Nathaniel Carter - Page 4




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               Petitioner claimed dependency exemption deductions for                 
          Deont´┐Ż and Junior on his 1997 Federal income tax return.  He also           
          claimed head of household filing status and an earned income                
          credit as an eligible individual with two or more qualifying                
          children.  Respondent issued a notice of deficiency determining             
          that petitioner was not entitled to the dependency exemption                
          deduction for Junior, head of household filing status, and earned           
          income credit because he failed to provide substantiation for his           
          claims.                                                                     
               The first issue we address is whether petitioner is entitled           
          to a dependency exemption deduction for Junior.  Deductions are             
          strictly a matter of legislative grace, and taxpayers must                  
          satisfy the specific requirements for any deduction claimed.  See           
          INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New                  
          Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).                    
          Taxpayers are required to maintain records sufficient to                    
          substantiate their claimed deductions.  See sec. 6001; sec.                 
          1.6001-1(a), Income Tax Regs.                                               
               Taxpayers generally bear the burden of proving that the                
          Commissioner’s determination is incorrect.  Rule 142(a); Welch v.           
          Helvering, 290 U.S. 111 (1933).  Under section 7491(a)(1),                  
          however, the burden of proof shifts to the Commissioner if, among           
          other requirements, the taxpayer introduces “credible evidence              
          with respect to any factual issue relevant to ascertaining” his             






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