Danielle L. Clark-Hernandez - Page 10




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          respectively, for one-half of the self-employment tax due.                  
               Respondent disallowed deductions in the amounts shown above            
          because they were not ordinary and necessary and were not                   
          incurred in carrying on a trade or business.  Further, respondent           
          determined that petitioner failed to maintain adequate records,             
          failed to substantiate the claimed deductions, and untimely filed           
          her returns.  We agree with respondent.                                     
          E.  Schedule C Expense Deductions                                           
               Deductions are a matter of legislative grace, and taxpayers            
          bear the burden of proving the entitlement to 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 or her income and deductions.  See              
          sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.                          
               Section 162(a) allows a taxpayer to deduct all ordinary and            
          necessary business expenses paid or incurred during the taxable             
          year in carrying on any 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 a common or frequent occurrence in the type of business               
          involved.  Deputy v. Du Pont, 308 U.S. 488, 495 (1940).  No                 
          deduction is allowed for personal, living, or family expenses.              






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