- 5 - preparation of the return and testimony by petitioner’s accountant bear little relationship to reality. While the record in this case has made fact finding difficult, we nevertheless have carefully reviewed this record to analyze the issues and make findings and conclusions. B. Schedule C Expenses Section 162(a) permits a deduction for the ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business. An expense must be directly connected with, or proximately result from, a trade or business of the taxpayer. See Kornhauser v. United States, 276 U.S. 145, 153 (1928); O’Malley v. Commissioner, 91 T.C. 352, 361 (1988). Expenses that are personal in nature are generally not allowed as deductions. See sec. 262(a). Deductions are a matter of legislative grace, and taxpayers must comply with the specific requirements for any deduction claimed. See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). A taxpayer is required to maintain records sufficient to establish the amount of his income and deductions. See sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs. A taxpayer must substantiate his deductions by maintaining sufficient books and records to be entitled to a deduction under section 162(a).Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011