Edward C. Rosa - Page 4

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               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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