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3. Schedule E Deductions
Section 212(2) allows a deduction for all ordinary and
necessary expenses paid or incurred during the taxable year for
the management, conservation, or maintenance of property,
including real property, held for the production of income. Sec.
1.212-1(h), Income Tax Regs.
The evidence indicates that petitioner maintains several
rental properties. Petitioner thus claims depreciation as well
as various expense deductions associated with his rental
properties.
Petitioner, however, offered no evidence whatsoever to
substantiate deductions for the claimed amounts. Petitioner
failed to produce any records or documents that any of the
expenses were allegedly paid or incurred with respect to his
rental properties. Moreover, petitioner failed to present any
testimony, however slight, to explain the expenses listed on
Schedule E to give us any basis upon which we could estimate such
deductions. On the basis of his revised Form 1040, petitioner
would have this Court infer facts not in the record to prove that
he incurred legitimate rental expenses. The burden, however, is
on petitioner to substantiate his claimed deductions. We hold,
therefore, that petitioner failed to meet his burden of proof.
Consequently, petitioner is not entitled to deduct depreciation,
nor is he entitled to any of his claimed expense deductions. See
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Last modified: May 25, 2011