Hilary Harry Sax - Page 6

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          business.  Corbett v. Commissioner, 55 T.C. 884, 887 (1971).                
          Whether activities carried on by an individual can be                       
          characterized as a trade or business is a question of fact.  Id.            
          at 887.  Petitioner has the burden of proof.  Rule 142(a); Welch            
          v. Helvering, 290 U.S. 111 (1933).                                          
               Deductions are strictly a matter of legislative grace.                 
          INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New                  
          Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).                    
          Taxpayers must substantiate claimed deductions.  Hradesky v.                
          Commissioner, 65 T.C. 87, 89 (1975), affd. per curium 540 F.2d              
          821 (5th Cir. 1976).  Moreover, taxpayers must keep sufficient              
          records to establish the amounts of the deductions.  Meneguzzo v.           
          Commissioner, 43 T.C. 824, 831 (1965); sec. 1.6001-1(a), Income             
          Tax Regs.  Generally, except as otherwise provided by section               
          274(d), when evidence shows that a taxpayer incurred a deductible           
          expense, but the exact amount cannot be determined, the Court may           
          approximate the amount, bearing heavily if it chooses against the           
          taxpayer whose inexactitude is of his own making.  Cohan v.                 
          Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930).  The Court,              
          however, must have some basis upon which an estimate can be made.           
          Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).  There are            
          strict substantiation requirements under section 274(d) for items           
          such as travel expenses and meals.                                          
               Respondent stated that up to the date of trial, petitioner             

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