- 7 -
requirements of section 7491(a)(2), the burden of proof does not
shift to respondent in this case.
Respondent's determinations are presumed correct, and
petitioners bear the burden of proving otherwise. Welch v.
Helvering, 290 U.S. 111, 115 (1933). Moreover, deductions are a
matter of legislative grace, and petitioners bear the burden of
proving that they are entitled to any deduction claimed. New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); Welch v.
Helvering, supra at 115. This includes the burden of
substantiation. Hradesky v. Commissioner, 65 T.C. 87, 90 (1975),
affd. per curiam 540 F.2d 821 (5th Cir. 1976).
Section 162(a) allows a deduction for all ordinary and
necessary expenses incurred in carrying on a trade or business.
Section 212 provides a deduction for all ordinary and necessary
expenses paid or incurred with respect to management,
conservation, and maintenance of property held for production of
income, including real property. Sec. 1.212-1(h), Income Tax
Regs. Generally, a taxpayer must establish that deductions taken
pursuant to sections 162 and 212 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.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011