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consideration was "one dollar" is not controlling. We are also
unpersuaded by respondent's argument that petitioners realized
ordinary income from the sales. While petitioner was a real
estate broker by profession, the evidence established that the
lots, which petitioners held for over 20 years, were not held in
connection with petitioner's business.
Petitioner claimed itemized deductions of $11,305,
comprising $1,292 in medical expenses, $2,732 in taxes, $941 in
mortgage interest, and $6,340 in charitable contributions.
Deductions are a matter of legislative grace, and taxpayers must
establish entitlement to them. See Deputy v. DuPont, 308 U.S.
488, 493 (1940). Petitioners are required to keep books and
records to substantiate claimed expenses. See sec.
1.446-1(a)(4), Income Tax Regs. Petitioners have proven they
paid $1,557 in real property taxes on the lots during 1992.
Petitioners, as cash method taxpayers, are entitled to deduct the
taxes when paid. See sec. 164; Mitchell v. Commissioner, T.C.
Memo. 1983-155. As to the $9,748 balance of itemized deductions
($11,305 - $1,557), petitioners neither presented documentary
evidence nor proffered specific and convincing testimony
substantiating the deductions. Petitioners have failed to meet
their burden of proof, and we sustain respondent's determination
to the extent of $9,748.
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