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did not produce any credible evidence to substantiate the claimed
losses or to contest respondent’s determination that petitioners
had long-term capital gain income for 1999.9 Instead,
petitioners relied solely on the four summary affidavits
submitted to respondent during the examination of their 1999 and
2000 amended returns.
Because petitioners have failed to prove that respondent’s
determinations disallowing petitioners’ capital losses and
adjusting petitioners’ capital gain income are in error, we
sustain respondent’s determination recalculating petitioners’
capital gain income for 1999 and respondent’s determination
disallowing the balance of petitioners’ 1999 capital losses.
Substantiation of Deductions
Petitioners deducted business expenses on Schedules C and F
and claimed itemized deductions on Schedule A for 1999 and 2000.
The pertinent Code sections authorizing such deductions are
sections 162(a), 164, and 170.
Under section 162(a), a taxpayer may deduct ordinary and
necessary business expenses incurred or paid during the taxable
year. An ordinary expense is one that is common and acceptable
in the particular business. Welch v. Helvering, 290 U.S. at 113-
114. A necessary expense is an expense that is appropriate and
9Respondent’s capital gain adjustment for 1999 resulted from
respondent’s disallowing the basis claimed by petitioners in
connection with reported sales of some stock.
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