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Edwards office, petitioner set up an office in the basement of
her home.
She had installed in her basement office an Ameritech
telephone line that was separate from the personal home
telephone. The Ameritech line serviced her business phone
number, a Fax number, and an internet line. Petitioner was also
billed by Ameritech for cell phone service. Petitioner paid
Ameritech $4,128.24 for telephone services in 1998.
Discussion
Because petitioners failed to meet the requirements of
section 7491(a)(2), the burden of proof does not shift to
respondent in this case.
Section 162(a) allows a deduction for all ordinary and
necessary expenses incurred in carrying on a trade or business.
Generally, a taxpayer must establish that deductions taken
pursuant to section 162 are ordinary and necessary business
expenses and must maintain records sufficient to substantiate the
amounts of the deductions claimed. Sec. 6001; Meneguzzo v.
Commissioner, 43 T.C. 824, 831-832 (1965); sec. 1.6001-1(a),
Income Tax Regs.
Where a taxpayer has established that he has incurred a
trade or business expense, failure to prove the exact amount of
the otherwise deductible item may not always be fatal.
Generally, unless precluded by section 274, the Court may
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Last modified: May 25, 2011