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alleged in the petition are true, petitioner has failed to state
a claim upon which he is entitled to relief.
In general, the determinations made by the Commissioner in a
notice of deficiency are presumed to be correct, and the taxpayer
bears the burden of proving that those determinations are
erroneous. See Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933). Deductions and credits are a matter of legislative
grace, and taxpayers bear the burden of proving entitlement to
any deduction or credit claimed on their returns. See INDOPCO,
Inc. v. Commissioner, 503 U.S. 79 (1992); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934).
Section 32 provides a refundable tax credit for certain
eligible taxpayers. Section 32(c)(2)(A) defines the term “earned
income” broadly to include wages, salaries, tips, other employee
compensation, and the taxpayer’s earnings from self-employment.
However, section 32(c)(2)(B) excludes certain items from the
definition of earned income. The dispute in this case centers on
section 32(c)(2)(B)(iv), which provides in pertinent part:
SEC. 32(c). Definitions and special rules.–-For
purposes of this section--
(2) Earned income.
* * * * * * *
(B) For purposes of subparagraph (A)--
* * * * * * *
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