Eugene Clark - Page 4

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          petitioner was not entitled to the Schedule C car and truck                 
          expense deduction because petitioner failed to substantiate the             
          actual expenses claimed, and, instead, petitioner was allowed a             
          deduction based on standard mileage.  Therefore, respondent                 
          disallowed the depreciation deduction for petitioner’s Lexus and            
          further disallowed a portion of the depreciation deduction                  
          claimed for his computers for failure to substantiate the amounts           
          claimed.  In the petition, petitioner raised a new issue that the           
          amount of gross receipts reported on his Schedule C was                     
               Deductions are a matter of legislative grace, and the                  
          taxpayer bears 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             
               Section 162(a) allows a taxpayer to deduct all ordinary and            
          necessary business expenses paid or incurred during the taxable             
          year in carrying on any trade or business.  To be “necessary” an            
          expense must be “appropriate and helpful” to the taxpayer’s                 
          business.  Welch v. Helvering, 290 U.S. 111, 113 (1933).  To be             

          4    Upon reviewing the record, it is unclear when the audit of             
          petitioner’s 1996 return commenced.  However, since sec. 7491(a)            
          does not alter the taxpayer’s burden of proof where the taxpayer            
          has not complied with all applicable substantiation requirements,           
          including those of sec. 274(d), sec. 7491(a) does not apply in              
          this case.  Higbee v. Commissioner, 116 T.C. 438, 442 (2001).               

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