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The determinations reflected by the Commissioner in a notice
of deficiency are presumed correct, and the burden is on the
taxpayer to establish that the determinations are incorrect.3
Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933).
Section 162(a) allows a deduction for ordinary and necessary
business expenses paid during the taxable year in carrying on a
trade or business. A “trade or business” includes the trade or
business of being an employee. Primuth v. Commissioner, 54 T.C.
374, 377 (1970).
Section 600l provides, in pertinent part: "Every person
liable for any tax * * * shall keep such records, render such
statements, make such returns, and comply with such rules and
regulations as the Secretary may from time to time prescribe."
Section l.600l-l(a), Income Tax Regs., provides, in pertinent
part, that "any person subject to tax under subtitle A of the
Code * * *, shall keep such permanent books of account or
records, including inventories, as are sufficient to establish
the amount of gross income, deductions, credits, or other matters
required to be shown by such person in any return of such tax".
Moreover, even if books and records are maintained by the
3Sec. 7491 modifies this general rule and, in some
instances, shifts the burden to the Commissioner. In this case,
the burden does not shift to respondent because petitioner did
not fulfill the requirement of sec. 7491(a)(2), which, among
other requirements, requires that the taxpayer maintain records
to substantiate expenses claimed.
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Last modified: May 25, 2011