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Petitioner was employed full time as a computer analyst with
Wells Fargo. He testified that he retained two property
management companies to manage the Adams and Persimmon
properties. Petitioner also admitted that he did not keep any
records as to how much time he devoted to his real estate
activities. The Court concludes that petitioner does not satisfy
the exception set forth in section 469(c)(7) and he is not
entitled to deduct real estate losses in excess of the $25,000
loss allowed by respondent.
2. Petitioner's Employee Business Expenses
Deductions are a matter of legislative grace, and taxpayers
must maintain adequate records to substantiate the amounts of any
deductions or credits claimed. Sec. 6001; INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a), Income
Tax Regs.
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 claimed
pursuant to section 162 are ordinary and necessary 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), (e), Income Tax Regs.
With respect to certain business expenses specified in
section 274(d), however, more stringent substantiation
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