs. In addition,
petitioner generated significant tax benefits by offsetting
losses from his meteorite and pyrite collection activity against
his income from interest, dividends, and other sources and
thereby reported no Federal income tax liability. See sec.
1.183-2(b)(8), Income Tax Regs. All of these factors favor
respondent's position that petitioner's activity was not engaged
in with the requisite profit objective.
In addition to concluding that petitioner engaged in his
meteorite and pyrite collection activity without the requisite
profit objective, we agree with respondent that petitioner failed
to substantiate the expenses claimed on his Schedules C.
Taxpayers are required to prove their entitlement to any
deduction claimed, including the fact of payment. See Rule
142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992);
Welch v. Helvering, 290 U.S. 111, 115 (1933); Hradesky v.
Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d
821 (5th Cir. 1976). Petitioner would have us believe that he
paid $83,994 in 1995 and $64,035 in 1996 as "salvage from
salvagers".9 However, petitioner's testimony was bizarre if not
9 In testimony before the Court in his case involving the
taxable years 1992, 1993, and 1994, petitioner described the
"salvagers" as junior high school students who sold minerals to
him after he had disclosed the minerals' location to the
students.
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