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After careful consideration of the evidence presented in
this proceeding, we find that petitioner has failed to establish
that there should be any adjustment to or reduction in the
assessments made with respect to his 1988 Federal income tax
liability. Our reasons for this finding are summarized below.
The disputed liabilities in this case result from
respondent’s deficiency determination made more than 10 years
ago. The Commissioner’s determination of a deficiency is
presumptively correct, and the taxpayer bears the burden of proof
to establish that a deficiency determination is erroneous. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).5 As we
have observed in countless opinions, deductions are a matter of
legislative grace. New Colonial Ice Co. v. Commissioner, 292
U.S. 435, 440 (1934). A taxpayer claiming a deduction on a
Federal income tax return must demonstrate that the deduction is
allowable pursuant to some statutory provision and must further
substantiate that the expense to which the deduction relates has
been paid or incurred. Id. A taxpayer’s obligation to
substantiate a claimed deduction is not eliminated merely because
the taxpayer’s records have been lost, stolen, destroyed, or
otherwise made unavailable to the taxpayer. Malinowski v.
Commissioner, 71 T.C. 1120, 1124-1125 (1979); Villarreal v.
Commissioner, T.C. Memo. 1998-420 (“A taxpayer’s inability to
5 Sec. 7491 is not applicable to this proceeding.
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Last modified: May 25, 2011