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Issue 2. Petitioner’s Claimed Deductions for 1988 and 1993
The remaining dispute for 1988 concerns petitioner’s claim
to a commission expense deduction in the amount of $10,000.6 The
only dispute in 1993 involves petitioner’s claim to various
deductions, the precise nature of which is not clear from the
record.7
Deductions are a matter of legislative grace, and a taxpayer
must substantiate amounts claimed as deductions by maintaining
records adequate to establish such entitlement. Sec. 6001;
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); sec.
5(...continued)
petitioner has not “fully cooperated” with respondent as required
by the statute. Sec. 6201(d) provides that full cooperation
includes “providing * * * access to and inspection of all * * *
documents within the control of the taxpayer” if reasonably
requested. Petitioner admits possessing the books and records of
Bankers Mortgage yet never provided such records to respondent
despite respondent’s repeated requests that petitioner
substantiate her claims regarding the Form 1099 from Bankers
Mortgage. Thus, with respect to this item of income, petitioner
has not “fully cooperated”, and sec. 6201(d) is inapplicable.
See McQuatters v. Commissioner, T.C. Memo. 1998-88.
6 Petitioner claimed this deduction as a Schedule C, Profit
or Loss From Business, expense on the 1988 Form 1040 she
submitted to respondent in connection with these proceedings.
Respondent allowed the other Schedule C expenses that petitioner
claimed on the Form 1040 but contends that petitioner has not
adequately substantiated that the $10,000 represented a
deductible expense rather than a capitalizable cost related to
the acquisition of real estate.
7 Petitioner claimed various expenses on a 1993 Form 1040
that she submitted to respondent shortly before trial.
Respondent agreed to allow certain deductions listed on Schedule
A and Schedule C of the Form 1040 that respondent concedes were
adequately substantiated but contends that all remaining
deductions claimed by petitioner have not been substantiated.
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