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expenses with respect to those activities, he reported them on
the Schedules C for his real estate business.
OPINION
Petitioner claims that he is entitled to deductions for 1985
through 1988, which relate to expenses incurred with respect to
his orange grove, his cattle, and his collection of Ferrari
automobiles.68 Respondent argues that petitioner was not engaged
in a trade or business with respect to those activities and that
petitioner has failed to substantiate the expenses he claims.
It is well established that “‘an income tax deduction is a
matter of legislative grace and that the burden of clearly
showing the right to the claimed deduction is on the taxpayer.’”
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992) (quoting
Interstate Transit Lines v. Commissioner, 319 U.S. 590, 593
(1943)). It is also the taxpayer’s burden to show that the
particular expense is currently deductible and is not a capital
68Petitioner claims that he reported the expenses relating
to his orange grove, cattle, and Ferrari activities on his
returns for 1985 through 1988. The civil report that respondent
prepared indicates that petitioner claimed expenses for those
activities. However, we are unable to determine from the
spreadsheets and petitioner’s returns to what extent he claimed
expenses for those activities, since the expenses are
intermingled with expenses for other activities. Further, we are
unable to determine whether any expenses, if identifiable, were
in fact incurred in the activities that petitioner claims. Also,
it appears from petitioner’s supplement to petition that he is
claiming expenses in greater amounts than the expenses claimed on
his returns.
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