- 4 -- 4 -
Further, petitioner deducted $6,841 of vehicle expenses on
the barber shop Schedule C but failed to substantiate $567 of the
claimed amount. Thus, $567 of vehicle expenses remains at issue.
In the notice of deficiency, respondent: (1) Increased
petitioner’s gross receipts by $9,363 because respondent
determined that petitioner had unreported income; (2) increased
petitioner’s self-employment tax to reflect the increase in gross
receipts; (3) disallowed $782 of the travel expense deduction and
$60 of the meal and entertainment expense deduction because
petitioner failed to establish that the expenses were ordinary
and necessary business expenses; and (4) disallowed $567 of the
vehicle expense deduction because petitioner failed to
substantiate entitlement to the deduction.
The determinations of the Commissioner in a notice of
deficiency are presumed correct, and the burden is on the
taxpayer to show that the determinations are incorrect. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).2
1. Schedule C--Gross Receipts
A taxpayer’s gross income generally includes “all income
from whatever source derived”. Sec. 61(a). A taxpayer is
2 Sec. 7491 does not apply in this case to place the
burden of proof on respondent because petitioner neither alleged
that sec. 7491 was applicable nor established that he fully
complied with the substantiation requirements of sec.
7491(a)(2)(A).
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Last modified: May 25, 2011