4
OPINION
1. Schedule C Expenses
At trial, petitioner argued that she earned her 1994 income
in her capacity as an independent contractor, or, in the
alternative, as a statutory employee, even though most of her
1994 income was reported as employee wages on Forms W-2.
Therefore, as an independent contractor or as a statutory
employee, she properly reported her income and deducted her
business expenses on Schedule C.
Deductions are a matter of legislative grace. See New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). A
taxpayer bears the burden of proving that she is entitled to her
claimed deductions. See Welch v. Helvering, 290 U.S. 111, 115
(1933).
Section 162(a) allows a taxpayer to deduct all ordinary and
necessary business expenses paid or incurred during the taxable
year in carrying on any trade or business. No deduction is
allowed for personal, living, or family expenses. See sec. 262.
Taxpayers are required to maintain adequate records
sufficient to enable the Commissioner to determine the taxpayer's
correct tax liability. See sec. 6001; see also Meneguzzo v.
Commissioner, 43 T.C. 824, 831-832 (1965); sec. 1.6001-1(a),
Income Tax Regs.
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