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by disallowing $12,519.50 more than petitioner claimed as a loss
on his return. This will be corrected in the Rule 155
computation.
Deductions are strictly a matter of legislative grace.
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).
Taxpayers must substantiate claimed deductions. Hradesky v.
Commissioner, 65 T.C. 87, 89 (1975), affd. per curiam 540 F.2d
821 (5th Cir. 1976). Section 7491(a) does not change the burden
of proof where petitioner has failed to substantiate his
deductions. Higbee v. Commissioner, 116 T.C. 438 (2001).
Moreover, taxpayers must keep sufficient records to establish the
amounts of the deductions. Meneguzzo v. Commissioner, 43 T.C.
824, 831 (1965); sec. 1.6001-1(a), Income Tax Regs. Generally,
except as otherwise provided by section 274(d), when evidence
shows that a taxpayer incurred a deductible expense, but the
exact amount cannot be determined, the Court may approximate the
amount bearing heavily if it chooses against the taxpayer whose
inexactitude is of his own making. Cohan v. Commissioner, 39
F.2d 540, 543-544 (2d Cir. 1930). The Court, however, must have
some basis upon which an estimate can be made. Vanicek v.
Commissioner, 85 T.C. 731, 742-743 (1985).
Section 274(d) imposes stringent substantiation requirements
for the deduction of travel expenses and automobile expenses.
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