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failed to show that these “advances” constituted expenditures
giving rise to bona fide indebtedness. But even if such
expenditures were construed as loans to Alviso or GMT, they would
not be deductible by petitioner or offset his income.
(b) Unclaimed Expenses
Generally, ordinary and necessary expenses paid or incurred
in the carrying on of a trade or business are deductible by such
individual engaged in the trade or business. Sec. 162(a); sec.
1.162-1(a), Income Tax Regs. The expenditure must be “directly
connected with or pertaining to the taxpayer’s trade or
business”. Sec. 1.162-1(a), Income Tax Regs. “The determination
of whether an expenditure satisfies the requirements of section
162 is a question of fact.” Shea v. Commissioner, 112 T.C. 183,
186 (1999). The taxpayer has the burden of proving that he is
entitled to deductions. INDOPCO, Inc. v. Commissioner, 503 U.S.
79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435
(1934).
All deductible expenses are subject to substantiation.
Secs. 274(d), 6001. The general substantiation requirement is
set forth in section 6001 and provides in pertinent part: “Every
person liable for any tax imposed by this title, or for the
collection thereof, shall keep such records * * * and comply with
such rules and regulations as the Secretary may from time to time
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