Daniel J. Onorati - Page 5

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               Deductions are a matter of legislative grace, and taxpayers            
          must maintain adequate records to substantiate the amount of any            
          deductions or credits claimed.  Sec. 6001; INDOPCO, Inc. v.                 
          Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a), Income              
          Tax Regs.  Taxpayers generally bear the burden of proving that              
          the Commissioner’s determinations are incorrect.  Rule 142(a);              
          Welch v. Helvering, 290 U.S. 111, 115 (1933).                               
               Section 7491 does not apply here because petitioner has                
          failed to substantiate his deductions and provide evidence other            
          than his own testimony.  See sec. 7491(a)(2).                               
          1.  Dependency Exemption Deductions                                         
               Section 151(c) allows a taxpayer to deduct an exemption                
          amount for each “dependent” as defined in section 152.  As                  
          relevant here, section 152(a) defines a dependent to include a              
          son or daughter of the taxpayer, a son or daughter of a sibling             
          of the taxpayer, or an individual other than a spouse, whose                
          principal place of abode is the home of the taxpayer and who is a           
          member of the taxpayer’s household “over half of whose support,             
          for the calendar year in which the taxable year of the taxpayer             
          begins, was received from the taxpayer (or is treated under                 
          subsection (c) or (e) as received from the taxpayer)”.                      
               To qualify for a dependency exemption deduction, a taxpayer            
          must establish the total support cost expended on behalf of a               

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Last modified: May 25, 2011