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U.S. 111, 115 (1933). Deductions are a matter of legislative
grace, and the taxpayer bears the burden of proving that they are
entitled to the claimed deduction. See Rule 142(a); New Colonial
Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).
Section 6001 requires that a taxpayer liable for any tax
shall maintain such records, render such statements, make such
returns, and comply with such regulations as the Secretary may
from time to time prescribe. To be entitled to a deduction,
therefore, a taxpayer is required to substantiate the deduction
through the maintenance of books and records. In addition,
section 262 denies a deduction for any personal, living, or
family expenses.
2. Schedule E - Rental Income & Expense
Petitioner testified that the rental income and expenses
claimed on Schedule E relate to her business, OMNIX. She asserts
that she conducted economic research and some marketing through
OMNIX, which was conducted out of the home owned by both
petitioners. She testified OMNIX' business office consisted of
the entire area in the house with the exception of two bedrooms.
Petitioner testified that she charged OMNIX rent in the
amount of $1,500 per month ($18,000 annually) for the use of the
home. Petitioner also testified that she would write checks from
OMNIX to her husband for the rent. However, she did not write
the checks on a monthly basis, but "maybe altogether one check or
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