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his departure from American were credited to his account,
however, petitioner’s obligation to repay the loans was reduced
by those amounts, and the reduction of that obligation
constituted the receipt of taxable income. See Newmark v.
Commissioner, 311 F.2d 913, 915 (2d Cir. 1962), affg. T.C. Memo.
1961-285. On the basis of the foregoing, we find that petitioner
failed to report commission income in the amount determined by
respondent.5
B. Schedule C Expenses
Deductions are a matter of legislative grace, and the
taxpayer has the burden of showing that he is entitled to any
deduction claimed. Rule 142(a); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). During 1996, petitioner
continued his business as an insurance agent. Petitioner,
however, failed to maintain adequate records to substantiate
claimed deductions for his automobile and home office expenses.
1. Automobile Expenses
Section 162(a) allows a taxpayer to deduct all ordinary and
necessary expenses paid or incurred in carrying on a trade or
business. Under section 274(d), however, automobile expenses are
not deductible as a business expense and will be disallowed in
full unless the taxpayer satisfies strict substantiation
5 Although the amount determined by respondent includes Form
1099 income from Capitol and Life USA, petitioner concedes this
point, and therefore the issue merits no further discussion.
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