- 4 - Petitioner claimed $16,000 of deductions for prototype manufacturing expense on New Tech's Schedule C. The money was for the production of country and western CDs which petitioner planned to give away. Petitioner thought that if he gave away the CDs, people would invest in that endeavor. Respondent contends that this $16,000 prototype expense was an expense of the Nashville North, LLC, partnership, because the partnership was the entity promoting Greg Shires, the singer on the CDs. Petitioner agreed with this characterization at trial. Accordingly, the expense belonged to the partnership. We sustain respondent's determination as to this issue. Respondent disallowed $3,276 of vehicle expense deducted on petitioners' New Tech Schedule C. 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). 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. Section 274(d) imposes stringent substantiation requirements for the deduction of travel expenses and automobile expenses. Taxpayers must substantiate by adequate records certain items inPage: Previous 1 2 3 4 5 6 7 8 9 Next
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