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OPINION
A. Alleged Additional Compensation to Ms. Novak-O’Farrell
Petitioner argues that he is entitled to a deduction for
additional compensation paid to his employee, Ms. Novak-
O’Farrell, over and above those claimed on his Form 1040 for
1999, because of certain purchases that she made.
Deductions are a matter of legislative grace, and petitioner
bears the burden of proving that he is entitled to the deductions
claimed.4 See Rule 142(a); INDOPCO, Inc. v. Commissioner, 503
U.S. 79 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435
(1934). Taxpayers are required to maintain records that are
sufficient to enable the Commissioner to determine their correct
tax liability. See sec. 6001; sec. 1.6001-1(a), Income Tax Regs.
In addition, the taxpayer bears the burden of substantiating the
amount and purpose of the item for the claimed deduction. See
Hradesky v. Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam
540 F.2d 821 (5th Cir. 1976).
Ordinarily, a taxpayer is permitted to deduct the ordinary
and necessary expenses that he pays or incurs during the taxable
year in carrying on a trade or business. See sec. 162(a)(1). An
expense is ordinary for purposes of this section if it is normal
or customary within a particular trade, business, or industry.
See Deputy v. du Pont, 308 U.S. 488, 495 (1940). An expense is
4 Petitioner does not contend that sec. 7491(a) is
applicable to this case.
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