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claimed. See Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975),
affd. per curiam 540 F.2d 821 (5th Cir. 1976). Taxpayers are
required to maintain records sufficient to enable the
Commissioner to determine the taxpayer’s correct tax liability.
See sec. 6001; sec. 1.6001-1(a), Income Tax Regs.
Section 162(a) allows a deduction for all ordinary and
necessary expenses incurred during the taxable year in carrying
on a trade or business. To be “necessary” an expense must be
“appropriate and helpful” to the taxpayer’s business. Welch v.
Helvering, 290 U.S. 111, 113 (1933). To be “ordinary” the
transaction which gives rise to the expense must be of common or
frequent occurrence in the type of business involved. Deputy v.
du Pont, 308 U.S. 488, 495 (1940).
The Schedule C deductions in issue fall into eight
categories: (1) Legal and professional fees; (2) depreciation;
(3) travel and meals; (4) equipment transportation and storage;
(5) office; (6) telephone; (7) security; and (8) advertising.
10(...continued)
burden of proof to the Commissioner, subject to certain
limitations, where a taxpayer introduces credible evidence with
respect to factual issues relevant to ascertaining the taxpayer’s
liability for tax. See Internal Revenue Service Restructuring
and Reform Act of 1998, Pub. L. 105-206, sec. 3001, 112 Stat.
726-727. Respondent contends that the examination commenced
before July 22, 1998, and petitioner has not argued that sec.
7491 is applicable to him.
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