Thomas N. Coccia - Page 7

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               Petitioner never commenced operation of the newsstand.  On             
          his "amended return", petitioner reported a net loss of $11,900             
          for the business.                                                           
          A.   Burden of Proof                                                        
               The Commissioner's determinations are presumed correct, and            
          generally, taxpayers bear the burden of proving otherwise.  Welch           
          v. Helvering, 290 U.S. 111, 115 (1933).  Moreover, deductions are           
          a matter of legislative grace, and taxpayers bear the burden of             
          proving that they are entitled to any deduction claimed.  New               
          Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); Welch v.           
          Helvering, supra at 115.  This includes the burden of                       
          substantiation.  Hradesky v. Commissioner, 65 T.C. 87, 90 (1975),           
          affd. per curiam 540 F.2d 821 (5th Cir. 1976).                              
               The burden of proof may shift to the Commissioner under                
          section 7491(a).  Because petitioner failed to comply with the              
          requirements of section 7491(a)(2), however, section 7491 is                
          B.   Petitioner's Income                                                    
               Pursuant to section 61(a), gross income includes "all income           
          from whatever source derived" unless excludable by a specific               
          provision of the Internal Revenue Code.  Petitioner does not                
          dispute that during 2000, he received wages of $73,210, gambling            
          winnings of $4,600, interest income of $298, and nonemployee                

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