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respondent contended that these expenses should be disallowed
altogether, or if allowed, should be subject to the 2-percent
limitation of section 67. Furthermore, petitioner knew that the
issue of whether the expenses were properly deductible by him on
his individual tax return was before the Court, and he presented
evidence on that subject. Therefore, the burden of proof remains
with petitioner on all issues in this case.
II. Expenses Related to Craft-Barnett
A. Corporate Expenses v. Individual Expenses
The first issue is whether the expenses are properly
deductible by petitioner or whether they are expenses of the
corporation not deductible by petitioner.
Deductions are a matter of legislative grace; petitioners
have the burden of showing that they are entitled to any
deduction claimed. Rule 142(a); INDOPCO, Inc, v. Commissioner,
503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292
U.S. 435, 440 (1934). The taxpayer is required to maintain
records that are sufficient to enable the Commissioner to
determine his 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 claimed
deduction. See Hradesky v. Commissioner, 65 T.C. 87, 90 (1975),
affd. per curiam 540 F.2d 821 (5th Cir. 1976).
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