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the purposes designated.
Deductions are strictly a matter of legislative grace.
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).
Taxpayers must substantiate any deductions claimed. Hradesky v.
Commissioner, 65 T.C. 87 (1975), affd. per curiam 540 F.2d 821
(5th Cir. 1976). Section 6001 imposes upon every person liable
for any tax a duty to maintain records that are sufficient to
enable the Commissioner to determine the taxpayer’s correct tax
liability. Sec. 1.6001-1(a), Income Tax Regs.
Petitioner Harold L. Dozier claimed he was in business with
Ms. Faye Williams and Mr. Leonard Campbell to buy and sell names
“over the Web”.
Mr. Herman Tyler, petitioners’ tax return preparer,
testified. Mr. Tyler claimed that petitioners borrowed
approximately $25,000 from Keanon Thompson, a 14 year-old boy, so
they could participate in the business. Mr. Tyler asserted that
he arranged the loan because he had Keanon Thompson’s power of
attorney. Mr. Tyler referred to a promissory note, but no
promissory note was introduced in evidence. According to his
testimony, the funds never went to petitioners, but remained in
Mr. Tyler’s hands. Mr. Tyler also testified that he held funds
in trust for petitioners and made wire transfers to Mr. Leonard
Campbell of California. He said these wire transfers represented
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Last modified: May 25, 2011