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2. Substantiation of Deduction
A second difficulty with petitioners’ position here is that
the record before us falls short of providing any adequate
substantiation for petitioners’ costs in this case. Deductions
are a matter of “legislative grace”, and “a taxpayer seeking a
deduction must be able to point to an applicable statute and show
that he comes within its terms.” New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934); see also Rule 142(a).
Any amount claimed as a deductible expense must be
substantiated, and taxpayers are clearly required to maintain
adequate records sufficient to meet this requirement. Sec. 6001;
Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975), affd. 540
F.2d 821 (5th Cir. 1976); sec. 1.6001-1(a), Income Tax Regs.
When a taxpayer adequately establishes that he or she paid or
incurred a deductible expense but does not establish the precise
amount, we may in some circumstances estimate the allowable
deduction, bearing heavily against the taxpayer whose
inexactitude is of his or her own making. Cohan v. Commissioner,
39 F.2d 540, 543-544 (2d Cir. 1930). There must, however, be
sufficient evidence in the record to provide a basis upon which
4(...continued)
Likewise, Rev. Rul. 67-76, supra, 1967-1 C.B. 70, allowed a
medical expense deduction for the purchase of a three-wheeled
“autoette”, stating that the taxpayer “uses it primarily for the
alleviation of his sickness or disability and not merely to
provide transportation between his residence and place of
employment”.
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