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respondent computed petitioners’ corrected tax liability for 1995
as $17,625 and from this amount subtracted $13,711 representing
tax shown on petitioners’ return. On line 54 of their Form 1040,
petitioners reported zero tax liability. This is a mistake and
the correct deficiency based on the income tax return received
November 20, 1996, is $17,625.
Discussion
1. Schedules C and E Deductions
Petitioners contend that they are entitled to deduct
expenses and losses incurred in trading activities conducted
during 1995. Petitioners claimed deductions for expenses and
losses incurred in commodities trading on Schedules C and E of
their 1995 Federal income tax return.
Deductions are a matter of legislative grace, and a taxpayer
must be able to show that the deduction sought comes within the
express provisions of the statute. See New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). All taxpayers are required
to keep sufficient records to enable the Commissioner to
determine their correct tax liability. See sec. 6001; see also
Meneguzzo v. Commissioner, 43 T.C. 824, 831-832 (1965).
The deductions claimed by petitioners on their Schedules C
and E are disallowed for lack of substantiation. At trial,
petitioners offered no documentation to support their claimed
Schedules C and E deductions. It is well settled that we are not
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