George H. Richards - Page 14

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          the full amount specified in the instrument, then the payment               
          amount that does not exceed the sum payable for support shall be            
          considered a payment for child support.  Sec. 71(c)(3); Blyth v.            
          Commissioner, 21 T.C. 275, 279 (1953).                                      
               Pursuant to the terms of the Report and the Order,                     
          petitioner was directed to make biweekly payments to Ms. Richards           
          of $784.62.  Petitioner produced documents indicating that he               
          paid Ms. Richards alimony of $2,729.466 in 1997; therefore,                 
          petitioner is allowed a deduction for alimony in that amount.               
               Issue 4.  Schedule C Expense Deductions                                
               Deductions are a matter of legislative grace, and a taxpayer           
          must establish his right to the deductions claimed.  INDOPCO,               
          Inc. v. Commissioner, 503 U.S. 79, 84 (1992).                               
               Under section 162, a deduction is allowed for ordinary and             
          necessary expenses that are paid or incurred during the taxable             
          year in carrying on a trade or business.  Sec. 162(a).  Section             
          167 allows a depreciation deduction for property used in a trade            
          or business or held for the production of income.  Sec. 167(a).             
               Generally, a taxpayer is required to substantiate deductions           
          by maintaining books and records sufficient to establish the                

               6  We have credited petitioner with a payment of alimony of            
          $346.84 on Sept. 14, 1997.  While it may appear that this payment           
          was child support, petitioner met his child support obligation              
          for September 1997 and was not otherwise in arrears.  Moreover,             
          petitioner did not designate the payment as child support as he             
          had done with the payments on Sept. 12 and 26, 1997.                        

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