David M. Priestly, Jr. - Page 9

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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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