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c. Gifts to Charity
Petitioners reported gifts to charity in the amount of
$1,452. Respondent disallowed the entire amount due to lack of
substantiation.
2. Schedule E Rental Expenses
Petitioners claimed Schedule E deductions, excluding
depreciation, pertaining to their rental properties located at
5740 N. McVicker Avenue (McVicker), and the other located at 5466
Gettysburg (Gettysburg) in the amounts of $11,216, and $13,931,
respectively. The expenses consisted of auto and travel
expenses, insurance, legal and professional fees, mortgage
interest, water, taxes, and repairs.
In the notice of deficiency, respondent determined that
petitioners failed to substantiate adequately any amount greater
than $22,532, and disallowed $86 of the expenses pertaining to
McVicker and $1,907 of the expenses pertaining to Gettysburg.
Respondent, however, allowed an additional $622 expense deduction
for mortgage interest paid on petitioners' rental property.
Discussion
Under section 7491(a)(1),3 the burden of proof may shift to
the Commissioner. Because petitioners failed to meet the
3Sec. 7491 is effective with respect to court proceedings
arising in connection with examinations by the Commissioner
commencing after July 22, 1998, the date of its enactment by sec.
3001(a) of the Internal Revenue Service Restructuring and Reform
Act of 1998, Pub. L. 105-206, 112 Stat. 685.
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