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produces only a minor adjustment, because the available evidence
indicates that only $75 in income from this source was included
in respondent’s reconstruction of 1994-96 gross receipts (and
petitioner has failed to show inclusion in his income in any
other year). We therefore conclude that the downward adjustment
in respondent’s reconstruction that is appropriate in light of
petitioner’s evidence is capped at $75. Thus, we conclude that
petitioner has shown error in respondent’s reconstruction of 1996
gross receipts, in that it is overstated by $75.
Petitioner has not alleged or shown any other error in
respondent’s reconstruction of the gross receipts from
petitioner’s yacht charter business in 1994, 1995, or 1996. We
accordingly sustain respondent’s determination of unreported
charter income in those years, except to the extent of $16,662 in
1994 and $75 in 1996.
Disallowed Deductions of WDI
Taxpayers may deduct the ordinary and necessary expenses of
carrying on a trade or business. Sec. 162. Expenses incurred by
a corporation for the personal benefit of its shareholders are
not deductible. Intl. Trading Co. v. Commissioner, 275 F.2d 578,
585 (7th Cir. 1960), affg. T.C. Memo. 1958-104. Further, a
taxpayer may not deduct the business expenses of another
taxpayer. Welch v. Helvering, 290 U.S. 111, 114 (1933). The
burden of proof with respect to deductions claimed rests on the
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