Virginia L. Dimon - Page 5




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          111, 115 (1933).  With respect to the deductions claimed in                 
          Schedule C of the unfiled Form 1040 for 1996, deductions are                
          strictly a matter of legislative grace, and petitioners bear the            
          burden of proving that they are entitled to any deductions                  
          claimed.  INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992).            
               We turn first to the contention of Mr. Dimon that the                  
          $127,970 that he received during 1996 represented proceeds from             
          the sale of a business, and not nonemployee compensation.  On the           
          record before us, we reject that contention.  Mr. Dimon is deemed           
          to have admitted pursuant to Rule 90(c) that the $127,970 that he           
          received during 1996 was nonemployee compensation.  In addition,            
          Schedule C of the unfiled Form 1040 for 1996 that petitioners               
          provided to respondent on January 10, 2002, showed that Mr. Dimon           
          received during 1996 $127,970 in gross receipts from his Schedule           
          C business.  We are unwilling to accept Mr. Dimon’s general,                
          conclusory, and uncorroborated testimony at trial that those                
          admissions are wrong.  On the record before us, we find that Mr.            
          Dimon has failed to satisfy his burden of showing that the                  
          $127,970 that he received during 1996 represented proceeds from             
          the sale of a business, and not nonemployee compensation.5                  


               5In the respective notices issued to Ms. Dimon and Mr.                 
          Dimon, respondent increased Mr. Dimon’s nonemployee compensation            
          in the amount of $127,970 and increased Ms. Dimon’s income for              
          that year by one half of that amount, which respondent determined           
          to be community income.  Similarly, in those respective notices,            
          respondent included in Ms. Dimon’s income for 1996 the full                 
                                                             (continued...)           





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