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As petitioners’ arguments have been addressed by this and other
courts, we need not exhaustively review and respond to them.
Crain v. Commissioner, 737 F.2d 1417 (5th Cir. 1984).
Deductions are a matter of legislative grace, and taxpayers
bear the burden of proving the entitlement to any deduction
claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992);
New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).3
Section 162(a) allows a deduction for a taxpayer’s “ordinary and
necessary” business expenses paid or incurred during the taxable
year. However, a taxpayer is required to maintain records
sufficient to establish the amount of his or her income and
deductions. Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.
At trial, petitioner failed to offer any evidence with
regard to the disallowed Schedules A and C deductions. Her
testimony consisted chiefly of describing the nature of her
business activities during the year. Petitioners failed to
substantiate any of the disallowed Schedules A and C deductions.
Based on the record, we find no credible basis for allowing any
deduction in excess of amounts previously allowed by respondent.
The last issue for decision is whether petitioners are
liable for an accuracy-related penalty pursuant to section
6662(a) for the year in issue. Section 6662(a) imposes a penalty
3 Respondent does not bear any burden of proof or production
under sec. 7491 because the examination commenced prior to July
22, 1998.
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