- 7 -- 7 -
tax for the year at issue. Petitioner presented no evidence
establishing that the $9,363 of unreported income is not subject
to self-employment tax. Accordingly, we hold that petitioner is
liable for self-employment tax on the unreported income.
Respondent is sustained on this issue.
3. Schedule C--Business Expense Deductions
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
(1934). A taxpayer is required to maintain records sufficient to
establish the amount of his or her deductions. Sec. 6001; sec.
1.6001-1(a), (e), Income Tax Regs.
Section 162(a) allows a taxpayer to deduct ordinary and
necessary business expenses paid or incurred during the taxable
year in carrying on any trade or business. To be “ordinary” the
transaction which gives rise to the expense must be of a common
or frequent occurrence in the type of business involved. Deputy
v. Du Pont, 308 U.S. 488, 495 (1940). To be “necessary” an
expense must be “appropriate and helpful” to the taxpayer’s
business. Welch v. Helvering, supra at 113. Additionally, the
expenditure must be “directly connected with or pertaining to the
taxpayer’s trade or business”. Sec. 1.162-1(a), Income Tax Regs.
Pursuant to section 262(a), no deduction is allowed for personal,
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