- 9 -
claimed deduction was based on the depreciation of the EMS. By
notice of deficiency, respondent disallowed the claimed
deduction, determined that petitioner was liable for additions to
tax under sections 6651(a)(1) and 6659(a), and determined that
increased interest applied under section 6621(d) because the 1981
deficiency was a substantial underpayment attributable to a tax-
motivated transaction. Petitioner timely filed a petition to
this Court seeking a redetermination.
OPINION
The primary issue for decision is whether petitioner is
entitled to deduct the loss attributable to his investment in
Sav-Fuel. Deductions are a matter of legislative grace, and the
taxpayer bears the burden of establishing the entitlement to any
deduction claimed.8 INDOPCO, Inc. v. Commissioner, 503 U.S. 79,
84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440
(1934). In order to satisfy this burden, petitioner must
establish that the EMS-related activity was engaged in for profit
within the meaning of section 183.
8Sec. 7491, which is effective for court proceedings arising
in connection with examinations commencing after July 22, 1998,
provides rules that shift the burden of proof to the Commissioner
in certain circumstances and place on the Commissioner the burden
of production with respect to penalties and additions to tax.
Sec. 7491 is inapplicable to this case because the examination
began before July 23, 1998.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011