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returns and amended Federal income tax returns as “prima facie
evidence in support [of] its claimed deductions.”
Deductions are a matter of legislative grace, and the burden
of showing the right to deductions is on the taxpayer. See Rule
142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992).
The fact that a taxpayer reports a deduction on his income tax
return is not sufficient to substantiate the deduction claimed
on it. See Wilkinson v. Commissioner, 71 T.C. 633, 639 (1979);
Roberts v. Commissioner, 62 T.C. 834, 837 (1974). A tax return
is merely a statement of the taxpayer’s claim; it is not presumed
to be correct. See id.
The effect of the proffered income tax returns here is a
conclusion, given without any circumstances to gauge its
accuracy. No evidence was introduced to substantiate the
accuracy of the deductions taken on the amended returns. A
taxpayer is required to maintain records to substantiate
deductions claimed on the tax return. See sec. 6001. Basically,
Burien Nissan is relying on its own uncorroborated tax returns to
substantiate claimed interest deductions in excess of interest
deductions previously claimed. Burien Nissan has failed to carry
its burden of proving that it is entitled to the additional
interest deductions claimed in its 1994 Federal amended income
tax return.
23(...continued)
The correct amount of the employment award reversal is $598 in
1994, $652 in 1995, and $652 in 1996.
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