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The Court deems the issue raised and tried by consent of the
parties under Rule 41(b)(1) and properly before the Court. See
Christensen v. Commissioner, T.C. Memo. 1996-254, affd. without
published opinion 142 F.3d 442 (9th Cir. 1998).
Section 162(a) allows a taxpayer deductions for ordinary and
necessary business expenses paid during the taxable year in
carrying on a trade or business. Generally, a taxpayer must
establish that deductions claimed pursuant to section 162 are for
ordinary and necessary business expenses and must maintain
records sufficient to substantiate the amounts of the deductions
claimed. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. Under
section 6001, a taxpayer bears the sole responsibility for
maintaining his business records.
Petitioner says he purchased an existing newsstand but does
not have any records to show how much he paid for it. He
testified that the newsstand was burglarized twice before he was
able to commence operations. Petitioner filed burglary reports
with the police and gave them estimates as to the value of the
items taken, including the strongbox containing all of his
receipts.
If a claimed business expense is deductible, but the
taxpayer is unable to substantiate it, the Court is permitted to
make as close an approximation as it can, bearing heavily against
the taxpayer whose inexactitude is of his or her own making.
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Last modified: May 25, 2011