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Deductions are a matter of legislative grace, and petitioner
bears the burden of proving that he is entitled to the deductions
claimed. Rule 142(a); New Colonial Ice Co. v. Helvering, 292
U.S. 435, 440 (1934). The taxpayer bears the burden of
substantiating the amount and purpose of the item for the claimed
deduction. See Hradesky v. Commissioner, 65 T.C. 87, 90 (1975),
affd. per curiam 540 F.2d 821 (5th Cir. 1976).
Petitioner testified that he could not obtain the invoices
from Royal Roofing; he did not testify as to the purpose of the
payment. Mr. Cox, petitioner’s expert, testified that Royal
Roofing performed the work because “someone” had told him that
Royal Roofing had done the work. Mr. Cox did not talk to Royal
Roofing or see any invoices or proposals from Royal Roofing.
Accordingly, we do not place any weight on Mr. Cox’s testimony
regarding Royal Roofing.
Petitioner has not established that the payment to Royal
Roofing was a business expense. Accordingly, we sustain
respondent’s determination on this issue.
IV. Payment of Real Estate Taxes on Calvine 120/140
Respondent argues that petitioner must capitalize the real
estate taxes paid in 1995 on the Calvine 120/140 property
because, at the time they were incurred, it was reasonably likely
that petitioner would subsequently develop this property.
Petitioner counters that he is entitled to deduct the real estate
taxes because section 263A does not apply. Petitioner contends
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