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Discussion
Because petitioner failed to meet the requirements of
section 7491(a)(2), the burden of proof does not shift to
respondent in this case on the issues of itemized and business
expense deductions.
1. Itemized deductions
Tax deductions are a matter of legislative grace with a
taxpayer bearing the burden of proving entitlement to the
deductions claimed. Rule 142(a)(1); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). Taxpayers bear the burden
of substantiating the amount and purpose of any claimed
deduction. See Hradesky v. Commissioner, 65 T.C. 87 (1975),
affd. per curiam 540 F.2d 821 (5th Cir. 1976). Taxpayers are
required to maintain sufficient records to establish the amounts
of income and deductions. Sec. 6001; Higbee v. Commissioner, 116
T.C. 438, 440 (2001); sec. 1.6001-1(a), Income Tax Regs.
Petitioner, therefore, must produce evidence that he is entitled
to the deductions he claims.
At trial, petitioner offered no evidence to support his
claim for itemized deductions, mostly unreimbursed employee
expenses. He stated that he worked for J&S during the tax year
“doing maybe three projects for them to get on my feet.” He then
found a better job with a service department in upstate New York,
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Last modified: May 25, 2011