Melinda D. Rivera - Page 15

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               Further, the Court finds and holds that petitioner is not              
          liable for self-employment tax because of the exclusion accorded            
          employees by section 1402(c)(2).                                            
          II. Petitioner's Deductions                                                 
               In light of the Court's holding that petitioner is not                 
          entitled to deduct expenses on Schedule C, the Court must now               
          decide whether petitioner is entitled to deduct expenses incurred           
          in connection with her employment on her Schedule A.  See sec.              
               Deductions are a matter of legislative grace, and generally            
          the taxpayer bears the burden of proving the entitlement to any             
          deductions claimed.  See INDOPCO, Inc. v. Commissioner, 503 U.S.            
          79, 84 (1992).  In this case, however, the burden of proof is on            
          respondent because respondent raised a new matter and has                   
          asserted an increased deficiency.  See Rule 142(a).  Respondent,            
          therefore, must prove that petitioner is not entitled to the                
          deductions she claimed on her return.                                       
               Section 162(a) allows a taxpayer deductions for ordinary and           
          necessary business expenses paid or incurred during the taxable             
          year in carrying on a trade or business.  Generally, a taxpayer             
          must establish that expenses deducted 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; sec. 1.6001-1(a), Income Tax Regs.  Section            

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