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Petitioner also bought, sold, and traded military
memorabilia. Petitioner did not report this activity on his
1990, 1991, or 1992 returns.
A. Schedule C Deductions
In the notices of deficiency for the years 1990, 1991, and
1992, respondent disallowed all petitioner's Schedule C
deductions. Respondent now concedes certain of these
deductions.4 We must decide which, if any, of the remaining
deductions claimed by petitioner are allowable.
Deductions are a matter of legislative grace, and taxpayers
bear the burden of proving that they are entitled to any
deductions claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner,
503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292
U.S. 435, 440 (1934). Taxpayers are required to maintain
sufficient records to enable the Commissioner to determine their
correct tax liability. Sec. 6001.
Section 162 generally allows a deduction for all the
ordinary and necessary expenses paid or incurred during the
4Respondent concedes: Air phone charges of $89 in 1990,
$247 in 1991, and $1,808 in 1992; office rent of $25,050 in 1990
and $25,000 in 1991; postage and secretarial services of $1,880
in both 1990 and 1991; office expenses of $951.34 in 1990; and
printing expenses of $20,595 in 1990 and $5,424 in 1991. The
total deductions conceded by respondent are $48,565.34 in 1990,
$32,551.00 in 1991, and $1,808.00 in 1992.
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