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2. Gambling Loss Deductions
In his petition to this Court, petitioner implies that he
had gambling loss deductions that would offset any gambling
income he received during taxable year 1999. Respondent contends
that petitioner has not substantiated any such deductions.
Deductions are a matter of legislative grace and are allowed
only as specifically provided by statute, and petitioner bears
the burden of proving that he is entitled to the claimed
deductions. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84
(1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440
(1934). This includes the burden of substantiation. Hradesky v.
Commissioner, 65 T.C. 87, 89-90 (1975), affd. per curiam 540 F.2d
821 (5th Cir. 1976).
Section 6001 and the regulations promulgated thereunder
require taxpayers to maintain records sufficient to permit
verification of income and expenses. As a general rule, if the
trial record provides sufficient evidence that the taxpayer has
incurred a deductible expense, but the taxpayer is unable to
substantiate adequately the precise amount of the deduction to
which he or she is otherwise entitled, the Court may estimate the
amount of the deductible expense, bearing heavily against the
taxpayer whose inexactitude in substantiating the amount of the
expense is of his own making, and allow the deduction to that
extent. Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930).
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Last modified: May 25, 2011