- 7 - It appears to us that the computation of tax in the notice of deficiency incorrectly adds the Schedule C gross receipts to the total adjustments for both years. Respondent disallowed the total Schedule C expenses for both years and then added the Schedule C gross income to petitioners’ taxable income and subtracted the same amounts as miscellaneous deductions on Schedule A. The taxable income for 1995 and 1996 appears to be overstated by $10,530 and $11,580, respectively. This can be corrected in the Rule 155 computation. 2. Medical and Mortgage Interest Expenses With regard to the disallowance of the deduction for medical expenses for 1996, petitioners have the burden of establishing that respondent’s determination is erroneous. Rule 142(a). Section 7491 does not affect the burden of proof where the taxpayer has not substantiated deductions. Higbee v. Commissioner, 116 T.C. 438, 440-441 (2001). The deduction was disallowed because petitioners had not substantiated the expenditure. Petitioners presented no evidence from which the Court could conclude that respondent’s determination was erroneous, and we affirm that determination. The determination with respect to the 1995 mortgage interest is different. Petitioners claimed deductions of $6,764 for 1995 and $7,883 for 1996. Petitioners apparently substantiated the 1996 amount, but could substantiate only $4,101 of the 1995Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011