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$16,972 and $16,945, in 1996 and 1997, respectively. Respondent
allowed $15,520 and $11,067, respectively.
At trial, Mr. Ngo provided rent statements for 1996 and 1997
from PHI Excess Properties showing the amounts paid by Mr. Ngo on
behalf of Donut Star. We find that Mr. Ngo has satisfied his
burden to substantiate the rent or lease payments made on behalf
of Donut Star during 1996 and 1997. Mr. Ngo’s claimed deduction
is sustained.
2. Utilities
Mr. Ngo claimed utility expense deductions of $8,180 and
$7,922 in 1995 and 1997, respectively. Respondent allowed $5,929
and $2,033, respectively.
After reviewing the record, we find that Mr. Ngo’s business
ledger sufficiently supports, and thus substantiates, the utility
expenses of Donut Star in the following amounts. For 1995, Mr.
Ngo is entitled to a total deduction of $7,897.54. For 1997, Mr.
Ngo is entitled to a total deduction of $4,355.82.
3. Legal and Professional Fees
Mr. Ngo claimed a deduction for legal and professional fees
of $600 and $4,861 in 1995 and 1997, respectively. Respondent
disallowed $300 in 1995 and the entire amount in 1997.
Generally, legal fees may be deductible under section 162(a)
only if they are connected to a taxpayer’s trade or business.
See Guill v. Commissioner, 112 T.C. 325, 328-329 (1999); Davis v.
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